Which is not a characteristic of a variable life policy?

Which of the following is not a characteristic of a variable universal policy? The variable universal life policy DOES have cash value that varies with the performance of the investment. The correct answer is: It has no cash value.

What are the elements of a variable life policy?

Variable life insurance includes two components: a life insurance death benefit and a cash value account that is invested in various funds, usually mutual funds. The money from your insurance premium is used in a few ways.

Which of the following is a true characteristic of a variable universal life policy?

The correct answer is: FINRA representative license and Life license. Which of the following is true with regards to a Variable Universal life policy? Variable Universal Life Polices allow the policyowner to control the investment of cash values and select the timing and amount of premium payments.

What are the benefits of variable life insurance?

Variable life insurance, also called variable appreciable life insurance, provides lifelong coverage as well as a cash value account. Variable life insurance policies have higher upside potential of earning cash than other permanent life insurance policies.

Which statement describes a variable life insurance policy?

A variable life policy invests premiums in a separate account holding a designated mutual fund, usually a growth fund. The insurance company gives a minimum guaranteed death benefit, which cannot fall below a set amount, regardless of how poorly the separate account performs.

What is the difference between whole life and variable life insurance?

Whole life insurance: With a fixed premium, guaranteed cash value accumulation, and a guaranteed death benefit, this is a popular choice among consumers. Variable Universal life insurance: This provides flexibility in regards to premium payments, savings, and death benefits.

What is a variable insurance policy quizlet?

Variable life policies have a guaranteed minimum death benefit, which is the policy face amount, but the policy cash value is not guaranteed since it is tied to the separate account.

How does a variable whole life policy work?

A variable life insurance policy is a contract between you and an insurance company. It is intended to meet certain insurance needs, investment goals, and tax planning objectives. It is a policy that pays a specified amount to your family or others (your beneficiaries) upon your death.

How does a typical variable life policy grow?

Tax-deferred growth: As with permanent life policies, the cash value of a variable life insurance policy grows on a tax-deferred basis. Many insurers allow premium payments to be paid via the accumulated cash value, which reduces premium payments.

What determines cash value of a variable life policy?

Different Policies Accumulate Cash Value in Different Ways

Universal life policies accumulate cash value based on current interest rates. Variable life policies invest funds in subaccounts, which operate like mutual funds. The cash value grows or falls based on how well these subaccounts perform.

What is a variable life insurance product?

What Is Variable Life Insurance? Variable life insurance is a permanent life insurance product with separate accounts comprised of various instruments and investment funds, such as stocks, bonds, equity funds, money market funds, and bond funds.

Is variable life insurance A security?

Variable life is a type of security that offers fixed premiums and a minimum death benefit. Unlike whole life insurance, its cash value is invested in a portfolio of securities. As the policyholder, you can choose the mix of investments from those the policy offers.

When was variable life insurance introduced?

In fact, when variable universal life policies first became available in 1986, contract owners were able to make very high investments into their policies and received extraordinary tax benefits.

What are the disadvantages of variable universal life insurance?

Cons include the fact that indexed universal life premiums increase as the policyholder gets older. And when the policyholder dies, beneficiaries do not receive the total value of the account. While they do receive the face value of the death benefit, the insurance company holds onto any cash value that’s built up.

What is a variable insurance trust?

The Variable Contracts Trust consists of separate portfolios, each of which is an investment vehicle for variable annuity and variable life insurance contracts offered by the separate accounts of various insurance companies. The portfolios also may be offered to certain qualified pension and retirement plans.

Does variable life insurance have a death benefit?

Both variable life insurance and whole life insurance are forms of permanent coverage. Premiums are level and neither policy can be canceled due to changes in your health. Both types of life insurance also have a death benefit and accumulate cash value on a tax-deferred basis over time.

Who regulates a variable universal life policy?

The Office of Insurance Products (OIP) is responsible for the regulation of variable insurance under the Investment Company Act of 1940.

What type of premium is variable whole life insurance based on?

Variable Whole Life Insurance Is Based on What Type of Premium? Variable life insurance premiums can be fixed or variable, allowing the policyholder to remit a premium payment of no less than what is required to cover fees and expenses (e.g., mortality and expense (M&E) fees).

Who bears the investment risk in variable life?

The policyholder
The policyholder, rather than the insurer, bears all investment risk for a variable life or variable universal life insurance policy.

What is the savings portion of variable life insurance?

For a VUL insurance policy, the savings element consists of separately managed accounts, referred to as “subaccounts.” Each year the life insurer deducts what it needs to cover mortality and administrative costs. The rest remains in the separate accounts to earn further interest.

Can you cancel a VUL?

How do I surrender my VUL policy and what is the impact? If you are the owner of the policy you can call the number on your latest correspondence to request a surrender form. If you decide to surrender your policy: Your policy will have no further value and no death benefit after that date.