Loans and withdrawals will reduce the policy's cash value and death benefit. However, fees and penalties may apply. Because the policyholder assumes the investment risk, it is essential to purchase a variable life policy from an established company with professional fund managers who have a proven track record. A fixed account, which provides a competitive interest rate and safety of principal. A fixed account is advantageous for investors who may desire the option of a more conservative investment approach now, or in the future.
Many companies even offer a guaranteed minimum rate of return.
Finally, and perhaps most importantly, individuals should examine the insurance company's financial quality. Like all life insurance, variable life should be viewed first as life insurance protection and then as a long-term investment. For many people looking for an effective way to build wealth and provide death benefit protection for their family, variable life may be the answer. Harvey C. Timmer is an agent in the Miami office of John Hancock Financial Services, which provides a broad range of financial services, including life insurance, annuities and mutual funds. Registered products, including variable life insurance, are sold by prospectus.