Stock Market Crash: Variable Life Insurance Polices Face Risk

It’s not just your portfolio that will feel the pinch because of the recent stock market crash. Your variable life insurance policy may also be in danger of taking a downward spiral. Variable life insurance policies have been on the rise – currently accounting for up to 40 percent of life insurance premiums.

Michael Kortz, RFC, RR Insurance Agent from Orange County, California notes, “This type of policy has become increasingly popular because of the substantial tax advantages and larger cash value gains. However a variable life insurance policy exposes you to a higher risk because your policy’s value is directly tied to the investments you make.”

How a Variable Life Insurance Policy Works

Variable life insurance builds cash value over time. The cash value of the policy is invested in a variety of different accounts, similar to those found in a 401(k). The mix of investments is completely at the discretion of the policy holder.

What differentiates this policy from a more traditional option is the dramatic fluctuation of a policy’s cash value. Stock market gains can result in a rise in cash value which can lead to a cash rich policy. However, large market losses could result in negative consequences.

Polices in Danger of Collapsing

Many variable life insurance policies have been minimally funded in hopes that stock market gains will help fund their policy. A large amount of policies were sold with the assumption that the stock market would consistently provide big returns. But with the recent stock market plummet these policies face serious risk.

Cash Value Decrease in Policy

Because variable life insurance is directly tied to stock market performance your policy’s cash value may experience a decrease. Depending on which subaccounts have been selected, a policy could experience a 30-50% decline in policy value. “That would be devastating to the policyholder,” comments Financial Advisor Michael Kortz, RFC, RR.

Protecting your Policy from Market Risk

There are strategies you can implement to protect your life insurance policy from lapsing. Understanding your choices in these tough economic times will assist in protecting your investment.

1. Ramp up funding. Funding your existing policy at a much higher level can make up for the “evaporation” of your cash value. This will help keep your policy in force, and possibly avoid a policy lapse.

2. Reduce the death benefit. Reducing your policy’s death benefit may allow you to keep your premiums at their current level. However, this tactic may expose you to surrender penalties, especially if your policy is relatively new.

3. Invest in a fully-guaranteed policy. Switching your life insurance to a fully-guaranteed policy will protect your policy and cash value from lapses regardless of market conditions.

Understanding the correlation between the stock market’s downward spiral and your variable life insurance policy is important. Evaluating your current policy and making the necessary changes will salvage your investment and protect from future risk.”For those who own a variable life insurance policy, it might be time to consider one of the newer fully guaranteed universal life policies,” comments Michael Kortz, RFC, RR. “Regardless of what the stock market does, these policies are guaranteed to provide coverage as long as the level premiums are paid. People need to sleep at night. A policy that is rich in guarantees, and isolated from market ups-and-downs, could help them do that.”

Michael Kortz, RFC, RR is a Registered Financial Consultant (RFC) with an Economics degree from the University of California. He has been an insurance agent and investment adviser since 1999. He operates a financial planning firm in San Clemente, CA. He offers complimentary life insurance policy evaluations and can be contacted at (866) 606-2261 or http://www.tfp8.com

Tags: , , , , , , , ,

This entry was posted on Saturday, June 12th, 2010 at 01:17 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

84 Responses to “Stock Market Crash: Variable Life Insurance Polices Face Risk”

  1. Latest Health, Insurance, Health Insurance Auctions | Health Insurance Products says on June 12th, 2010 at 02:08 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  2. Good for you, Indian River County, June 13 – Jupiter Courier | Free hair loss cure Blogs says on June 12th, 2010 at 02:20 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  3. Stock Market Crash: Variable Life Insurance Polices Face Risk … | e-tips solution. says on June 12th, 2010 at 02:36 :

    [...] More here: Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  4. Affordable Car Insurance – Young Drivers Can Lower Their Car Insurance Rates Too!- Car Insurance Tips says on June 12th, 2010 at 02:49 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … Related Reading: Makita T-01389 62-Piece Impact Drill-Driver Bit SetIncludes seven black oxide precision 135-degree split point 1/4-inch hex shank drill bits, (2) 1/16-inch, 3/32-inch, (2) 1/8-inch, 3/16-inch, 1/4-inch… Read More > Garmin Forerunner 305 GPS Receiver With Heart Rate MonitorPackage Includes: Forerunner 305, Heart rate monitor, docking cradle, expander strap, AC charger, PC/USB interface cable, Quick start guide, Garmin T… Read More >  [...]

  5. Insurance Blog » Stock Market Crash: Variable Life Insurance Polices Face Risk … says on June 12th, 2010 at 02:57 :

    [...] the rest of this great post here [...]

  6. 09-10 Upper Deck SP GU RYAN WILSON ROOKIE 035/699 | Hockey Trading Cards says on June 12th, 2010 at 03:04 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  7. Brand New 2.5″ Wide Ibanez Guitar Strap | Electric Guitar Sales says on June 12th, 2010 at 03:21 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  8. Stock Market Crash: Variable Life Insurance Polices Face Risk … | Other Insurance | Save money right here! says on June 12th, 2010 at 03:24 :

    [...] original here: Stock Market Crash: Variable Life Insurance Polices Face Risk … Share and [...]

  9. Tricks for paying for individual health coverage insurance says on June 12th, 2010 at 03:33 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  10. Stock Market Crash: Variable Life Insurance Polices Face Risk … « blog01 – new life. says on June 12th, 2010 at 03:42 :

    [...] here: Stock Market Crash: Variable Life Insurance Polices Face Risk … Tagged as: also-be-, feel-the, feel-the-pinch, pinch-because, policy-may, portfolio, recent, [...]

  11. Stock Market Crash: Variable Life Insurance Polices Face Risk … « Insurance Tell says on June 12th, 2010 at 03:54 :

    [...] here: Stock Market Crash: Variable Life Insurance Polices Face Risk … Comments [...]

  12. Car Insurance Frustrations From Beginning To End | WHAT YOU NEED To KNOW ABOUT? says on June 12th, 2010 at 03:55 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  13. Auto Accessories for Women | Discount MP3 Players says on June 12th, 2010 at 04:23 :

    [...] Stock Market Crash: Wavering Life Insurance Polices Face Risk … [...]

  14. Fitness #49: Basic Inexpensive Exercise Equipment I Use (Freddie’s Modern Kung Fu 2010) | says on June 12th, 2010 at 04:29 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  15. Something From The History Of Stock Market Malaysia | The Articles About Everything We Blog says on June 12th, 2010 at 04:46 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  16. Investing and Trading: Airelon’s Thoughts: September 2008 | Currency Trading Exchange Guide says on June 12th, 2010 at 04:58 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  17. Oh My God. . . Crazy Car Driver | Auto insurance Blog says on June 12th, 2010 at 05:08 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  18. Stock Wrap: The Real Story, June 11 | Currency Trading Exchange Guide says on June 12th, 2010 at 05:14 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  19. Learn Stock Trading: Why Some People Almost Always Fail In The Stock Market | Currency Trading Exchange Guide says on June 12th, 2010 at 05:14 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  20. Brit Rises Most in 15 Years After Rejecting Takeover (Update1) | facts on global warming says on June 12th, 2010 at 05:15 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  21. Stock Market Crash: Variable Life Insurance Polices Face Risk … says on June 12th, 2010 at 05:19 :

    [...] Read more here: Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  22. Shopping Online for Auto Insurance Fast and Easy | Car Insurance Online | Auto Insurance Quotes says on June 12th, 2010 at 05:52 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  23. Stock Market Simulation Software | Online Stock Simulator | Day | Currency Trading Exchange Guide says on June 12th, 2010 at 06:14 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  24. Online Stock, Share Trading & Investing. How to Get Started | Currency Trading Exchange Guide says on June 12th, 2010 at 06:14 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  25. Big insurance changes in store for Californians with pre-existing conditions | Acne treatment Blog says on June 12th, 2010 at 06:24 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  26. The Health Savings Account and the Obama Administration | Newest Trends on the Internet says on June 12th, 2010 at 07:01 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  27. » U.S. Stock-Index Futures Rise; National Semiconductor Gains says on June 12th, 2010 at 07:09 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  28. lot of 3 vine drop gem dangle belly rings | Belly Button Rings says on June 12th, 2010 at 07:13 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  29. Introduction to Risk Management and Insurance | home equity loan compariso says on June 12th, 2010 at 07:20 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  30. Stock Trading Advice About Using Systems says on June 12th, 2010 at 07:42 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  31. Trade Advice- Identify Source Of Trade Float says on June 12th, 2010 at 07:43 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  32. How To Select The Best From Various Home Insurance Quotes says on June 12th, 2010 at 07:44 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  33. Jesse Livermore: World’s Greatest Stock Trader – Just another WordPress weblog says on June 12th, 2010 at 07:48 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  34. Temporary Health Insurance – Is It Right For You? says on June 12th, 2010 at 08:07 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  35. Stock Market Education & Training – Liberated Stock Trader. | IE You says on June 12th, 2010 at 08:13 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  36. finance credit says on June 12th, 2010 at 08:33 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  37. Affliction Military Hat | Iconic MMA says on June 12th, 2010 at 08:45 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  38. Pimple Scar Products-Is There Any Hope? | Get Rid Scars says on June 12th, 2010 at 09:47 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  39. To Own a Life Insurance Does not Do You Harm - Car Insurance|Health Insurance|Life Insurance - eMaxInsurance.com says on June 12th, 2010 at 09:51 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  40. The Neatest Little Guide to Stock Market Investing | The Books Stores says on June 12th, 2010 at 10:08 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  41. Pasar modal pendidikan dan pelatihan – pedagang pasar saham dikecualikan. | BeatTheRecession says on June 12th, 2010 at 10:24 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  42. Trigun 1 2/3 | the effects of global warming says on June 12th, 2010 at 10:32 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  43. Article Marketing | How To Stand Out From Your Competitors In Online Business Posted By: Seppo Lamsa | Moneysiteproducts Blog says on June 12th, 2010 at 10:57 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  44. Killings cleared of all charges – The Daily News Journal | Las vegas car accident attorney Blogs says on June 12th, 2010 at 11:07 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  45. » Sensex regains 17000-mark says on June 12th, 2010 at 11:18 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  46. » Online Tutorial About Indian Stock Market – India’s Nse & Bse Share Markets says on June 12th, 2010 at 11:19 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  47. Affordable Car Insurance from Car Insurance Illinois | Arizona Insurance, Car Insurance Quotes says on June 12th, 2010 at 11:26 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  48. Super White Teeth | global warming effect says on June 12th, 2010 at 11:33 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  49. 3 Simple Tips For Choosing The Best Crash Diet Plans | Healthy Weight Loss Ideas says on June 12th, 2010 at 11:34 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  50. The Office: Dwight – CPR – Stress Relief – Hannibal Lecture says on June 12th, 2010 at 11:56 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  51. Tips for Online Dating: How Online Dating Work for you | MATCH DATING ONLINE ON HERE says on June 12th, 2010 at 12:37 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  52. Petrobras Fuels Real as Stock Sale Attracts Investors (Update3) | Currency Trading Exchange Guide says on June 12th, 2010 at 13:07 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  53. SEC puts in ‘circuit breaker’ rules to prevent ‘flash crash’ | Currency Trading Exchange Guide says on June 12th, 2010 at 13:11 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  54. Life McGowan says on June 12th, 2010 at 13:33 :

    While life insurance is a guaranteed protection, it is but the utmost concern of plan holders to gain the maximum worth of their investment. It is essential to be constantly aware of the modes and terms of the plan as well as current evaluation of the market value of such plans involving the possible variants that affect its substantial rewards.

  55. Dems insurance commissioner battle gets … not-so-nice | global warming effect says on June 12th, 2010 at 13:49 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  56. Your Source for Daily FOREX Market News and Analysis | World University Information says on June 12th, 2010 at 14:44 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  57. guaranteed life insurance | Insurance Quotes Education And Training says on June 12th, 2010 at 15:38 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  58. Here’s Egg in Your Face or How to Make Your Own Cosmetics | Home Made Recipes says on June 12th, 2010 at 19:51 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  59. Oceana County jury acquits Hart woman of drugged-driving death | Georgia car accident lawyers Blog says on June 12th, 2010 at 20:56 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  60. Day Trading Course > Online Stock Traders Course – Daytrader Courses – Just another WordPress weblog says on June 12th, 2010 at 21:49 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  61. Stocks Rally Strongly, So What’s Next? | Cosmetology and Beauty Careers says on June 13th, 2010 at 09:24 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  62. How I Made Over $6 Million In The Stock Market – After Taxes. | Cosmetology and Beauty Careers says on June 13th, 2010 at 10:38 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  63. Tontometro, el Medidor de tu Inteligencia – Movisol says on June 13th, 2010 at 11:16 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  64. Variable Life Insurance says on June 13th, 2010 at 14:30 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  65. A Brief History of Stock Market Growth and Expansion – Just another WordPress weblog says on June 13th, 2010 at 19:52 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  66. California Life Insurance Guide – Understanding Your CA Life Insurance Policy Options | Health Guide says on June 14th, 2010 at 00:26 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  67. Christian Debt - US Economic Outlook 042210 says on June 14th, 2010 at 00:55 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  68. China defends Internet ‘Great Firewall’ | Watch Movies Online says on June 14th, 2010 at 02:09 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  69. Stock Market Crash: Options Trading Profits – Jules Dawson | Currency Trading Exchange Guide says on June 14th, 2010 at 05:34 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  70. A Guide To Low Cost Life Insurance | Health Guide says on June 14th, 2010 at 06:22 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  71. Dating online adult age Sanford | MATCH DATING ONLINE ON HERE says on June 14th, 2010 at 20:43 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  72. Florentino Sule says on June 15th, 2010 at 01:22 :

    I stumbled upon this site from searching on Yahoo and just wanted to say thanks for this interesting post on weight loss. Thanks again!

  73. Arline Turley says on June 15th, 2010 at 02:03 :

    Very nice blog with good ideas !!! I follow you each day !?!

  74. Dow Crash: Jim Cramer Doesn’t Know What to Think! Cancel All Orders! DOW PLUNGES! | Currency Trading Exchange Guide says on June 15th, 2010 at 15:19 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  75. Auto Insurance Michigan says on June 15th, 2010 at 20:44 :

    This is funny, I was just thinking about this yesterday. For some weirdmotive I stumbled to this article lol. I’ll be coming back here. This really is a good discovery….rare for me to stumble on new websites

  76. Fun Halloween Party Ideas | Unique Halloween Costumes says on June 16th, 2010 at 00:07 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  77. Commodity & Index ETF Trading Strategy | Currency Trading Exchange Guide says on June 16th, 2010 at 12:01 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  78. best emotional stages of a relationship breakup says on June 17th, 2010 at 01:38 :

    Hey admin, very informative blog post! Pleasee continue this awesome work..

  79. Clarence Kupferberg says on June 17th, 2010 at 02:44 :

    I stumbled upon this site from searching on Yahoo and just wanted to say thanks for this informational article on dieting taking xocoslim. Thanks again!

  80. Gala Heuer says on June 17th, 2010 at 03:07 :

    I stumbled upon this site from searching on Google and just wanted to say thanks for this informational article on losing weight taking xoco slim. Thanks again!

  81. World Travel Tours » Travel Insurance – is Free Always a Good Thing? says on June 17th, 2010 at 22:28 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

  82. What was the PE of the stock market before and after the stock market crash of 1929? | Stock Trading Online | How To Make Money With Money says on June 22nd, 2010 at 09:51 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk | Stock Market News [...]

  83. merit fitness says on June 22nd, 2010 at 15:23 :

    It’s good to see this information in your post, i was looking the same but there was not any proper resource, thanx now i have the link which i was looking for my research. . . . . .

  84. Amazon Target Trimmed, Stock Still A Buy | Credit and Loan says on June 22nd, 2010 at 20:53 :

    [...] Stock Market Crash: Variable Life Insurance Polices Face Risk … [...]

Leave a Reply