[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.easyquotes4you.com\/variable-life-insurance-good-investment\/#BlogPosting","mainEntityOfPage":"https:\/\/www.easyquotes4you.com\/variable-life-insurance-good-investment\/","headline":"Is Variable Life Insurance a Good Investment?","name":"Is Variable Life Insurance a Good Investment?","description":"Quick Navigation Links Show 1 What is Variable Life Insurance? 2 What are the advantages of Variable Life Insurance? 3 What are the disadvantages of Variable Universal Life? 4 Alternatives to Variable Life Insurance 5 life insuranceMy Take One of the main attractions with permanent life insurance, like variable life insurance, is the cash value.. More<\/a>","datePublished":"2018-09-30","dateModified":"2019-12-16","author":{"@type":"Person","@id":"https:\/\/www.easyquotes4you.com\/author\/site-admin\/#Person","name":"Rob Pinner","url":"https:\/\/www.easyquotes4you.com\/author\/site-admin\/","identifier":1,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/e4da538e10e071b419f4843e8193941a0ff5ad58e937daa177fa846a5124dc4d?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/e4da538e10e071b419f4843e8193941a0ff5ad58e937daa177fa846a5124dc4d?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Rob Pinner","logo":{"@type":"ImageObject","@id":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/logo-shape-e1536791917640.png","url":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/logo-shape-e1536791917640.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/Variable-Universal-Life-1.png","url":"https:\/\/www.easyquotes4you.com\/wp-content\/uploads\/2018\/09\/Variable-Universal-Life-1.png","height":897,"width":2000},"url":"https:\/\/www.easyquotes4you.com\/variable-life-insurance-good-investment\/","about":["Life Insurance"],"wordCount":930,"keywords":["buy online","convert term","experienced agent","financial portfolio","independent agency","independent agent","indexed universal life","instant quoter","insurance","life","life agent","life insurance","mutual funds","online life quote","sub-accounts","term","term insurance","Transamerica","Transamerica Life","variable life","variable universal life"],"articleBody":" Quick Navigation Links Show 1 What is Variable Life Insurance? 2 What are the advantages of Variable Life Insurance? 3 What are the disadvantages of Variable Universal Life? 4 Alternatives to Variable Life Insurance 5 life insuranceMy Take One of the main attractions with permanent life insurance, like variable life insurance, is the cash value component attached.\u00a0 The problem with most of these permanent policies is the rate of return is usually low.\u00a0 This is where variable universal life could make a difference.What is Variable Life Insurance?Variable universal life insurance is a permanent policy that is part of the universal life family.\u00a0 The difference between variable universal life and a universal life policy is how the cash value component is calculated.In a variable universal life policy part of your premium goes to pay the COI (cost of insurance), the remaining portion is invested into sub-accounts. These sub-accounts are very similar to mutual fund shares and are tied to the stock market\u2019s performance.In these sub-accounts there is no guaranteed interest rate or \u201cfloor\u201d, if the sub-accounts you choose are in the negative, then your cash value will decrease. With that said, there is no ceiling on what interest you can earn, which is an upside to these policies.The sub-accounts inside the variable life insurance policy are unique to the policy and cannot be invested in outside of the policy.\u00a0 There are management fees tied to these sub-accounts which can eat up the cash value.The cash values of the variable life insurance policies grow tax deferred.\u00a0 Withdrawals and loans can also be taken tax free as long as the contract remains in-force.\u00a0 If you surrender the policy any gain will be taxed at ordinary income rates.What are the advantages of Variable Life Insurance?It\u2019s a permanent policy: Variable life insurance is designed to last your lifetime (age 121).Cash value grows tax-deferred: The cash value grows tax-deferred which means none of the growth is reported to the IRS. If funded properly can be used to supplement retirement.Tax-free withdrawals & loans: Cash value can be pulled out as withdrawals and loans tax-free. You must keep your policy in-force to keep from paying taxes on the gains of the policy.\u00a0 When funded correctly these policies can be very similar to Roth IRA.Higher Rate of Return: Being allowed to invest into the sub-accounts which mirror mutual funds, variable universal life policies have a chance for greater rate of return than other permanent life insurance policies.What are the disadvantages of Variable Universal Life?More Expensive: Just like the other permanent life policies, the premium is more expensive than term life insurance. Not only are you a paying a COI (cost of insurance), but you are investing into the sub-accounts as well.Premiums are Not Guaranteed: The major problem with these policies is that like the other Universal Life policies the COI (cost of insurance) rises every year. The cash value growth in the variable universal life products is projected to grow and to offset the rising COI. If the investments (sub-accounts) do not perform well or the product was sold on a higher than normal interest rate projection, your premium could be raised.\u00a0 If you refuse to pay this higher premium the carrier could cancel your policy and you would be left with nothing.Management Fees can be high: The sub-accounts that are offered with your variable universal life policy all come with there own management fees, very similar to fees associated with Mutual Funds. For some reason these fees associated to the sub-accounts are usually higher than the one\u2019s associated with mutual funds.Loss of Cash Value: While there is a chance to make a really good rate of return in a variable universal life policy, there also runs a risk of a down turn in the market. In the variable universal life policy, the cash value component lose money and just like any other investment, a lot of it.\u00a0 It\u2019s very important to review yearly with your agent if you own one of these policies.Alternatives to Variable Life InsuranceIf you want to stay in the permanent life insurance arena, and you like the cash value component of the variable universal life, I would recommend an Indexed Universal Life.\u00a0 These policies allow you some upside interest of the market, without any downside risk of the market.\u00a0 Always make sure to find a policy with a guaranteed premium.Term life insurance is another alternative to variable universal life.\u00a0 Some recommend investing the difference of premium between term and permanent policies.\u00a0 This concept is call \u201cbuy term, invest the difference\u201d.\u00a0 Remember, term does expire and unless your investments have done well you will still probably need life insurance.life insuranceMy TakeWhile variable universal life does have some very appealing attributes, I would not recommend a policy like this.\u00a0 While the idea of a lot of cash value growth seems tantalizing, the risk involved when the market doesn\u2019t cooperate far outweighs any cash value accumulation.Life insurance can be used as a financial tool, but let\u2019s remember, first and foremost it\u2019s used for death protection.\u00a0 Overall, we do not feel Variable Univesal Life is a good investment.\u00a0 There are many other options to choose from, without the risk and high management fees.If you own one of these types of policies we highly recommend seeing your agent, asking for an in-force illustration, and just make sure it\u2019s still a sound product.\u00a0 If you have any questions or comments, please give us a call.\t{\t\t\"@context\": \"https:\/\/schema.org\",\t\t\"@type\": \"FAQPage\",\t\t\"mainEntity\": [\t\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"What is variable life insurance?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"Variable universal life insurance is a permanent policy that is part of the universal life family.\u00a0 The difference between variable universal life and a universal life policy is how the cash value component is calculated.In a variable universal life policy part of your premium goes to pay the COI (cost of insurance), the remaining portion is invested into sub-accounts. These sub-accounts are very similar to mutual fund shares and are tied to the stock market\u2019s performance.\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t,\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"Are premiums guaranteed in a variable life insurance policy?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"No, the premiums are not guaranteed in a variable life policy.\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t,\t\t\t\t{\t\t\t\t\"@type\": \"Question\",\t\t\t\t\"name\": \"What are alternatives to variable universal life?\",\t\t\t\t\"acceptedAnswer\": {\t\t\t\t\t\"@type\": \"Answer\",\t\t\t\t\t\"text\": \"If you want to stay in the permanent life insurance arena, and you like the cash value component of the variable universal life, I would recommend an Indexed Universal Life.\u00a0 These policies allow you some upside interest of the market, without any downside risk of the market.\u00a0 Always make sure to find a policy with a guaranteed premium.Term life insurance is another alternative to variable universal life.\u00a0 Some recommend investing the difference of premium between term and permanent policies.\u00a0 This concept is call \u201cbuy term, invest the difference\u201d.\u00a0 Remember, term does expire and unless your investments have done well you will still probably need life insurance.\"\t\t\t\t\t\t\t\t\t}\t\t\t}\t\t\t\t\t\t]\t}"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Is Variable Life Insurance a Good Investment?","item":"https:\/\/www.easyquotes4you.com\/variable-life-insurance-good-investment\/#breadcrumbitem"}]}]