Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Variable life works very much like Universal life in concept, except that the accumulation account allows for different investment choices than just a fixed account. A variable life policy will offer different investment choices within the policy. Usually mutual funds are the type of investments used within the accumulation account. The insured selects from the choices offered by the policy. Usually there is something for just about every risk profile. The insured selects for example 3 funds to have the excess premium (beyond the current monthly charge for insurance and fees) deposited into. Over time these will gain and they will lose as any investment does. The idea is the same as any investment, to make money over time. A variable life is very much a hands on product. It should be reviewed and possibly rebalanced on a regular basis. Variable life policies are not '"fire and forget" plans.
Variable universal life insurance is a security. Those who sell it must be registered representatives of a broker dealer. Variable universal life insurance uses a guaranteed account or the separate sub accounts that offer market access to equities and bond investment instruments. Because of this market access, the cash value account could lose money, so a risk tolerance profile needs to be established to determine product suitability for the investor.
When variable universal life premiums are paid, the policy expense loads are generally deducted and the earnings or losses are credited or debited from the premium and/or cash value accumulation account.
.JPG){kind=avatar}
When variable universal life premiums are paid, the policy expense loads are generally deducted and the earnings or losses are credited or debited from the premium and/or cash value accumulation account.