Recently, a few of our clients have asked us to review variable life insurance proposals they have received. As with any investment product, life insurance policy or otherwise, there are some key issues that need to be addressed prior to purchase. The first key point to address is whether your retirement horizon is in the immediate or near future or a long time down the road.
Time is the key element here.
If your retirement horizon is less than a five to ten year period, these policies are not for you. Variable life insurance combines traditional whole life insurance with investments in mutual funds. There are two key characteristics to these policies. The first characteristic is there is no guaranteed minimum cash value. At any time, the cash value in the policy is based on the market value of the assets invested in the underlying mutual funds.