Variable Life Insurance

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Definition of 'Variable Life Insurance'

Variable life insurance is a type of permanent life insurance that offers a variety of investment options. The policy's cash value grows based on the performance of the underlying investments, and the policyholder can choose how much of their premium payments to allocate to the cash value and how much to allocate to the death benefit.

Variable life insurance can be a good option for people who want to have a say in how their money is invested and who are willing to take on some risk in exchange for the potential for higher returns. However, it is important to be aware of the risks involved before purchasing a variable life insurance policy.

One of the biggest risks of variable life insurance is that the cash value can decrease in value. This can happen if the underlying investments perform poorly. If the cash value decreases, the policyholder may not have enough money to pay the premiums on their policy, and the policy could lapse.

Another risk of variable life insurance is that the death benefit can be reduced if the cash value decreases. This is because the death benefit is based on the policy's cash value. If the cash value decreases, the death benefit will also decrease.

Variable life insurance can be a good option for people who are willing to take on some risk in exchange for the potential for higher returns. However, it is important to be aware of the risks involved before purchasing a variable life insurance policy.

Here are some additional things to consider before purchasing a variable life insurance policy:

* How much do you want to invest in the policy?
* How long do you want to keep the policy?
* What are your investment goals?
* How much risk are you willing to take?
* What are your other financial goals?

If you have any questions about variable life insurance, you should talk to a financial advisor.

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