Why many chose Variable Insurance rather than saving in a bank?

A couple of years back, we are being familiar with traditional life insurance but since a lot of people now is looking for investment, insurance already evolved in different form. Now we already have what we called the "Variable Life Insurance" or VUL.

In Variable Life Insurance, there are two components, one is what we called Face Value, where it is the amount of life insured, another component is what we call, the fund value or the cash you invested. These are separate component. (Terms may differ depending on the company)

The main attraction of Variable Life Insurance is the protection itself. Once the insured passed away, guaranteed that you will get the death benefit plus the fund value. Once the insured is out of the picture, the family continues on living, they can either use the money to pay debt, source of income or to pay their expenses.

I've talked to many clients already and seems to me, that what they are looking for is variable insurance. Regular savings bank commonly will give you a rate of 2 to 2.5% interest rate less taxes. There are also banks that would offer a bit higher interest provided that you won't be having withdrawals for a certain time. Variable Life Insurance will give you higher interest rate, but that will depend on market or investment performance. 

In VUL, you can also withdraw anytime just like a regular savings account. In Savings account, the cash is put in the bank, not invested anywhere. Bank will surely give you an interest provided you meet their requirement or above maintaining balance.  In Variable life insurance, the contribution or your cash is invested in different vehicles like stocks, mutual fund, bonds, money market etc. You control your money where you want it to be. If you are a policy holder, it is you who will choose where to invest it, your financial advisor might give you a suggestion. But choosing the right vehicle for investment depends on your risk appetite.

To summarize, here are some reason why would you consider purchasing a variable life insurance.

Premiums are fixed - One advantage of Variable life insurance is you pay a fix amount of premium, that means you really don't have to worry over time that it will increase. Although there are some option to add more.

Death benefits are Guaranteed - Even if there are fluctuations in the market of your investment component, death benefits are guaranteed. You will have a peace of mind knowing that whatever happen on your investment, the policy's death benefit is available for you.

Variety of Investment Vehicle - There are more options for you to choose from, compared if you have your money in a bank. And these investment vehicles may give you higher yield compared to banks low interest rate.

You can withdraw your money - In case of emergency, you will have a peace of mind given that you know for sure you can withdraw your money at any point in time.

Here are just a few to mention on the benefits of Variable life insurance, for any further questions you can drop me a message or follow our facebook page.