Variable life insurance is like attaching a life insurance policy to your stock portfolio. Your portfolio may contain stocks, bonds, money market etc. which would give you the tremendous opportunity to earn awesome profits on your investments. You will choose where your money is invested, but as a result you also bear the risk. It is therefore incumbent on you to do some research before you get started.

A variable life insurance policy has a guaranteed death benefit and accumulates a cash value which is based on an assumed minimum interest rate of about 4%. This, however, may vary from company to company. Your investment will be separate and apart from your life insurance policy. You make the decision as to how much is applied to investment and how much to pay life insurance premiums. You may invest in stocks bonds, money market or any other applicable investment with the sole purpose of getting the highest return possible on your money.

Any quotation you get for a variable life insurance policy must be accompanied by a prospectus which should be carefully scrutinized by you. These policies are regulated by the Securities And Exchange Commission and The Commissioner of Insurance of the state in which the policy is issued. The agent must have an NASD, National Association Of Securities Dealers license, in addition to his regular life insurance license, to sell these policies.

You are allowed to take a loan from your variable life insurance policy. This loan, however, reduces the face amount of the policy as well as the cash value, by the amount of the loan. The normal assumption is that when you repay the loan the cash value will revert to what it was before and the face amount also. That is not necessarily so. Bear in mind that while the loan was outstanding, the amount of the loan was not there to invest, so your profit will be less that amount that would have been earned on that money. Now, you attempt to recover your life insurance; you may be able to do so in most cases, however, if your health should change you may not be allowed to recover the life insurance portion.