Cost & Coverage
We make it easy to compare and buy insurance.
Interested in investing the cash value earned from your life insurance policy’s cash value? Find out if variable life insurance is the right choice for you.
Variable life insurance is a type of permanent life insurance, meaning it stays in force your whole life if you keep paying your monthly or annual premiums. Variable life insurance is similar to whole life insurance (a simpler form of permanent life insurance) in that it pays a tax-free lump sum to your beneficiaries if you die, and in that it contains a long-term savings component called the “cash value” of the policy. However, unlike whole life insurance, variable life insurance offers you investment options for the policy’s cash value.
Variable life insurance is basically whole life insurance with added flexibility around how the policy’s cash value grows over time. Here’s a snapshot of variable vs. whole life insurance:
|THE DETAILS||VARIABLE LIFE INSURANCE||WHOLE LIFE INSURANCE|
|Guaranteed Death Benefit||Yes||Yes|
|Guaranteed Cash Value||No||Yes|
|How Cash Grows (or Shrinks)||Subaccounts - pool of investor funds offered by insurer||Earns interest at predetermined rate|
|Notes||Risk of holding expensive insurance policy with little to no cash value||No risk compared to other permanent types, but there are probably better investment options|
Compare the market, right here.
Policygenius saves you up to 40% by comparing the top-rated insurers in one place.
Not sure what kind of coverage you need? Use our simple calculator to find out in 5 minutes.
A basic form of permanent life insurance. Whole life insurance offers death benefit coverage to beneficiaries that gradually reduces the insurer’s commitment as the policyholder’s cash value builds. Cash value earns interest at a fixed rate predetermined by the insurer.
Similar to whole life insurance, except it offers the policyholder the option to use the cash value to pay for premiums. The interest that the cash value earns is also subject to change with universal life, whereas it’s fixed with whole life.
Variable universal life insurance is similar to universal life insurance in that it has fluctuating premiums, but differs in its asset options. With a variable universal life insurance policy, you can choose the assets your premiums invest in.
A type of permanent life insurance usually used by seniors, final expense insurance is meant to cover any end-of-life costs and outstanding debts. Policies are typically sold for smaller coverage amounts—$10,000 or $25,000 for example.
Permanent life insurance for seniors who may not qualify for other kinds of life insurance. Policies are sold for smaller amounts of coverage — typically a maximum of $10,000 — and nearly all applicants are accepted. Premiums are expensive relative to the amount of coverage.
For the majority of people, variable life insurance is neither a good life insurance product nor a good investment vehicle.
There are much better ways to invest than in a variable life insurance policy – ways that are cheaper, have a higher growth potential, and aren’t wrapped up in a complicated life insurance policy. Many shoppers prefer to avoid permanent insurance policies altogether and instead opt to buy a term life policy and invest the rest of their savings in a retirement account such as an IRA or 401(k).
There is a small minority that may find variable life insurance useful due to its tax-deferred nature, but even in those cases, there are alternatives that may provide a better solution.
For the majority who won’t find variable life insurance useful, a much simpler and cheaper term life insurance policy is the way to go. In general, people should avoid combining insurance with an investment or savings component. If you’re trying to put together a long-term financial strategy that includes a variety of investments, you should speak to a financial advisor or tax expert.
Security you can trust
Yes, we have to include some legalese down here. Policygenius Inc. (DBA Policygenius Insurance Services in California) (“Policygenius”), a Delaware corporation, is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application.
Copyright Policygenius © 2014-2020