Variable Life Insurance

Variable life insurance is similar to universal life insurance. As the cash value of your policy accumulates, you can modify your policy's death benefit.

The two main differences between variable and universal life insurance are: 1) Variable life does not have flexible premiums, and 2) Variable life allows you to invest in riskier investments such as stocks, bonds, and mutual funds. (Universal life insurance is generally restricted to safe investments that earn a lower rate of return.)

As a result of the riskier investments, your cash value is likely to fluctuate more with a variable life insurance policy. This fluctuation means your death benefit is more likely to change from one month to the next. You may share in the upside potential, but you also share in any downside potential.

Before buying a variable life insurance policy, you should be aware of the risks involved in investing. It pays to be familiar with basic investment principles. The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax adviser.