The Rock Insurance Minnesota:
Variable Life Insurance Minnesota
What is Variable Life Insurance?
A variety of insurance products are made available by the insurance industry to meet different types of consumer needs. For instance, term life insurance and whole life insurance were perceived to have many shortcomings and the insurance industry came up with an alternative in the form of universal life insurance.
The insurance industry started offering investment control and variable life insurance when consumers wanted more from the industry. The whole life insurance offers fixed rate of return to consumers but this rate of return is decided on by the insurance company. On the other hand, the variable life insurance option allows the policyholder to guide the investment over the account value part of the insurance policy.
If you currently own a variable life policy, you have complete control over your investments and you can choose from a variety of subaccounts to allocate funds. The premiums are fixed for the life of your insurance policy but growth of your account value depends on the performance of your chosen subaccounts and it may also determine the death benefit value.
When it comes to sub account options, there is a lot to choose from including fixed interest options, and stock and bond. You can be as aggressive or conservative as you want to be and you are completely free to allocate the account value as per your desire.
The variable life insurance policy comes with fixed premium which cannot be changed in case your financial situation changes and it may seem to be a disadvantage for some people. However, you do get guaranteed death benefit with a variable life policy. In case the subaccounts chosen by you do not perform as good as you had hoped, the expected death benefit will go down but the policy comes with a minimum defined death benefit and will never go below that level. Needless to say, the defined benefits or any other guarantees are contingent upon the claims paying ability and financial strength of the insurance company issuing the policy.
As far as the withdrawals are concerned, you may have to pay surrender charges. Also, you may have to pay taxes in case the withdrawal is more than what you have already paid in the policy. Keep in mind that withdrawals or loans on the policy will reduce the cash value of your policy as well as the death benefit, and you may have to pay extra premiums in order to keep the policy in force.
In simple terms, it can be said that a variable life insurance policy offers you a flexible option where you can build your own portfolio and you also have the security of a defined death benefit. The death benefit will be there as long as you keep paying fixed premiums. On the other hand, this is not the case with a variable universal life insurance or universal life insurance.
As far as the availability and cost of a life insurance policy is concerned, it depends on a variety of factors including health, age, type as well as amount of insurance. Like other financial decisions, buying an insurance policy also involves some expenses. Generally, insurance policies have a few charges, fees and contract limitations that may include underlying investment management fees, account fees, expense charges, mortality charges, optional benefit charges as well as administrative fees.
In case the policyholder decides to surrender the policy, the charges may include surrender charges and there may be some income tax implications. A variable universal life policy may also have additional fees that may not need to be paid for other types of investment products. FDIC or other government agencies do not guarantee variable life policies and these policies are also not endorsed or guaranteed by any bank or savings association.
You also need to know that the principal value as well as the investment return of an investment option is not guaranteed. Since the value of variable life sub accounts changes with the market conditions, the principal in the subaccounts may be less than or more than the original amount invested at the time of surrender.
Variable life insurance offers you an option to combine the benefit of investment based return and insurance. It is recommended to get in touch with us as an independent insurance agent to help you explore various available options when you are considering buying life insurance. We service multiple areas in Minnesota including Burnsville, Brooklyn Park, and Maple Grove.