Traditional or Variable Life Insurance, Which Investment Type To Take?

What insurance plan fits your financial criteria, your lifestyle and your tolerance to risk. Let’s take a look at the difference between traditional and variable life insurance to help you make a choice.

 

 

Traditional life insurance

 

  • Samples of traditional life insurance include Term or Temporary and Permanent (Whole Life, Endowment) life insurance. 
  • Provides higher level savings within a specific number of years or it could also be throughout the whole life.
  • It coulda offer dividends and guaranteed cash values for participating policies.
  • No changes can be done nor it is allowed to add premiums in order to raise benefit upon maturity.
  • At the start of the policy, certain protection and death benefits are stipulated and well defined. 
  • Do not incur investment highs and lows on returns and death benefits are assured with an exception to the dividends component.

 

Variable life insurance and investments

 

Forms of variable investments include fixed income securities such as the following:

 

  • cash deposits
  • corporate bonds (debenture, secured, convertible)
  • government bonds (T-bills/T-bonds), 
  • onshore accounts
  • shares/equities
  • common trust funds
  • unit investment trust fund
  • mutual funds
  • real estate. 

 

These forms of investment are more suitable for those who have the tolerance to medium to high risks. It is ideal for those who can take risks and manage slight fluctuations in their investment and policy.

 

Variable life insurance offers a possibility for bigger returns however the risk is high because of volatility in the market. Thus, return on investments is not assured and depends heavily on the market price movements. 

 

Want to know more about variable life insurance? Still confused on which investment type to take? Talk to an experienced financial advisor now to give you the pros and cons of each insurance and investment type.

Posted by: Lauren Kinchela on

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