I think you are confusing the two terms of a “trust” and a insurance policy within a trust.

Variable Life Insurance Policy
A form of whole life insurance, variable life insurance provides permanent protection to the beneficiary upon the death of the policy holder. This type of insurance is generally the most expensive type of cash-value insurance because it allows you to allocate a portion of your premium dollars to a separate account comprised of various instruments and investment funds within the insurance company’s portfolio such stocks, bonds, equity funds, money market funds and bond funds. In addition, because of investment risks, variable policies are considered securities contracts and are regulated under the federal securities laws; therefore, they must be sold with a prospectus.

The major advantage to variable policies is that they allow you to participate in various types of investment options while not being taxed on your earnings (until you surrender the policy). You can also apply the interest earned on these investments toward the premiums, potentially lowering the amount you pay. However, due to investment risks, when the invested funds perform poorly, less money is available to pay the premiums, meaning that you may have to pay more than you can afford to keep the policy in force. Poor fund performance also means that the cash and/or death benefit may decline, though never below a defined level. Also, you cannot withdraw from the cash value during your lifetime.

Variable annuities offer the investor a range of investment choices and the value of your investment will depend on the investment options you choose. These options comprise mostly stocks, bonds, money market instruments or some combination of the three. Though variable annuities are invested in mutual funds they are not to be considered mutual funds because:

1. You receive periodic payments for the rest of your life or your designated beneficiary does.

2. There is a death benefit attached to variable annuities that guarantees that your beneficiary will receive a specified amount in the event of your death.

3. Variable annuities have the advantage of being tax deferred; no income tax is levied on income and investment gains until you actually start withdrawing your money.

One of the biggest financial risks most people face is not volatile market conditions and the loss of savings but longevity. ‘Will you outlive your money?’ has become a burning issue for most people. Preparing for a long and happy retirement life is of great importance and with it comes choosing the best variable annuities to see you safely through.

One type of investment is the immediate annuity plan – you give the insurer an amount of money and the company will pay you an agreed upon amount of money every month for the duration of your life. This is a good scheme provided your insurer stays solvent and is able to make the payments over your life span. If you break the contract you could end up paying a very large penalty, so choose wisely.

When choosing the best variable annuities you need to base your selection on one main principle – the company should be a long standing one of high repute. Insurers should be able to offer you immediate annuity options and have an ‘A’ rating (for financial safety) from Moody’s Standard and Poor’s among others. Make sure the company you choose has ratings from at least 2-3 services that provide the ratings. Then you consider the size of the monthly payouts; women are expected to have a longer life expectancy ratio hence the payouts are smaller for them. You could add inflation riders to your annuities to guarantee yield return but need to be sure it is a good option for you.

One important tip to bear in mind when choosing best variable annuities is not to invest more than $100000 with any one insurer. The reason: the state guaranty fund covers the annuitant in case the company folds up to a limit of $100000, hence it does not make sense to invest more money with any one insurer.

Variable life insurance is a kind of retirement plan with standard and optional features. It offers unique combination that can help provide you in your retirement plan today and tomorrow. That is if you understand the contract or policy.

This variable annuities offer wide range of investment choices. A professional money management is very important with this type of insurance. This can help provide for your beneficiaries with standard death benefit when you died while still saving for retirement. Some even offer additional benefit, at an additional fee.

Variable annuities and its features benefit in some companies:

• Participation in the growth potential of the stock market
• Protection features that can insure against market risk for additional fee
• Tax advantages including tax deferral
• Opportunity for a fixed rate return
• Beneficiary protection
• Flexible income options which include the potential rising stream of income
• Predictable Income Stream
• Guaranteed life time income
• Liquidity – which allow for withdrawals

Since as you can see, variable annuity is designed specifically as long term retirement savings where in the insurance product whose gain accumulates tax-deferred.

There are lots of cases filed in the court to this kind of life insurance, the variable annuity for the reason, the individual who have this kind of life insurance have not really fully understood the contract.

So it is very important to read and understand what is in the contract and if ever you need some explanation for you to understand, then ask. This variable annuity is good for the right person, a person who has some knowledge. For example you have to know how to calculate the interest rates.

There are many insurance companies who offer this kind of insurance, fixed and variable annuities. What is important is you have to know the company well, how they serve their customer and most especially the years they were on this kind of business with reputable records.

Although different insurance companies differ in rates, features of their insurance, interest rates, etc. This type of insurance needs some monitoring time to time since it’s an investment. There are also some companies offer additional benefits.

Extreme planning is needed for variable annuity. Sometimes no matter how reputable the companies are, still they fail sometimes. So be sure you have some knowledge of variable annuity life insurance. You can ask your friend those who have this kind of life insurance just to lighten up your mind.

Do some research regarding this type of insurance since for sure, you have time to explore and do research if you are interested to have this type of life insurance. One thing good in this kind of life insurance, variable annuities is that, it allows you to take advantage to any potential market appreciation on a tax deferred basis. Just be sure that it is managed by professional.

For further knowledge to variable annuities, you can log in through the internet and do some research and explore the sites where variable annuity life insurance are offer. Learn more before jumping to this type of life insurance.

Before going any further with this article it is important that readers understand clearly that investments in annuities are safe thanks to the annuity insurance provided by the state guarantee fund. Annuities are created and marketed by insurance companies and the state guarantee fund protects your investment up to a maximum amount of $100000 with the insurance company, in the event the company goes bankrupt.

All through our working lives, we are hard at work saving for a comfortable retired life. However, the reality is the fear of living too long and running out of money can and does plague us, unless we are part of the Fortune 500 list. How do we take care of the retirement stage of our lives successfully? In order to find out how, read this article on the National Association of Variable Annuities, which will help you make informed decisions on how to invest for retirement.

The national Association of Variable Annuities (NAVA) was founded in 1991 and seeks to actively promote the knowledge of variable annuities as well as create awareness about variable life insurance products among its members and the public at large. The organization also helps to create awareness about how investing in variable annuities helps to generate long term tax deferred growth. It is advisable when planning your retirement plan to consider this option and to make use of the online calculator provided to see how variable annuities can fit into your retirement plans and benefit you the most.

A variable annuity is a contract between you and the insurance company; you give the insurance company an amount of money upfront or make installment payments for a set period of time. The insurance company guarantees you a monthly payment for the rest of your life. During the 1980s and 1990s critics of the variable annuities investment plans enjoyed trashing the concept, predicting its early demise and claiming the product’s death benefit as absolutely worthless and not worth consideration. During the period 2001 to 2003 insurance companies paid out approximately 2.8 billion dollars more than the value of annuities.

According to the National Association of Variable Annuities, this was one of the clearest indicators ever of the value of guaranteed payments. The basic death benefit which is one of the features of the product ensures that the beneficiaries of the investor receive either the purchase payment or market value of the annuity, whichever is higher.

According to NAVA most variable annuities have begun offering enhanced death benefits, allowing investors to lock in market gains periodically to protect against future volatile market conditions. The insurance protection these annuities enjoy inspires confidence in the investor to stay invested.

For the amount of death benefit one can purchase Whole Life, as life insurance is way overpriced.

• $500,000 worth of Whole Life Coverage = $14,000 per year
• $500,000 worth of Term Coverage = $300 per year

Difference of $13,700 extra you are paying to get Permanent Life coverage.

What is the difference between Term Life Insurance vs Whole Life Insurance?

Term Insurance is for a set term or time period from 1 year and usually up to 30 years.

Whole Life is life coverage for the rest of your life PLUS an “investment portion” held by the life insurance company.

With Term Coverage there is no investment portion. Like car insurance it is pure insurance. That’s it.

Do you ever see an auto insurance agent try to add an “investment” to your automobile coverage? No you do not. It doesn’t make sense at all. What for? It is the same thing with life insurance. What for?

With Whole life coverage it is Term insurance + Investment Portion with you paying premiums for the rest of your life.

1st thing’s first. What do you need life coverage for?

You need it to protect your family that depends on the breadwinner’s income whether it be the husband working, the wife working or both parents working to bring money in to take care of the family. Life Coverage is there so that if something happens to the income provider the income can still come in and the family isn’t financially devastated.

Once the children are grown up and making their own income they are no longer dependent on the parent(s) income. At that time you no longer need it for that purpose.

So why keep paying premiums for the rest of your life?

Some people believe that it will make their family rich but that is further from the truth. Don’t throw away your money like that. You are better off buying term coverage only for the time period for which it is needed.

Besides, the older you get, the premiums are going to skyrocket. You only purchase it when you need to protect your family.

Save your money and/or invest it wisely.

But what about the investment portion when you buy whole life insurance?

It is sold to you as an investment for retirement / children college fund / emergency fund in which it will grow while being held by the company and you can “BORROW” from it and pay it back with interest.

BORROW from my investment? Isn’t it my money?

No, as long as your policy is active you can only borrow from it AND pay the life company back with interest. They call it CASH VALUE. Sounds like a catchy and wonderful phrase right?

The real ripoff? You first year of premium payments you get NO CASH VALUE. That’s right. The money that was supposed to go to your investment portion only starts the 2nd year. The first year it goes to the insurance agent commission and the insurance company. Your money? Yeah right. Their money.

BOTTOM LINE? Buy Term Coverage only when you need it (ONLY when you have dependents)

Take the money that you would save and put it into a retirement account which YOU CONTROL 100%. Your money fully controlled by you to invest it anywhere you choose or just leave it in cash.and STAY AWAY from Whole Life / Permanent / Universal Life / Variable Universal Insurance or any type of life insurance that has a savings or investment tied to it.

You may want whole life insurance but did you know that it is only one type of permanent life insurance? Here’s a brief overview of the different types to help you when shopping for a quote.

Unlike term life insurance, permanent life insurance doesn’t have a set term that will end and your beneficiaries no longer get a death benefit. What’s more, permanent life insurance policies can build up cash value, money that you can receive before you die, and thus are also considered a supplementary investment vehicle. The basic types of permanent life insurance are whole life insurance, universal life insurance and variable life insurance.

With whole life insurance you pay a set premium for the life of the policy. The amount of your death benefit also stays the same. The savings portion is usually a dividend.

Universal life, also known as adjustable life insurance, is a more flexible policy in that you can increase the death benefit as long as you pass a medical exam. Your cash value typically grows at money market interest rates and after awhile can be used to help offset your premium.

Variable life pays a death benefit and also accumulates cash value based on investing in stocks, bonds and mutual funds. Because of this, there is an element of risk.

Permanent life insurance usually costs more than term life insurance because of these features. After you’ve decided what type of insurance is best for your situation, make sure to get several comparison quotes as rates can vary from one company to another. You can get quotes online from either the life insurance companies’ Web sites directly, or through a Web site that allows you to get several comparison quotes at once.

Before you buy, you’ll want to thoroughly understand the policy and don’t be afraid to ask your agent or the company representative questions.

Many variable life insurance policies allow for a hold on the value of the policy. This hold ensures that the total value of the policy will not fall below a certain amount. This amount on hold only pertains to the death benefit and has nothing to do with the total cash value of the policy. The cash value of the policy, which is the amount of money the holder can draw upon during their lifetime, will have no cash minimum.

The Benefits of a Variable Life Insurance Policy

This insurance policy allows the holder to invest untaxed monies. These monies will remain untaxed until the life insurance policy is used. Potentially, any monies earned by the investments can be used to lower the premiums on the life insurance policy.

The Potential Hazards of a Variable Life Insurance Policy

This type of life insurance policy holds a certain amount of risk. As with any monetary investment, the cash value is not guaranteed. Thus, gambling with the cash value of the variable life insurance policy can render the policy worthless aside from the guaranteed death benefit. The death benefits as stated when the holder begins the policy may also be reduced. Variable life insurance companies will offer a guaranteed death benefit, but this amount may be significantly lower than the amount obtained at the inception of the policy.

This is a policy which holds the potential for great gains but you can also stand the chance of losing the overall value of the death benefit to the point of a minimum value as we define the variable life insurance policy.

Although you will get the same premium flexibility that a universal life insurance policy offers, you will also enjoy a broader range of investment choices than are available elsewhere.

An Overview of Variable Universal Life Insurance

This type of insurance policy offers you a lot of flexibility. Once you’ve made your initial payment you can then make additional payments in any amount and at any time you want. However, although your payments are flexible they still are subject to specific maximum and minimum amounts.

And if you don’t make any payments your policy will be in effect for as long as you have enough cash value in it to cover your monthly insurance charges.

Depending on your aversion to risk, you can invest your premiums into one or more of the investment portfolios that the plan offers. These investment portfolios offer you the potential for long term growth along with tax deferred earnings. You also can enjoy the flexibility of making tax free transfers from one portfolio to another.

And your options don’t stop there because you also have a choice of death benefits. Either you can provide a level benefit that equals the original face amount of your policy or you may opt for a variable benefit. The variable benefit will be the original face amount of the policy and your policy account value.

What are the Advantages of a Variable Universal Life Insurance Policy?

There are three major benefits that a variable universal policy offers.

1. Because you have so many different investment portfolios to choose from you have the greatest potential for growth – more than with any other kind of life insurance policy.

2. Within limits you determine when you make your premium payments and the amount you pay.

3. You have the flexibility of increasing or decreasing the face amount of your policy.

What are the Disadvantages of a Variable Universal Life Insurance Policy?

Risk goes hand-in-hand with the flexibility this plan offers.

1. If you make poor investment choices you may have to increase the amount you pay in premiums.

2. If your investment choices do not perform as you anticipate it is possible that your insurance policy will lapse.

3. You run the risk of having problems funding your policy because of the flexibility it permits. Since you can skip payments and may experience negative returns there is the potential of losing the money you have invested along with the insurance coverage that you want.

Because of the inherent risk involved with this type of an insurance program it would be in your best interest to consult with a qualified professional before making your investment. And make sure to read the prospectus in its entirety. Also be sure to have all of your questions answered before investing or sending any money.

Reader’s Question:

Can I get cheap smoker life insurance in Houston? Why or why not?  How do rates compare between term and permanent and between smoker and non smoker?

Sly

Houston Texas

A cheap smoker life insurance is relative.  Why relative?  Because a smoker’s rates will depend on how often he smokes and how many sticks per day is a person able to use.  Two smokers will not necessarily have the same rate.  The rates will also depend on the company providing the quotes.  Some companies are cautious and have a stricter rule when rating smokers.  Others will exercise more leniency.  In other words, a cheap smoker life insurance can actually be taken to mean a plan that is the most affordable among the different coverage offered by different companies.  The operative word is affordable because a smoker will be charged higher than a person who does not smoke.

Between a term and permanent plan, the term will be charged with lower premiums because it does not operate for life.  Even if the person is non-smoker, his term plan rates will still be lower because of the time factor.  Actual rates between the two and will vary according to age.  For a 30-year old man who smokes, a cheap smoker life insurance is about $44 per month.  That is 60% more than the $19 rate of a non-smoker.  For a smoker’s life plan quote, the most affordable rate could be in the $200 level.  This is also on a monthly basis.  The coverage is $300,000 for both quotes.   Half of that will be charged to non-smokers of the same age and for the same coverage.  As you can see, there is a very wide gap between term and life insurances and between smokers and non-smokers.

It is up to you to decide which works best for you.  If you need help on customizing a plan, it is advisable to talk to an experienced insurance agent in Houston who can help you calculate the right cost for you budget, as well as, the right type of life plan.

Okay, so term life insurance is more affordable than whole life, but it seems we are pinching pennies more and more the economy seeming to get worse. How can I afford a life insurance premium even if it is the less expensive term life when I am trying to support a family of four?

Yan

Houston ,TX

Yan,
I agree with you that the economy seems to be getting worse, but I think you need to think about life insurance in a different way. You should first count the cost of not having a life insurance policy. What would happen to your family? Is your mortgage paid off? Do you have debt? If your answer to any of these is yes then you would be leaving this financial burden to them in an already depressed economy.

There are other things to consider as well. If your death was due to a terminal illness then there would be medical bills. Funerals too are very expensive today costing anywhere from $2,000-$15,000.

Now imagine all of these financial burdens being taken care of for the people you love most. That would give them the chance to stay in the home they know. Your children could continue in the school they currently attend. Your wife would be able to continue on with life with a gift from you, a reminder of how much you cared for her and your children. That is priceless.

So shop around and get a good price. The life insurance market today is very competitive and the rates are too. Get several quotes so you can be assured you got the best rate. Hope this helps you get a lower rate on Houston life insurance.