variable life insurance

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Variable Life Insurance

A whole life insurance policy in which some, or all, of the premium is allocated to a separate account, which is invested in common stock. If the common stock portfolio does well, the death benefit increases accordingly; if it performs poorly it decreases, though all variable life insurance policies have a benefit floor. A significant advantage to a variable life insurance policy is the fact that the policyholder does not have to pay taxes on earnings from the portfolio until it is cashed in, usually through death. In the United States, variable life insurance policies are considered securities contracts and, as such, they are regulated by federal law.
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variable life insurance

Life insurance that relates benefits to the value of a separate investment account underlying the annuity. This insurance is designed to prevent erosion of benefits by inflation. The size of the benefits will vary.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Variable life insurance.

Variable life insurance policies are cash-value policies that allow you to choose how your premium is invested from among a package of alternatives offered by the insurer.

In many variable life policies, the face value of your policy depends on how well the investments you've chosen are performing.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Some of these are bonds, stocks, pooled funds, and variable life insurance policies. Educate yourself to understand these options, and choose which ones are applicable to your goals.
Jeffrey Webber, a venture capital investor and private equity fund manager, purchased two frozen Section 7702(a)-compliant private placement variable life insurance policies from a Cayman Islands insurance company through a grantor trust.
In 1999, Webber contributed $700,000 to a grantor trust in which the trustee purchased two "Flexible Premium Restricted Lifetime Benefit Variable Life Insurance Policies" (the policies) from Lighthouse, a life insurance company based in the Cayman Islands.
Beginning in the late 1970s, the 1RS issued a series of revenue rulings in an attempt to clarify the parameters under which a policy owner will be treated as the actual owner of the assets of a variable life insurance policy or a deferred variable annuity (virtually all of the rulings related initially to deferred variable annuities, but have now been extended to variable life insurance policies) on account of the level of the policy owner's control over investments within a segregated account.
Besides VAs, sales of variable life insurance policies have slowed significantly because of the prolonged period of low interest rates.
The key differentiator with a term life insurance policy compared to whole life insurance, universal life insurance and variable life insurance policies is there is no cash accrual or investment component.
FINRA issued Notice 06-38 in 2006 which contains six "best practices" standards broker-dealers and registered representatives must follow when supervising the settlement of variable life insurance policies. These "best practice" standards cover a variety of issues, including (1) suitability, (2) due diligence, (3) best execution, (4) training and supervision, (5) compensation, and (6) life settlement syndications.
Variable life insurance policies are subject to the same income, estate, gift, and generation-skipping transfer taxation rules as all other types of life insurance policies.
* Anyone who sells variable life insurance policies or variable annuities is required to have an NASD license, along with an insurance license.
Initially, it will sell investment-oriented products for individuals known as variable life insurance policies but the product line will be expanded to cover medical and casualty insurance products, Mitsui Mutual said.
Similarly, the cash value of whole life and variable life insurance policies is not included on federal financial aid forms.

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