Variable life insurance provides death benefits and cash values that differ with the performance of a portfolio of underlying investment options. The premiums for variable life insurance policies are made to remain stable over time.
These policies build up cash values on a tax-deferred basis with the chance for higher rates of return than traditional whole life policies. Variable life insurance policies' cash values differ with the investment results of funds chosen by the policy owner.
There are many choices available to the policy owner when choosing an investment and they include: stock, bond and money market funds. Another option is a fixed account with a guaranteed interest rate.
People who are willing to take a risk in order to obtain greater returns will likely fit well with this type of insurance. Good investment strategy would provide the potential for higher cash values and death benefits. If the specified investments perform inadequately, cash values and death benefits would drop accordingly.