The final type of permanent Life Insurance in the suitability series is Variable Life Insurance.
In its simple sense, if a client were looking for permanent life insurance at the lowest cost, Variable Life would never be the best choice. However, if the objective were to build significant cash value, retain some control on the investment decisions, and include life insurance to add a tax deferral, Variable Life could be the answer, an here is how:
In all permanent life insurance policies there is cash value that is invested. Variable Life is unique in that the policy owner has choices in how that cash value is invested. A Variable contract comes with a list, generally of more than 80, affiliated funds of differing asset classes available to direct the investment. The policy owner has choices of investment from small cap to large cap, value to growth, with unlimited adjustments.
Variable Life is an organized approach to build significant cash values on a tax deferred basis, often outside the insured’s estate as a wealth transfer vehicle. The life insurance component is the self-completing part of the plan. If the insured does not live the intended build up is paid to the beneficiary.
Variable Life requires ongoing investment monitoring to optimize the cash build up. This is not a set it and forget it contract.
We see life insurance buyers find disappointment for 2 primary reasons. First the contract is underfunded, missing the focus of significant tax deferred build up. Second, and even more critical is the lack of attention paid to the investment allocation, adjustments need to be made.
Variable Life can be a dynamic wealth transfer vehicle with proper use. A full examination of the “Policy Expense Analysis” prior to implementation to fully identify all the moving parts will set this contract up for a successful outcome.
If you have questions about Variable Life, new or in-force policies, drop me an email for some support. Contact me at 203-637-6655 or email firstname.lastname@example.org