Variable life insurance is a form of whole life insurance in which a part of your premium payment is allocated to a portfolio of investments held by the insurance company, according to your choice. While a minimum death benefit is usually guaranteed, the risk is with the policyholder and if your investments perform poorly the death benefit payable and the cash value of the policy can decline. This could mean you find yourself having to pay more than you can afford to keep the policy in force.

If the investments perform well, interest earned can be allocated against premiums to reduce the amount paid. Cash value and death benefit can also increase. Because Variable life insurance carries an investment risk it is regarded as securities under federal Securities Laws and must be sold with a prospectus.

Care must be taken when investing in a Variable life insurance policy, and guidance should be sought from an experienced professional agent. They will help you get the policy that promises the best performance, but remember the risk is ultimately yours.