What Is A Variable Insurance Trust?

Variable universal life (VUL) policies offer an innovative solution for investing and insuring. Contract owners have access to various accounts similar to mutual funds that enable them to build tax-deferred wealth faster.

Policyholders must understand all associated fees and expenses associated with VULs as these can vary widely between products. You should request from your financial professional a policy prospectus.

Variable insurance trusts are tax-deferred investment vehicles

Variable insurance trusts (VIT) are an innovative financial tool designed to help you meet both investment goals and life insurance objectives. They combine death benefits with growth potential. VITs may also be combined with other estate planning tools like family limited partnerships and charitable remainder trusts for use with estate planning purposes. But like any investment vehicle, variable insurance trusts come with risks and charges associated with them. As premium amounts paid may reduce fees related to policy expenses (your net amount of risk determines these fees), so it is crucial that these costs be clearly understood before investing.

Variable universal life insurance (VUL) can provide an efficient way of building wealth. Its investment component can be placed into different separate accounts similar to mutual funds; its name combines “variable” and “universal”, signifying its flexibility; investors can have more control over how they invest their money this way than with traditional life insurance; however, VUL can present greater risk than its traditional counterpart if investments perform poorly, potentially decreasing in value over time.

Cash values of variable universal life policies (VULs) depend on various factors, including performance of its underlying investments and any fees and charges deducted from premiums. They may increase or decrease as market conditions change and beneficiary distributions depend on various considerations. If borrowing against your policy’s cash values occurs, however, this could reduce death benefits or cause it to terminate prematurely.

This information on this page is designed to meet certain regulatory requirements pertaining to using a fund’s summary prospectus, but does not represent a recommendation, solicitation, or offer to sell shares in any jurisdiction. Specifically, shares offered through variable annuities or life insurance contracts issued or administered by life insurance companies do not become publicly available; nor are they insured by Federal Deposit Insurance Corporation or National Credit Union Administration.

They are a type of mutual fund

Variable insurance trusts (VITs) are mutual funds that combine investment opportunities and life insurance protection into one fund, offering investors both investment opportunities as well as life insurance protection. Such funds can help investors meet various financial goals such as savings objectives, retirement planning or estate planning; but it’s important to understand their risks: both death benefits and cash values of policies can change according to factors like investment performance and premium costs – if these variables aren’t managed carefully then policies could become unprofitable or even lapse.

Before investing in any variable insurance trust, investors should consult with a tax or financial professional. The tax consequences associated with these investments are highly complex and may change over time; certain options may be subject to capital gains taxes while others are taxed at regular income rates. Investors should also be aware of any fees or charges associated with them such as administrative, servicing, 12b-1 and management charges that may incur.

Variable life insurance offers investors an alternative to fixed income investments with its potential tax-deferred growth potential. Policies typically sold through financial advisors but they can also be bought directly from insurers; some provide multiple investment options while others specialize in specific strategies, like target date funds.

Variable life insurance, similar to mutual funds, is a high-risk investment. Mortality and expense charges included with an initial premium can contribute to its volatility; additional factors that affect its cash value include investment performance, fee structures, loan activity and policy owner borrowing against it for expenses can reduce its worth and even alter death benefits and tax implications.

Variable universal life (VUL) insurance allows investors more investment flexibility than traditional whole-life policies; however, this comes at the expense of surrender charges and annual maintenance charges that may offset some earnings on assets held within the contract. Furthermore, variable universal products usually include marketing costs for their underlying investment options into the overall pricing; you can access this information from your financial advisor.

They are a tax-free investment

Variable insurance trusts are estate planning tools that use life insurance policies as assets. This approach can reduce potential estate tax exposure while offering more investment flexibility compared to traditional fixed trusts. Variable insurance trusts can also be combined with other estate planning instruments like family limited partnerships and charitable remainder trusts for greater estate tax mitigation potential. Managing variable insurance trusts requires professional management from an impartial fiduciary. Furthermore, it’s vital that prospective investors know all associated fees prior to investing.

Variable Universal Life (VUL) policies offer investors an effective and tax-deferred method of investing for long-term goals, unlike traditional fixed insurance contracts. VULs are issued by insurance companies, usually including an investment component and death benefit; investments may include stocks, bonds, mutual funds, exchange-traded funds or any number of options that diversify risk. Furthermore, variable universal life contracts may include optional riders that provide coverage against specific occurrences at additional fees that will be deducted from the net amount at risk.

Fees and expenses associated with variable annuities and life insurance policies differ based on insurance company and product type, but typically include commissions, mortality and expense charges, surrender charges and annual maintenance charges. Investors should review a policy’s prospectus carefully in order to understand these costs.

Investors must also carefully consider the tax ramifications of withdrawing taxable amounts from an insurance policy early. Any withdrawals before age 59 1/2 are subject to a 10% federal income tax penalty.

While VULs offer investors an exciting investment opportunity, they also carry significant risks. Like other investments, they’re subject to market fluctuations and the possibility of loss; before making any decisions involving VULs investors should thoroughly research and consult their financial advisor on its features and fees in order to make informed choices suited for their personal situation. Furthermore, investors should review all contract provisions regarding termination as well as language differences so an estate planning attorney may help interpret any complex clauses.

They are a tax-free retirement plan

Variable insurance trusts can be an excellent tool to help you reach your financial goals. They combine the security of life insurance with investment potential for growth opportunities, making them perfect for family protection or planning retirement as a supplement to 401(k)/IRA contributions.

Investment options provided through LifeLong Income Plans vary across asset classes and investment styles, with flexible structures enabling you to customize them to meet your goals, time horizon, risk tolerance and retirement timeline. It provides protection benefits, lifelong income streams and optional living benefits; performance is subject to market forces so its value could increase or decrease over time.

VUL policies are typically tailored to meet the life insurance needs of high-income earners and retirees, who typically possess greater investment resources and may need greater protection. While these policies can be complex and riskier than other forms of life insurance, they offer investors opportunities for wealth building through accessing investments as well as being useful tools for moving assets in an tax-efficient manner.

Lifetime annuity insurance may be an ideal solution for individuals who have reached their 401(k) and IRA contribution limits, providing additional growth potential from investments. But before making such a commitment it is important to determine whether this coverage will last throughout your entire lifespan.

Variable universal life insurance provides you with the ability to combine investment flexibility with the security of a permanent death benefit, making it a good way to transfer wealth tax-efficiently while protecting against inflation. While its high growth potential could yield substantial gains, its downsides include complexity and greater levels of risk.

This page’s information is designed to help you better understand the investment objectives, risks, charges and expenses of Guggenheim Investments variable insurance funds. Please refer to their prospectuses for additional details; investors should seek guidance from their investment or insurance professional when selecting variable life or annuity products with applicable underlying funds that fit their personal circumstances.