Variable Life Insurance

Definition - What does Variable Life Insurance mean?

Variable life insurance is a type of permanent life insurance that allows the insured person to place a percentage of their premium payments into the insurer's portfolio of investment accounts. Upon the death of the policyholder, the beneficiaries will receive not only death benefits but also the investment returns.

Insuranceopedia explains Variable Life Insurance

The benefit of variable life insurance is that it creates an opportunity for a life insurance policy to generate more money than it would otherwise. The tax-deferred investments may increase the total value of the policy and ultimately benefit a beneficiary more. Furthermore, the interests earned can go toward premiums as well. At the same time, poor fund performance may mean premiums higher than expected and a decline in the cash value or death benefit, though it would not go below a predefined amount. Lastly, this type of cash value policy does not allow for withdrawals during the insured's lifetime.

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