What is variable life insurance?
Variable life insurance (VLI) is a form of permanent life insurance that, as the name suggests, covers the life of the insured. Like other forms of permanent life insurance, VLI policies have an investment component known as a cash value, as well as a guaranteed death benefit in most cases. So as long as you pay your premiums and follow the rules of the policy, your insurance coverage remains in effect.
Variable life insurance is an option for people who are not afraid of risk. The cash value of the NAV policy can be invested, but returns are not guaranteed. When the market is doing well, so can the cash value of your policy. If the market is bearish, your VLI policy may lose value, although many policies have a minimum threshold to protect against negative returns. Depending on the company and the wording of the policy, your earnings may be limited to a certain percentage, with any excess earnings being lost to the insurer.