A type of permanent life insurance where the cash value is invested in sub-accounts similar to mutual funds. The cash value and death benefit can fluctuate based on investment performance. Variable life offers higher growth potential but also carries investment risk.
Related Terms
Cash Value
A savings component built into permanent life insurance policies that grows over time on a tax-deferred basis. You can borrow against the cash value, withdraw from it, or surrender the policy for its cash value. Term life insurance does not have a cash value component.
Permanent Life Insurance
Life insurance that provides coverage for your entire lifetime as long as premiums are paid, unlike term life which expires after a set period. Permanent policies include a cash value component and come in several forms: whole life, universal life, and variable life.
Universal Life Insurance
A type of permanent life insurance that offers flexible premiums and an adjustable death benefit. The cash value earns interest at a rate set by the insurer. You can increase or decrease your premium payments and death benefit within certain limits.