Variable Life Insurance is a permanent life insurance policy that combines lifelong coverage with the potential for investment growth. Unlike Whole or Universal Life, Variable Life allows you to allocate your policy’s cash value into a selection of investment options—often similar to mutual funds. This gives you the opportunity to grow your policy’s value faster, but it also introduces market risk.
When you purchase a Variable Life policy, your premium covers the cost of insurance and administrative fees, and the rest is invested into sub-accounts—these could include stocks, bonds, or money market funds. The performance of these investments directly affects the growth (or decline) of your cash value.
You’ll still have a guaranteed minimum death benefit, but the cash value and overall policy performance will fluctuate based on the market. Some policies allow you to adjust your death benefit and premium payments, giving you some flexibility—though typically less than Universal Life policies.
You can also borrow against your cash value or make withdrawals, though these may reduce the death benefit or trigger taxes if not managed properly.
It’s best suited for people who want their life insurance to work harder as part of a broader investment strategy. Variable Life Insurance is ideal for:
Because the value of the policy is tied to investment returns, this type of insurance requires a more hands-on approach and the willingness to monitor performance over time.
Variable Life Insurance tends to be one of the most expensive types of life insurance, partly due to its investment structure and management fees. A healthy 30-year-old could expect to pay $250–$500/month or more, depending on coverage level and investment mix.
The policy lasts your entire life, assuming it’s properly funded and the investments don’t underperform to the point of draining your cash value. Poor performance could put your policy at risk of lapsing—so it’s not a “set it and forget it” product.
