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Variable Life is another interest-sensitive form of insurance. The purpose of variable life is to combine the protection features of life insurance with the investment potential of common stocks.
The key to this sort of policy is that the death benefit is completely variable. The insured has the option of choosing between several different investment mediums: stock funds, bond funds, real estate funds, or any combination.
These contracts do provide a minimum guaranteed death benefit. The actual death benefit could be higher depending upon the performance of the investment vehicle chosen. Because it does rely upon the market's growth, the cash value also fluctuates. There is absolutely no guarantee to the amount of the cash value. Unlike universal life, the premiums paid are fixed. There are policy provisions that allow loans to be made from the cash value, and once agin never have to be repaid.
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