What does variable whole life insurance allow the insured to do?

Variable whole life insurance offers the insured the ability to self-direct the cash value investment. This type of policy combines permanent life insurance with an investment component, allowing policyholders to allocate their cash value among a variety of investment options, such as stocks and bonds. The value of the cash account can fluctuate based on the performance of these investments, which distinguishes it from traditional whole life policies that have fixed growth rates.

This self-direction provides the insured with greater control over the growth of their cash value and can lead to a higher return compared to more conservative fixed accounts included in other types of life insurance. It is important for policyholders to be aware of the risks associated with these investments, as the cash value can decrease if the chosen investments perform poorly, impacting the overall benefits of the policy.