Before you invest in variable life insurance, it is important to fully understand its characteristics. Each product offers policyholders a savings feature. The premiums, minus the insurance company fees and taxes, are added to the policy's balance. This gives the policy a growing cash value.
This is used by many to save for specific situations, such as paying for college tuition or buying a house. This allows cash to grow faster than other investments, and it can grow without tax. This makes it attractive for many with an affordable and comprehensive insurance solution.
Variable life insurance products also have another important feature: the policyholder can choose where the policy's cash value is invested. These products provide policyholders with a variety of investment options. This includes a variety of stocks, bonds, and mutual funds as well as money markets.
The policyholder can distribute the cash value across a variety of investments to reduce risk and maximize return. These policies allow policyholders to make changes throughout the policy's life.
The ability to convert it into cash value is one of its most important features. These policies are popular because they allow you to accumulate cash value over time and still provide death benefit coverage. This provides the necessary death benefit while you build your investment.
The cash value is due if the insured dies. The policyholder can surrender it at any time and receive the cash value. This option is great for parents who want coverage while their children live with them, but still want the cash value once they have children.