Variable Term Life Insurance – Ask An Agent

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Buying insurance is confusing enough and if you have typed variable term life insurance into your search engine you may end up being more confused than when you started. Term life insurance is one thing and variable life insurance is another. There are more options than ever when it comes to buying any type of life insurance, for good or bad, this ain’t your daddy’s life insurance policy!

Term life insurance is purchased for a certain amount of time, typically 10, 20, and up to 30 years. At the end of the term the policy terminates and you must reapply for another policy this will include another physical exam unless you chose a term life insurance policy with guaranteed renewal as part of your original term policy. If you did, then you will not have to retake a physical exam.

The good thing about this type of policy is that it’s a lot less expensive since the it will only cover you for a limited time. The bad part is that if you develop any serious illnesses before the end of the policy, you will pay a lot more to reinstate the policy, or you may even be denied when you try to renew.

Variable life insurance is a type of permanent insurance where the insurance company invests a certain amount of money, that you specify, into money market accounts, stocks, bonds and equity funds. So not only do you get life insurance protection you also get an investment opportunity. Although, keep in mind, these investments will flow with the market’s ups and downs and therefore are considered somewhat risky.

As a result, the cash value of the policy cannot be guaranteed and the policy may eventually become worthless except for the guaranteed death benefit. The guaranteed death benefit will decrease with each loss in the market down to the minimum level allowed by the insurance company.

Some benefits of variable term life insurance is that the money used for investing is untaxed and remains untaxed until the life insurance policy is paid out. A variable life insurance policy has the potential to make a lot of money or lose a lot of money. There may be some additional protection features available to reduce your risk, check and see if they are worth the extra money.

Research companies that offer variable life insurance policies and ask if they have a policy that offers a hold on the value of the policy. What this means is the insurance company will make sure the value of the policy does not fall below a certain amount. The hold amount only refers to the amount of the death benefit and not the total cash value of the policy.

If you choose to surrender your policy after a number of years go by you can choose a policy that will allow you to turn the cash value of your policy into an annuity that gets paid out yearly.

Any type of investment comes with risks and the possibility of huge benefits, before you decide whether or not a variable term life insurance makes sense for your overall financial goals you should talk to a professional and make sure you understand all that is involved.

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