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Are you wondering what possible Houston TX variable life insurance policies there are? Are you looking for an insurance plan that will accumulate cash value throughout the policy? Did you want to invest the cash value so it could potentially grow?
Houston TX Variable Life Insurance
Cash value is a common feature among most permanent life insurance plans. Usually, policyholders can use the accumulated cash value as an investment savings account and withdraw money from it.
These investment-esque savings accounts usually earn interest or other investment gains and grow tax-deferred. That is, they’ll accumulate tax-free.
With most of these policies, your premium payments will go into the cash value, toward the cost of insuring you, and toward policy fees and changes. Therefore, only a portion of your premiums becomes part of the cash value.
Each type of policy that does accrue cash value does so differently. Regardless of which you choose, you can get to your cash value with a loan, withdrawal, or surrender.
Insurance Plans with Cash Value
Variable life insurance is a type of permanent life insurance plan. Like other permanent life insurance plans, it’ll last your lifetime and has a savings portion. Unlike other permanent life insurance plans, like whole or universal life policies, variable life insurance plans have an investment component.
It combines the usual death benefits with a savings account. The cash value in the savings account is invested in many sub-accounts that are available in the policy. Each sub-account is akin to a mutual fund, although they’re only available to a variable life insurance policy. Typically, variable life policies will have several sub-accounts to choose from, and some can offer up to 50 different options.
Features of Variable Life Insurance
The appeal of Houston TX variable life insurance plans is the investment element of the policy. It combines death protection with an investment account that will accumulate cash value. Not to mention this cash value comes with a tax advantage.
Like with most investment earnings, it grows tax-deferred. And later down the line, they may not be taxed even if you take money out of the account if you access said cash value correctly through loans while using the account as collateral instead of direct withdrawals.
Variable life insurance plans make a better investment option than whole or universal life plans. There’s a higher potential for higher growth, but you can only invest in the available sub-accounts that come with your policy. So you won’t have access to the variety of choices that are out on the open market.
Do variable life insurance policies sound good so far? Unfortunately, it is a riskier option than other insurance plans. Like with all investments, there’s the chance to lose money depending on the market.
Most people aren’t knowledgeable about the stock market, so they don’t change their investments. The same thing could happen with this. There are too many variables for the average person to manage.
So how do your investments falling affect you? Your account will have less cash value that you can withdraw from in the future. However, the more significant issue is that, depending on the policy, your death benefits may also decrease if your investments aren’t doing so great. Of course, some policies will guarantee that your death benefits won’t fall below a minimum level.
Variable Universal Life Insurance
Now, what if you enjoy the investment options but want a bit more stability with them? There’s something called variable universal life insurance plans. If it sounds like it’s a combination of variable life insurance and universal life insurance, you’d be correct.
Universal life insurance is another type of permanent life insurance, like whole life insurance, but with more flexibility. It offers the chance to change your premium and death benefit amounts without getting a new policy.
Although you’ll need to pay a minimum premium to keep the policy active, you can use the accumulated cash value to pay the premium. What does that mean? Depending on how much has accumulated, you can skip paying the premium until it depletes.
How does that play into variable universal life insurance plans? Pulling from how universal life insurance plans work, you can adjust the premium and death benefit amounts to suit your needs.
From the variable life insurance plans, you can still invest the cash value accumulated in your policy. Like with variable plans, you can still only invest in the sub-accounts available with your policy. And since they’re still investments, you have the potential for unlimited growth but also lose value.
Is a variable life insurance plan right for you?
If you’re looking for an insurance policy that will protect you and your family for a lifetime, variable life insurance plans are a possible option. Variable life insurance plans are among the several permanent life insurances available.
What if you want to invest the accumulated cash value so it can continue growing for later? If that’s so, variable life insurance plans are a viable option. You’ll be able to invest the cash value back into mutual fund-like sub-accounts attached to the policy so that it can grow more than other permanent life insurance plans. However, since these investments are like stocks, they’re liable to decreasing in value as well.
However, if you enjoy that potential growth but want some stability, variable universal life insurance plans are an option. Like with variable insurance plans, your cash value can grow limitlessly and fall just as far. However, it also takes parts from a traditional universal life insurance plan, giving flexibility in your death benefits and premium.
Regardless of which one you choose that suits you and your family, you may want to sit down with an insurance agent to thoroughly discuss all the options available to you. Any expert with Best Life Insurance Houston Agency can answer any questions regarding Houston TX variable life insurance plans.
Houston, TX Fun Facts:
- Houston is the 4th most populous city in the United States.
- The total area of Houston can contain San Francisco, New York City, and Boston all at the same time.
- Houston is the only major U.S. city without zoning ordinances, which allows for more flexibility in land use planning.
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