| Variable Life Insurance |  |
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| Variable Life Insurance |
Variable Life Insurance benefits (both the death benefit and earnings)
vary based on the investment performance of the assets in which your
premium payments are invested. You will generally be offered a variety of
investment options (equity, bond, and money market mutual funds). Death
benefits and cash values are directly related to the performance of
investment options you choose. There may be a guaranteed minimum death
benefit; however, you may be required to pay extra for that feature.
There are two kinds of Variable Life Insurance policies. You can buy a
policy which has premiums with set times and amounts, or you can buy a
policy which allows changes in premium payment times and amounts. Unlike
Universal Life Insurance, however, the death benefit will also change
depending on how much you pay in and the performance of the investments
you choose.
The insurance company will give you a "prospectus" which will
explain the policy before you buy it. The company will probably describe
the different investment options in the prospectus, but you may also ask
for additional information about the investment options. Study the
prospectus carefully and be sure to ask the company about anything you
don't understand.
Agents who sell Variable Life Insurance must have both a Massachusetts
insurance agent license and be registered as representatives of a
broker-dealer licensed by the National Association of Securities Dealers (NASD)
and be registered with the Securities and Exchange Commission (SEC) as
well. The SEC also reviews and approves the contents of the prospectus you
will receive, and is currently involved in an effort to make these
prospectuses much more understandable to consumers.
With a Variable Life Insurance policy, there are usually no guarantees. If
the investments you choose lose money, you could find that the value of
your account is far less than the amounts you have paid in.
Although some Variable Life policies may include a minimum guaranteed
death benefit, others do not have this guarantee. It is possible that, if
you were to die when the values were low, the death benefit your
beneficiaries received would be reduced to little or nothing. |
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Source: Massachusetts Department of Insurance
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For information about Lynch Insurance please contact:
William Lynch |
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