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Variable life insurance includes three main components: lifetime coverage, a death benefit and a cash value. But here’s a closer look at how this insurance product works: Premiums build cash value.
The way cash value grows depends on the specific type of policy — whether it’s whole life, universal life or variable life. These policies differ in how they earn interest, with some offering ...
Variable life insurance tax benefits are essentially an IRS loophole of section 7702 of the tax code. This allows you to put cash (after-tax money) into a policy that is invested in the stock ...
Variable universal life insurance (often shortened to VUL) is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of separate accounts , similar to mutual funds , and the choice of which of the available separate accounts to use is entirely up to the contract owner.
The determination of the cash value, both the base amount and the applicable surrender charge, in the contract can be explicit by determining the value for each surrender date (guaranteed cash values), by referring to the value of specific investments or subject to the discretion of the insurance company, which is often executed to bring cash values in line with values of the investments of ...
Tax-Deferred Cash Value Growth. The cash value of a life insurance policy grows tax-free. As long as the money remains in the policy, the funds are tax-deferred similar to a 401(k) and IRA. You ...