How does variable life insurance work ? Why is it considered as risk? I have heard that its profitable though.
Total Comments: 4
Posted: Wed May 09, 2012 07:49 pm Post Subject:
Variable insurance is "risky" because your cash value is directly invested in the stock market through the insurance company's separate account. There are no guarantees that your money will increase in value, and you could lose all of the money you put in.
This is not an explanation of how variable insurance products work, just a superficial response to your last two questions. There are too many product variations to give you a precise answer to "How does variable life insurance work?"
It also depends on whether you are asking about Variable Whole Life or Variable Universal Life.
Posted: Thu May 10, 2012 01:19 pm Post Subject:
Good answer, Max.
Posted: Mon Jun 18, 2012 09:53 am Post Subject:
What Max Herr says. It can be profitable if you know what you're buying into. Don't get permanent life insurance policies if you're not willing to invest the time in reading the fine print and running some numbers for yourself or with a certified agent you trust. You could also look at term-on-a-UL-chassis products. This may offer you greater flexibility and safety than variable universal or variable whole life policies.
Pat Cassidy
Disclaimer: I work for [Link deleted per TOU] and this is my personal opinion.
Posted: Mon Jun 18, 2012 11:32 am Post Subject:
running some numbers for yourself or with a certified agent
Two things wrong with this statement.
1) The vast majority of insurance consumers -- including agents -- have no idea how to "run the numbers", and a statement like this is meaningless. This is a complex and specialized task that only a relative few agents have learned or been taught to do. Agents mostly know only how to input a few numbers into the insurance company's software in order to generate an illustration, and many of them are taught by other agents how to manipulate the numbers in order to make a sale. In a few cases, it's been proved that the insurance companies taught the agents how to manipulate the software.
2) There is no such thing as a "certified" agent. All legitimate agents are licensed by the state(s) in which they transact business (a person's licensing status can easily be verified using the Internet and the state's Dept of Insurance website). But even state licensing does not "certify" that the agent knows what he or she is doing, only that they may have passed a licensing exam somewhere along the way (California quietly lowered its passing score from 70% to 60% five years ago). Some agents pay extra money and take additional courses to obtain professional designations such as Chartered Life Underwriter ("CLU"), but this does not make them "better" than an agent without a CLU designation, only different. There are plenty of CLUs running around who still have no clue as to what they're talking about.
Posted: Wed May 09, 2012 07:49 pm Post Subject:
Variable insurance is "risky" because your cash value is directly invested in the stock market through the insurance company's separate account. There are no guarantees that your money will increase in value, and you could lose all of the money you put in.
This is not an explanation of how variable insurance products work, just a superficial response to your last two questions. There are too many product variations to give you a precise answer to "How does variable life insurance work?"
It also depends on whether you are asking about Variable Whole Life or Variable Universal Life.
Posted: Thu May 10, 2012 01:19 pm Post Subject:
Good answer, Max.
Posted: Mon Jun 18, 2012 09:53 am Post Subject:
What Max Herr says. It can be profitable if you know what you're buying into. Don't get permanent life insurance policies if you're not willing to invest the time in reading the fine print and running some numbers for yourself or with a certified agent you trust. You could also look at term-on-a-UL-chassis products. This may offer you greater flexibility and safety than variable universal or variable whole life policies.
Pat Cassidy
Disclaimer: I work for [Link deleted per TOU] and this is my personal opinion.
Posted: Mon Jun 18, 2012 11:32 am Post Subject:
running some numbers for yourself or with a certified agent
Two things wrong with this statement.
1) The vast majority of insurance consumers -- including agents -- have no idea how to "run the numbers", and a statement like this is meaningless. This is a complex and specialized task that only a relative few agents have learned or been taught to do. Agents mostly know only how to input a few numbers into the insurance company's software in order to generate an illustration, and many of them are taught by other agents how to manipulate the numbers in order to make a sale. In a few cases, it's been proved that the insurance companies taught the agents how to manipulate the software.
2) There is no such thing as a "certified" agent. All legitimate agents are licensed by the state(s) in which they transact business (a person's licensing status can easily be verified using the Internet and the state's Dept of Insurance website). But even state licensing does not "certify" that the agent knows what he or she is doing, only that they may have passed a licensing exam somewhere along the way (California quietly lowered its passing score from 70% to 60% five years ago). Some agents pay extra money and take additional courses to obtain professional designations such as Chartered Life Underwriter ("CLU"), but this does not make them "better" than an agent without a CLU designation, only different. There are plenty of CLUs running around who still have no clue as to what they're talking about.
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