When looking at a Variable Life Insurance policy in Nashville you must make sure the agent is qualified to talk to you about this particular policy because if your agent is not licensed with the correct license, he or she may lead you away from this type of policy based on what they can and cannot sell instead of what is best for your situation. This is because variable policies are tied to security investments; instruments and investment funds within the insurance company’s portfolio such as stocks, bonds, equity funds, money market funds and bond funds. Agents who sell this type of policy must have certain security licenses to do so because variable policies are considered securities contracts. They are regulated under the federal securities laws and they must be sold with a current prospectus.
The advantage that is most talked about when discussing variable policies is that they allow you to participate in various types of investment options while not being taxed on your earnings until the policy is surrendered. You can also lower the amount of premiums you might pay by simply applying the interest earned on the investments. That is assuming you have earned interest.
The drawback to this a variable life policy is due to investment risks. When the investments do not perform well there will actually be less money paid toward the premium, which means you will have to pay more; not less, for the policy to stay in place. If the fund is not managed well, the cash and/or death benefit may actually decline. Fortunately, they do have a defined level that the cash and/or death benefit cannot go under. The other very important thing to note about this type of policy is you cannot withdraw any of the cash value during your lifetime. So if you think you may need the cash down the road out of the policy, this is one to stay away from.
Variable life insurance is a form of permanent life insurance that provides permanent protection to the beneficiary upon the death of the policy holder. Note that it is also generally the most expensive type of cash-value insurance. This is because it allows you to allocate a portion of your premium dollars to a separate account comprised of various instruments and investment funds. Make sure you totally understand and have good counsel before purchasing this type of insurance policy.