Choosing the perfect life insurance policy can be tricky. There are dozens of different kinds of life insurance coverage policies that can make choosing difficult. Each of them has different advantages and disadvantages that you have to look at to make sure that you’re getting the best protection for your loved ones.

One of the types of life insurance that is commonly misunderstood is variable life insurance, which provides a unique set of advantages that isn’t offered by other types of coverage. At Longevity Brokers we are pleased to help customers get the best insurance policies for all areas of their life, everything from auto insurance to homeowner’s insurance. Not only do we provide quality insurance, but we also help customers make educated decisions about their life insurance needs.

What is Variable Life Insurance?

Variable life insurance (also called variable universal life insurance), is another form of whole life insurance with some distinct differences than a traditional permanent insurance policy. Unlike a term insurance policy, you won’t lose coverage after the term is up, which means that as long as you continue to make the premium payments, you’ll have life insurance coverage.

Just like with other whole life policies, variable life insurance policies have a cash value component. The longer that you pay the monthly premiums, the more value is accumulated inside of the plan. This is a great component of the plan if you ever need to borrow money against the policy in the future for a financial emergency. Although that will take a chunk out of the death benefit.

Unlike a traditional whole life policy, these variable life insurance plans allow you to invest the accumulated cash value into a variety of different investment vehicles. Inside of the plan, you’ll have several different options on how you want that cash value invested.

Advantages of Variable Life Insurance

There are several benefits to these variable plans. One of the obvious ones is that it allows flexibility in how much you pay in monthly payments. Within a certain range, the insurance company will allow you to change your premiums. There will be certain times in your life when you need to save money on your insurance premiums, and these plans allow you to change that as your life changes. This is where they get the “variable” portion of their name.

Additionally, you’ll be able to change (within reason) the death benefit of the policy. The older that you get, the less need you’ll have for life insurance. Instead of having to reapply for a smaller insurance policy, you’ll be able to decrease your death benefit.

There is an additional tax advantage that you’ll find with these life insurance plans. All of the growth inside of the account is tax-deferred until any of the money is withdrawn. It’s a great way to supplement your investment portfolio.

Disadvantages of Variable Life Insurance

There is one significant disadvantage, these plans are much more expensive than other options. If you’re looking for the most affordable life insurance coverage, variable plans aren’t the best choice. In just about every case, a term life insurance policy is going to be the cheapest route for life insurance.

Another pitfall of these plans is that these plans are much more complicated than its counterparts like a term insurance plan or a tradition whole life policy. For anyone that doesn’t have experience in the life insurance marketplace, it’s easy to be confused with all of the components and parts of the plan.

The Importance of Life Insurance

Life insurance is one of the most important purchases that you’ll ever make for you and your loved ones. If you didn’t have life insurance, your loved ones would have thousands and thousands of debt and no resources to pay those bills, which can make an already stressful situation a lot worse, but that’s where life insurance comes in.

It’s vital that you get the best insurance policy that fits your needs the best. There are several different factors that you’ll need to consider when you’re looking for that perfect policy. Different things like your debt, your retirement, your salary, and how many family members rely on your income.

The primary goal of your life insurance coverage is to give your family the money that they need to pay off any of your unpaid expenses and final bills that you would leave behind after your passing. Make sure that your insurance plan is large enough to pay for all of them without leaving any financial stress to your loved ones.

The next factor to consider is your annual salary and how many family members rely on that income every month. The secondary purpose of your coverage is to replace your paycheck if anything tragic were to happen to you.

As you can see, there are several different factors that you’ll need to account for when calculating your life insurance needs, and all of these factors can change constantly. You could get several raises and drastically increase your paycheck, or you could finally pay off your mortgage debt, both of which would alter your insurance needs. With a variable life insurance policy, you would be able to change the death payout as your needs change.

Summary

In most cases, we don’t recommend these variable life insurance policies because of all the disadvantages and because they are much more expensive than other options, but that doesn’t mean that you should automatically discount these plans for your insurance needs.

If you have any questions about life insurance or about variable insurance plans, please contact one of our agents today. Our agents at Longevity Brokers would be happy to answer any questions that you have or help connect you with the perfect insurance policy to fit your needs. Life insurance is just one of the many quality products that we are pleased to provide. Call us at (720)209-4598 or use our contact form.