Why might investors choose to participate in variable life insurance products?

Investors may choose to participate in variable life insurance products primarily because these products offer a unique combination of life insurance protection and the potential for investment growth. Variable life insurance policies allow policyholders to allocate their premium payments among a variety of investment options, which can range from stocks and bonds to money market accounts. The value of the cash accumulation component of these policies can fluctuate based on the performance of the chosen investments.

This dual benefit is attractive to individuals who are looking for more than just basic life coverage; they seek an opportunity to grow their investment over time while also ensuring financial protection for their beneficiaries. This potential for higher returns, linked to investment performance, distinguishes variable life insurance from more traditional life insurance products, which do not typically offer significant growth potential.

In contrast, options such as eliminating risk entirely or obtaining only guaranteed low returns do not align with the core appeal of variable life products, which embrace market fluctuations to potentially enhance overall returns. Additionally, while variable life insurance can contribute to retirement planning, it is not focused solely on providing retirement income; instead, it serves a broader purpose of combining life insurance with investment opportunities.