Variable Life Insurance: High Payouts?

If a variable life insurance policyholder opts for a high value policy and consistently funds the policy, there can be very high payouts. Until 2004, most variable life insurance policies could be purchased with the payout totaling close to $2,000,000. At that time policy premiums fell and new policy types allowed for better payouts, which prompted insurance providers such as MetLife and Prudential Financial to raise the maximum payout.

Raising Premium Payments

To reap the rewards of a high payout, the policyholder needs to pay substantial premiums to build the cash value in his policy. In general, the cost of all permanent life insurance policies are significantly higher than term life insurance. That is because a portion of the premium payment goes not only to paying for the insurance death benefit, but a portion of that is also invested into gaining cash value that can be tapped into at a future time.

Before you sign on the line for a variable life insurance policy with a high payout, you need to honestly asses your current and future earning potential and the overall needs of your family. Sometimes the life insurance policy is not worth the financial effort, especially if the cost negatively impacts your current quality of life.