Carey Williams

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Variable Whole Life Insurance

Features:

  • Definitely the MOST EXPENSIVE type of life insurance
  • Guarantees a death benefit
  • The growth of cash value is "variable" meaning that the investment of the policy's cash value is left to the policyowner's discretion.  A policy's cash value accrues interest from the policyholder's decisons on where to invest it.  The policyowner is free throughout the life of the policy to realocate his cash value and to divide it up among his investment options as he will.   Insurers employ asset managers to oversee the cash value of variable insurance policies and carry out the changes insrturcted by policy owners.  Therefore, owners of variable policies can expect to pay an extra fee to cover the expenses of these money managers.  The fee is caluclated as a very small percantage of the total cash value being managed.
  • Buyers are attracted to the guaranteed death benefit and the minimal risk of lapse.
  • Whole life policies are designed to mature (usually when the insured reaches 100 years of age).  Upon maturation, the death benefit is paid, and the policy terminates.  This means that Whole Life policies may not actually continue for a lifetime, but they are guaranteed to pay a death benefit.
  • Contrary to Universal Life, to prevent the policy from lapsing, the policy owner MUST make regular payments of a fixed premium, just as though this were a simple Term Life policy



Types of Variable Whole Life Coverage:

  • Level Death Benefit - the death benefit is equal to the face amount.
  • Increasing Death Benefit - pays a death benefit of your policy's face amount...PLUS any accumulated cash value.  The downside is that this option costs more than the Level Death Benefit option

 

Considerations:

  • Your FUTURE INSURABILITY.  Get approved now while you are healthy and future potential health problems that may arise will not jeopardize your ability to obtain future life insurance coverage.  In contrast for example IF you had a TERM POLICY...you are healthy now but later on during your policy term a serious health condition develops that ultimately makes you a higher risk to insurance companies.  If you were covered by a TERM POLICY that expires at some point, you will have to face higher rates OR if your condition is very serious...the possibility that no insurance company will be willing to offer you new coverage at all!  So, if this is a potential concern, then I strongly urge people to consider a permanent style of life insurance such as Whole Life to protect your future insurability  
  • If you already have some health issues, you may be able to get a certain level of coverage through your employer on a  "Guarantee Issue" basis at attractive rates.  However, if you leave this employer, you may not be able to take this coverage with you
  • Higher fees can reduce investment returns
  • A downside to Variable Whole Life Insurance is that there is a possibility of a negative return on investment - losing cash value!







Reasons to Purchase Variable Whole Life Insurance: 

  • Cover debts / liabilities (e.g. home mortgage / funeral costs).
  • Maintain a spouse's standard of living.
  • Provide income for children until they become adults
  • Pay for daycare, schooling or college education.
  • Fund a Buy/Sell Agreement for a business so the remaining business partner(s) can continue running the business
  • Protect a business from substantial income loss in the untimely death of a key employee.
  • Protect an Estate against liquidation
  • Tax Advantaged Investment Vehicle
  • Funding a Retirement Plan



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