Policy Types

Variable Life Insurance

The different categories and structures of life insurance products.

Definition

What Is Variable Life Insurance?

Variable life insurance is a form of permanent life insurance in which the policy's cash value is invested in sub-accounts — similar to mutual funds — that the policyholder selects. The cash value fluctuates with investment performance, and the death benefit may also vary (subject to a guaranteed minimum). Unlike whole life or indexed universal life, variable life carries direct investment risk — cash value can decrease significantly in a market downturn. Variable life insurance is classified as a security and requires agents to hold both an insurance license and a securities license (FINRA Series 6 or 7). Variable universal life (VUL) combines the investment features of variable life with the premium flexibility of universal life.

Nevada Context

Variable life products sold in Nevada require agents to hold both Nevada insurance and FINRA securities licenses. Nevada consumers considering variable products should understand that cash value guarantees are limited — market losses are borne by the policyholder.

How It Affects You

Variable life offers the highest growth potential of any life insurance type — but also the most risk. If investment sub-accounts underperform, the policy may require additional premiums to maintain the death benefit. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance carrier.

Real-World Example