Retirement & Financial Planning Report

Tax Savings Idea –Variable Life Insurance

With variable life insurance you can invest in mutual funds and never pay taxes.


With variable life insurance, a form of permanent (cash value) life insurance, you allocate your premium payments among subaccounts that resemble mutual funds. You enjoy tax-free buildup even if you move money from one sub account to another.

Although there may be many subaccounts to choose among, with variable life insurance you should emphasize the subaccounts resembling stock funds rather than bond funds because stocks likely will provide the greatest long-term payoff.

Typically, you’ll pay life insurance premiums periodically, which is a form of dollar-cost averaging into the stock market. Over a time horizon of 15 years or longer, well-managed stock subaccounts should ride out any market corrections and deliver substantial returns to investors.

If you enjoy strong sub account performance you can maintain the same premium payments and see your cash value as well as the policy’s death benefits rise. Alternatively, you can trim premium payments in the future yet still sustain insurance coverage.