Typically, variable life insurance is the most expensive type of cash value life insurance. This is because unlike whole insurance, variable insurance gives you total control over your investments - what ever kind they may be money market funds, stocks, or bonds.
The amount of times you can alter and update your investment portfolio is commonly unlimited also, but verify this with your insurance broker as some companies may have different rules.
Since many of the benefits of variable life insurance are totally dependent on your ability to invest productively, you should be completely certain that you understand all risks involved before you purchase this type of policy.
The pros and cons of variable insurance
Along with the freedom that is added with variable life insurance there also comes some risk. Since cash value of the policy depends upon the investments you make, the insurance company will not guarantee a minimum amount for this segment of your variable insurance policy.They are not at all responsible for poor investments you make and, if your investments perform badly, you might be forced to forfeit your savings.
On the other hand, if you invest wisely, your cash value can increase substantially.
There are also considerable tax advantages to variable life insurance policies. The cash value segment is tax-deferred until the policy is redeemed. This means that unlike your own investments, your proceeds are not subjected to capital gains tax even when you change investments - so they grow tax-deferred.