The choice to purchase variable life insurance always involves one difficult question that many people sometimes forget: how exactly do you get variable life. Variable life is a far cry from whole or term life, and the requirements for handling these accounts are different as well. Because variable life accounts involve investment portfolios and securities activity, not every insurance agent is qualified to manage these types of account. In fact, only agents who have completed the examination with the National Association of Securities Dealers are licensed to sell and manage variable life policies.
Finding These Agents
The hard part can be finding these licensed agents. While the well-known, larger life insurance companies all have such agents in their employment, many of the lesser known companies do not. The only way to know for sure whether any given company retains such agents in their employment is to ask. You can do so by either researching the life insurance company and its offerings on the internet or by calling to obtain information. The licensing restriction may limit the number of companies from which you can choose your policy.
What to Look For
Expect a variety of options when you begin to research variable life policies. All variable life policies come with the freedom to invest your own cash account, though some companies offer more guidance than others when it comes to the types of investments you should make. If you are comfortable handling your own investments without outside input, then you should feel free to do so. If not, it is a good idea to find a company that offers at least some form of instruction or assistance in managing the investment side of the policy.
Regardless of which option you select, you will be responsible for your own profits and losses. That means that the potential for a complete loss of the cash portion of your policy is ever-present, particularly if you make unnecessarily risky investments that place that capital in jeopardy. Even if you lose the entirety of the cash portion of your savings investment, however, you will still have the actual insurance component of the policy intact. You will, of course, have to begin the investment side anew. Keep in mind, the best life insurance policy for you might not be the best policy for everyone else.
Benefits
One thing you can count on is that the insurance company itself will be making very conservative investment choices. Their interest is in seeing the larger portions of the premiums they collect accrue steadily in value over time rather than being subject to the inconsistencies of the markets. Another tremendous benefit is the fact that your variable life policy gains will be free of capital gains tax.
As with any complex financial transaction, the decision to acquire variable life insurance is one that should only be made in consultation with insurance agents and your other financial advisors. The potential for both short and long term gains with these types of policies is self-evident, but the added risk associated with variable life makes it well worth your while to discuss the issue with professionals prior to purchasing a policy.
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