| Variable life insurance offers the ultimate | | | | insurance is redeemed. |
| in life insurance flexibility. The main | | | | |
| principle governing variable life insurance | | | | Is variable life insurance for you? |
| is that you control your life investments | | | | |
| instead of the life insurance company | | | | It is very important to think long and hard |
| managing them on your behalf. This enables | | | | about variable life insurance before opting |
| you to select the level of risk that you | | | | to take it on, as there is a high level of |
| subject your life insurance fund to, paving | | | | risk involved with this type of life policy. |
| the way for you to make substantial interest | | | | Ideally, variable life policies should only |
| gains on the cash-in value of your life | | | | be taken out by seasoned investors who know |
| insurance policy. | | | | there way around the investment markets. If |
| | | | you've never invested in the stock market |
| How does variable life insurance work? | | | | before then a variable life policy is |
| | | | probably not for you. |
| All life insurance products are a form of | | | | |
| investment vehicle. Standard no cash-in value | | | | However, if you are confident in your |
| life insurance policies like term life | | | | investing abilities this is what you stand to |
| insurance invest life insurance premiums in | | | | gain from taking out a variable life |
| ultra low-risk funds that are often obliged | | | | policy... |
| to return a certain level of interest. This | | | | |
| provides the life company with confidence in | | | | 1. Variable life policy potential: |
| receiving a tangible level of return, which | | | | |
| is transferred through to the life insurance | | | | A variable life policy has the potential to |
| policyholder by way of a guaranteed lump sum | | | | make substantial interest gains that are much |
| payment upon death or terminal illness. | | | | higher than on a standard term life insurance |
| | | | policy. Whereas you might pay a small premium |
| Variable life insurance is different from | | | | per month for a £100,000 pay out upon |
| standard types of life insurance as the life | | | | death with a standard policy, if you invest |
| company hands the investment reigns over to | | | | well with a variable life policy that |
| the policyholder. The life company may allow | | | | £100,000 could be worth £500,000 or |
| a percentage of the fund to be invested, or | | | | more when redeemed! |
| in some cases, all of the fund to be invested | | | | |
| by the policyholder. Variable life policies | | | | 2. Tax advantages: |
| come with the disclaimer that the life | | | | |
| insurance company takes no responsibility for | | | | The cash surrender values of variable life |
| the performance of the variable life | | | | policies are exempt from taxation until the |
| policyholder's investments. Therefore, if the | | | | point at which they are redeemed. Also, gains |
| investments perform poorly the policyholder | | | | made via variable life policies are not |
| accepts the consequences that there will be | | | | subject to capital gains tax (CGT). |
| little or no cash surrender value when the | | | | |