Cash Value in Variable Life Insurance

What makes variable life insurance unique is that the policyholder can invest his policy's cash value. 

Either whole life insurance or universal life insurance may be variable.  Variable life insurance policies retain the methods of accessing cash value which their non-variable equivalents offer; however, they do not retain any guarantees of interest.  The only interest to be had is interest which the policyholder can grow through his own investment decisions.

Investment risk with variable life insurance

Clearly, this is the sort of policy which a confident investor would prefer, since it allows him to take the reins of what may someday be his retirement fund.  However, it is not without risk: a policyholder's investment decisions may result in a rate of interest lower than the rate offered by a non-variable life insurance policy.  It can even result in a negative rate of return, which reduces the policy's cash value.

Cash value investment

Due to government filing requirements, the owner of a variable life insurance policy is not at liberty to invest his cash value in just any security.  Each policy details exactly in which securities the owner may invest.

The restrictions notwithstanding, the policyholder has much freedom to be grateful for: cash value may be divided up among the available investment opportunities in whatever manner the policy owner pleases, and the policy owner is free to transfer his cash value from one investment to another at any time.

Have more questions?  Call 1-800-823-4852 now to consult with a life insurance advisor or to purchase variable life insurance.