Variable life insurance plan?

[Payne]

What are the pros and cons of having a variable life insurance plan?

[feh]

Variable Life Insurance -- Pros and Cons from Life Insurance .Net

Another reason to be leery of them - the person selling them often gets a large commission, so they may be pushing a product that isn't for you.

[tripods68]

Stay away!!!!!

[jason_simpson]

Although Variable Life policies are generally more expensive than other life policies, they do give the holder more control and flexibility. The potential is there to make very large profits, with tax deferred investment and large tax free lump sums to beneficiaries.

[grand_canyon]

These products usually are money losers for you. This is why the insurance company is in the penthouse of the nicest downtown buildings in each city.

Here's the cons

1) Cost of Insurance (COI) increases as you get older.
2) They usually charge you a 5%+ load on all monies you pay in. You pay sub account fees. The COI is usually high. They have other fees like mortality and expenses (M&E) and contract fees.
3) 50% of all VULs are canceled within 10 years per Consumer Reports.
4) These have some weird tax issues for example turning into a Modified Endowment Contract (MEC).

Supposed pros

1) You can take a loan out against the policy: You have to pay interest on the loan so you're paying interest on your own money.
2) They can't cancel them: True but the COI increases as you get older basically making this very expensive to carry as you get older.
3) You can make money in the investments: See number 2 above, too expensive you'll have to make a high return just to break even.

Bottom line, stay away.