This is the most common type of permanent insurance. The premiums for a whole life policy must be paid periodically in the exact amount indicated in the policy. The premiums generally remain constant over the life of the policy. This variation of permanent life insurance allows you, after your initial payment, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums. You also can reduce or increase the amount of the death benefit more easily than under a traditional whole life policy.
Premiums have maximum charges but are based on current mortality and interest assumptions.
The cash value and premium hinge on current interest rates. This type of permanent policy provides death benefits and cash values that vary with the performance of an underlying portfolio of investments. You can choose to allocate your cash value among a variety of mutual fund-like investments, at varying degrees of risk. The cash value of a variable life policy is not guaranteed, and the policyholder bears that risk. There are, however, usually a number of investment options to allow for an individual to match his or her tolerance for risk.