Posts tagged ‘death benefit’

Variable Universal Life Insurance

When it comes to taking out life insurance, there are many different options available. Term life insurance is one of the easiest options to understand but does not always offer the best benefits. This is where variable universal life insurance comes in. This works differently to term life insurance and offers a number of pros and cons. Before taking this type of insurance out, you need to look into the pros and cons to make sure that it is exactly the best for the situation.

What Is Variable Universal Life Insurance?

This type of insurance works very differently when compared to term life insurance. First of all, the death benefit from the insurance can differ, depending on the underlying investments that are made. This is not a case of just paying in a set amount each month and getting a set amount back; it is about making investments and getting the payout dependent on those investments.

By basing the investment on the stock market, there is a chance of getting significantly more than any other type of life insurance, which is what is most appealing to it. However, there are high risks with investing in the stock market and you will need to keep an eye on it carefully. Of course, something that this life insurance will guarantee is a minimum payout, just in case your death is when the stocks are down.

The Pros

The main benefit to taking out variable universal life insurance is the fact that the death benefit is potentially much higher than any other type. It is based on the stock market and your choice of investment. If that is high when you die, then you could find that your family will end up with enough money to cover your funeral expenses and live in stability.

While there is the risk of the stock market suffering, you set up a minimum amount that your family will receive. This means that you can make sure that they will be financially stable enough, whether that is to clear the mortgage or afford college.

There is also the chance to increase the amount of money that it put into the insurance, which will increase the amount that could potentially be paid out. This type of insurance offers much more flexibility than any other type.

By being tied to the stock market and investments, there is less risk that the cost of the policy will decrease due to inflation or the cost of living.

At the same time, you can take money out of the life insurance when you need to, which is something that you are able to do with the stock market. This means that you do not need to worry about how much money you are earning each month, which can change over the term of a life insurance policy.

The Cons

The first important factor to mention is that variable universal life insurance quotes costs much more than any other type of life insurance policy. This is due to the nature of it. The premiums need to cover the cost of many different aspects, including the insurance, charges and any expenses.

This is tied in with the stock market and you will need to understand about the risks of the stock market and how to use it to your advantage. If you have no understanding, you risk making mistakes in your investment and losing out on the money that you put in. You will need to manage the investments and will need to keep an eye on the stocks that are around.

This is often better for those who are younger. The stock market is a long term investment option and can take decades to see the investment pay off. Of course, the older you are, the more experience you may have with stocks and know more about it, which is also something to consider.

There are many different types of life insurance policies available and variable universal life insurance is just one of them. It is very important to look into the pros and cons of each one to make sure that you get the best option for your family. If you are willing to take risks, this type of life insurance may pay off as being the best.