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If you are comfortable with investing in equities and willing to assume higher risk, then you may want to consider variable life insurance. Although we typically don’t recommend this option for most, read on and you decide if this is right for you.
What is Variable Life Insurance
Variable life insurance is another type of permanent life insurance that is designed to provide a death benefit for your beneficiary to span your lifetime (verses term life insurance that only provide coverage for a specific length of time). The risk comes in because the cash value is invested in various funds within the insurance company’s portfolio. These funds may include equities, bonds, money market or combination of various types.
The cost of insurance is paid from your premium payments and the cash value in the policy. If the variable life insurance company’s portfolio of investments perform poorly, you may have to pay additional funds to keep the policy in force. If the portfolio performs well, you benefit from a larger cash value in your account.
Variable life does have the same benefits as other permanent life insurance options in the fact that you can borrow from your cash value at reasonable interest rates and tax free.
Due to the risks involved with variable life insurance and the vast number of available options, it’s wise to discuss the pros and cons of variable life with a North Carolina licensed life insurance agent.
If you would like to learn more about variable life and other life insurance options such as term life, whole life and universal life, call our office to discuss your needs and options today.