Best Variable Life Insurance Options for 2025?

Navigating the world of life insurance can feel complex, and when you add investments into the mix with variable life insurance, it can seem even more daunting. You’re looking for security for your loved ones, but perhaps also an opportunity for cash value growth tied to market performance. Finding the “best” variable life insurance isn’t about picking a single company off a list; it’s about finding the policy and carrier that perfectly aligns with your specific financial goals, risk tolerance, and long-term needs. That’s where understanding the product and having the right guidance becomes crucial.

This guide, updated for 2025, will demystify variable life insurance. We’ll explore what it is, who it might be suitable for, the key factors to consider, and how working with an independent agency can make all the difference. At Insurance By Heroes, founded by a former first responder and military spouse, we understand the importance of protection and informed decisions. Our team, many with backgrounds in public service, is dedicated to serving you, not just selling a policy. As an independent agency, we aren’t tied to any single carrier. Instead, we work with dozens of top-rated insurance companies, allowing us to shop the market and tailor coverage specifically for your unique situation.

What Exactly is Variable Life Insurance?

Variable Life Insurance (VUL) is a type of permanent life insurance policy. Like other permanent policies (such as whole life), it’s designed to provide coverage for your entire life, as long as premiums are paid. It also includes a cash value component that can grow over time on a tax-deferred basis. The defining characteristic of variable life, however, is how that cash value grows.

Unlike whole life insurance, where the cash value grows at a guaranteed (though often modest) rate set by the insurer, the cash value in a variable life policy is invested in underlying investment options, often called subaccounts. These subaccounts function much like mutual funds, holding assets such as stocks, bonds, and money market instruments. The policyholder typically gets to choose how their cash value is allocated among these available subaccounts.

This structure offers the potential for greater cash value growth compared to other types of permanent life insurance, especially during strong market periods. However, it also introduces investment risk. Because the cash value is linked to the performance of the chosen subaccounts, it can fluctuate. If the investments perform poorly, the cash value could decrease, and in some policy structures, even the death benefit could be affected (though usually guaranteed not to fall below a certain minimum amount, provided premiums are paid).

Key Features of Variable Life Insurance:

• Permanent Coverage: Designed to last your lifetime.
• Cash Value Component: Accumulates funds within the policy.
• Investment Options (Subaccounts): Policyholder directs cash value allocation into various investment funds.
• Market-Linked Growth Potential: Cash value growth depends on the performance of chosen investments.
• Investment Risk: Cash value (and potentially death benefit) can decrease due to poor market performance.
• Premium Flexibility: Many VUL policies offer flexible premium payments, allowing you to adjust the amount and frequency (within certain limits), though sufficient premiums are needed to keep the policy in force.
• Death Benefit Options: Often includes options like a level death benefit or an increasing death benefit (face amount plus cash value).
• Policy Loans and Withdrawals: Access to cash value is typically available through loans or withdrawals, though these can impact the death benefit and cash value, and may have tax consequences.

It’s vital to understand that variable life insurance is a complex financial product, essentially combining insurance protection with an investment vehicle. This complexity means it requires careful consideration and a thorough understanding of its features, risks, and costs.

Who Should Consider Variable Life Insurance?

Variable life insurance isn’t a one-size-fits-all solution. Its unique structure makes it more suitable for certain individuals than others. Generally, VUL might be appropriate if you:

• Have a Higher Risk Tolerance: You must be comfortable with the possibility that your cash value could decrease due to market downturns. If the thought of your policy’s value fluctuating makes you uneasy, VUL might not be the right choice.
• Seek Higher Growth Potential: You are looking for cash value growth potential that could exceed what’s offered by traditional whole life or universal life policies, and you understand this potential comes with risk.
• Have a Long-Term Investment Horizon: VUL is typically best viewed as a long-term strategy, allowing time for potential investment growth to overcome market volatility and policy costs.
• Are Already Maximizing Other Retirement Contributions: Financial advisors often recommend VUL only after individuals have fully funded other tax-advantaged retirement accounts like 401(k)s and IRAs.
• Need Permanent Life Insurance Protection: You have a definite need for life insurance coverage that lasts your entire life, not just for a specific term.
• Understand and Can Afford the Costs: VUL policies come with various fees and charges (discussed later) that can impact performance. You need to be aware of these and ensure the premiums fit comfortably within your budget.
• Desire Premium Flexibility: The ability to adjust premium payments (within policy limits) might be attractive compared to the fixed premiums of traditional whole life.

Conversely, VUL is likely NOT suitable if you:

• Have a low tolerance for investment risk.
• Are primarily seeking guaranteed cash value growth.
• Need life insurance for only a specific period (term life might be better).
• Are not maximizing other retirement savings vehicles.
• Are uncomfortable with complex financial products and potential fees.

Determining suitability requires a careful look at your complete financial picture, goals, and risk profile. This is an area where objective advice is invaluable. At Insurance By Heroes, we take the time to understand your situation. Because we represent many different carriers, we can objectively assess whether VUL, or perhaps another type of policy from one of the dozens of companies we work with, is truly the best fit for you. We won’t push a product; we’ll help you find the right solution.

Understanding the Investment Component: Subaccounts and Risk

The heart of a variable life insurance policy’s growth potential lies in its separate account and the subaccounts within it. Think of the separate account as the investment engine of the policy, distinct from the insurance company’s general assets.

Subaccounts Explained:

Within the separate account, insurers offer a menu of subaccounts. These are essentially investment portfolios, similar in structure and objective to publicly traded mutual funds. Each subaccount invests in a specific type of asset or follows a particular strategy:

• Equity Funds: Invest primarily in stocks (e.g., large-cap, small-cap, international).
• Bond Funds: Invest in various types of bonds (e.g., government, corporate, high-yield).
• Balanced Funds: Hold a mix of stocks and bonds.
• Money Market Funds: Invest in short-term, low-risk debt instruments (often used for stability).
• Specialty Funds: May focus on specific sectors (like technology or healthcare) or asset classes (like real estate).

As the policyholder, you choose how to allocate your net premiums (premiums minus policy charges) among the available subaccounts based on your risk tolerance and investment objectives. You can typically transfer funds between subaccounts, although there may be restrictions or fees associated with frequent trading.

The Prospectus is Key:

Before investing in any subaccounts, you MUST receive and carefully read the policy prospectus and the prospectuses for the underlying funds. These documents contain vital information, including:

• Investment objectives and strategies of each subaccount.
• Associated risks for each fund.
• All fees and charges (discussed next).
• Past performance data (though remember, past performance does not guarantee future results).

Fees and Charges – A Critical Factor:

Variable life insurance policies come with multiple layers of fees and charges, which directly impact your cash value accumulation. It’s essential to understand these costs:

• Mortality and Expense (M&E) Risk Charges: Compensate the insurer for the death benefit guarantee and other risks. Deducted regularly from the cash value.
• Cost of Insurance (COI): The charge for the pure life insurance protection. Varies based on age, health, and the amount of coverage. Also deducted from cash value.
• Administrative Fees: Flat fees or percentages charged for record-keeping and policy administration.
• Fund Management Fees: Fees charged by the managers of the underlying subaccounts (similar to expense ratios in mutual funds). These are embedded in the subaccount’s performance.
• Premium Load Charges: A percentage deducted from each premium payment before it’s invested.
• Surrender Charges: Fees charged if you surrender the policy or withdraw significant amounts, especially in the early years. These typically decrease over time.
• Rider Charges: Additional costs for any optional policy riders you add (e.g., waiver of premium, accidental death benefit).

These fees can significantly affect the policy’s performance. A policy with seemingly strong investment returns can be hampered by high internal costs. This is a major reason why comparing policies across different carriers is so important – fee structures can vary widely. An independent agency like Insurance By Heroes excels here, helping you analyze and compare the total cost impact from various insurers.

Understanding Market Risk:

It cannot be stressed enough: the cash value in a VUL policy is subject to market risk. The value of the subaccounts will rise and fall with the markets. During prolonged downturns, your cash value could decline substantially, potentially requiring higher premium payments to prevent the policy from lapsing. While designed for growth, VUL demands acceptance of this inherent volatility.

Key Factors When Choosing a Variable Life Policy and Company

Selecting the right variable life insurance involves more than just looking at hypothetical illustrations. It requires a deep dive into several critical factors. Remember, the “best variable life insurance companies” aren’t necessarily the ones with the flashiest marketing; they are the ones whose products best align with *your* specific needs and whose financial stability ensures they can meet their long-term obligations.

Here’s what to scrutinize, and where working with an independent agent like Insurance By Heroes provides a significant advantage:

1. Insurer Financial Strength:

Life insurance is a long-term promise. You need assurance that the company will be around and financially sound decades from now to pay the death benefit. Look for high ratings from independent rating agencies like:

• A.M. Best (A++ to A- are generally considered secure)
• Standard & Poor’s (S&P) (AA to A are strong ratings)
• Moody’s (Aaa to A3 indicate strong financial security)
• Fitch Ratings (AAA to A show high credit quality)

While high ratings aren’t an absolute guarantee, they are a crucial indicator of a company’s claims-paying ability. Insurance By Heroes works primarily with highly-rated carriers, ensuring this foundational aspect is covered.

2. Investment Options (Subaccounts):

Evaluate the range, quality, and performance history of the available subaccounts.

• Variety: Does the policy offer a diverse mix of equity, bond, and money market funds covering different asset classes and investment styles? Are there reputable fund managers behind the options?
• Quality: Research the underlying funds. Are they managed by well-known, respected investment firms? What are their long-term track records (understanding past performance isn’t predictive)?
• Alignment: Do the available options align with your investment strategy and risk tolerance?

Different insurers offer different fund lineups. One company might excel in offering low-cost index funds, while another might provide access to specialized alternative investments. There isn’t one “best” menu; the ideal choice depends on your preferences. Comparing these options across the dozens of carriers Insurance By Heroes represents is key to finding your fit.

3. Fees and Charges:

As discussed earlier, fees are critical. Obtain detailed illustrations and carefully review the breakdown of all internal charges (M&E, COI, admin fees, fund expenses, surrender charges). Lower fees generally mean more of your premium and investment earnings work for you.

However, don’t choose solely based on the lowest fees. Sometimes, slightly higher fees might be justified by superior investment options, stronger policy features, or better service. This is a complex trade-off analysis where professional guidance is essential. We help you compare the *net* impact of fees and potential returns across different policies.

4. Policy Features and Flexibility:

Consider the policy’s structural elements:

• Premium Flexibility: How much latitude do you have in paying premiums? What are the minimums required to keep the policy active?
• Death Benefit Options: Understand the choices (e.g., level, increasing) and how they work.
• Rider Availability: Does the company offer riders you might need, such as a waiver of premium (if you become disabled), an accelerated death benefit (for terminal illness), or a long-term care rider? The availability and cost of riders vary significantly between insurers.
• Loan and Withdrawal Provisions: How easily can you access the cash value? What are the interest rates on loans, and how do withdrawals impact the death benefit?

Again, policies differ. Carrier A might have a great long-term care rider but less premium flexibility, while Carrier B offers maximum flexibility but fewer rider choices. Insurance By Heroes helps you weigh these features based on what matters most to you.

5. Policy Illustrations:

You will be shown policy illustrations projecting future cash value and death benefit growth based on assumed rates of return and current charges. Treat these illustrations with caution:

• They are NOT guarantees: Performance is hypothetical and depends on actual market returns and the insurer’s future charges (which can sometimes change, particularly the COI).
• Check the Assumed Rate of Return: Ensure the illustration uses a reasonable, non-guaranteed rate. Ask to see projections at lower rates (e.g., 0% or a historical low) to understand the downside risk.
• Focus on Guaranteed Elements: Pay close attention to the guaranteed minimum death benefit and the maximum charges the insurer can impose.

We help clients understand what illustrations truly represent and focus on realistic scenarios, comparing projections from multiple carriers side-by-side.

6. Customer Service and Company Reputation:

While harder to quantify, consider the insurer’s reputation for customer service, claims handling, and overall ease of doing business. Online reviews and industry surveys (like J.D. Power) can provide insights.

Navigating the Landscape: Why Independence Matters

Searching for the “best variable life insurance companies” online yields many lists, but these often lack personalized context. The reality is that Company X might offer a VUL policy that’s fantastic for a 40-year-old aggressive investor but entirely unsuitable for a 55-year-old with moderate risk tolerance. Company Y might have lower internal fees but a less diverse subaccount lineup. Company Z could boast top-tier financial ratings but have less flexible premium options.

This is precisely why working with an independent agency like Insurance By Heroes is so advantageous. We aren’t captive agents obligated to promote one company’s products. Our loyalty is to you, our client.

• We Shop the Market: We have access to policies from dozens of different, highly-rated insurance carriers. We do the comparison shopping for you, analyzing the intricate details of each offering.
• We Tailor Solutions: Founded by individuals with backgrounds in service (first responder, military family support), we prioritize understanding your unique needs, goals, and risk comfort level. We then identify policies from across the market that genuinely align with your profile.
• We Explain the Complexities: Variable life insurance has nuances regarding fees, investment risk, tax implications, and policy mechanics. Our team is committed to explaining these clearly, ensuring you make an informed decision. We cut through the jargon and marketing speak.
• We Focus on Suitability: Our goal isn’t just to sell a policy; it’s to ensure the product is appropriate for your financial situation and objectives. If VUL isn’t the right fit, we’ll tell you and explore other options (like whole life, universal life, or term life) from our wide range of carrier partners.

Think of us as your personal insurance navigators. Instead of you trying to decipher dozens of prospectuses and fee structures, we leverage our expertise and market access to bring the most suitable options to you for consideration.

The Critical Role of Professional Guidance

Given the inherent complexities and risks associated with variable life insurance, attempting to navigate this market alone is generally ill-advised. The potential for misunderstanding investment risks, underestimating the impact of fees, or choosing an unsuitable policy structure is significant.

Professional guidance from a qualified and ethical advisor is paramount. An independent agent, in particular, offers distinct advantages over a captive agent who represents only one company:

• Objectivity: Independent agents can compare products from multiple insurers without bias towards a single carrier.
• Broader Choice: Access to a wider array of products increases the likelihood of finding the optimal fit.
• Client-Centric Focus: Their success depends on satisfying the client’s needs, not meeting a specific company’s sales quota.

The team at Insurance By Heroes embodies this client-first approach. Our foundation in public service shapes our commitment to integrity, transparency, and genuinely helping people protect their families and financial futures. We understand the weight of the decisions involved in financial planning and life insurance.

How Insurance By Heroes Can Help You

If you’re considering variable life insurance as part of your financial strategy, Insurance By Heroes offers a partnership built on trust and expertise:

1. Personalized Needs Analysis: We start by listening. We want to understand your financial goals, existing assets, family situation, risk tolerance, and insurance needs.
2. Market Comparison: Leveraging our relationships with dozens of top carriers, we analyze and compare suitable VUL policies (and other alternatives if appropriate), focusing on the factors discussed above: financial strength, investment options, fees, features, and suitability.
3. Clear Explanations: We break down complex policy details, illustrations, and fee structures into understandable terms, ensuring you grasp the benefits, risks, and costs involved.
4. Tailored Recommendations: Based on our analysis and your needs, we present you with carefully selected options and explain the pros and cons of each, empowering you to make the final choice.
5. Application & Ongoing Support: We assist you through the application and underwriting process and remain a resource for policy service and reviews throughout the life of your policy.

Our background isn’t in high-pressure sales; it’s in service. We bring that same dedication to helping you navigate the complexities of insurance.

Take the Next Step Towards Informed Protection

Variable life insurance offers a unique combination of lifelong protection and market-linked growth potential. However, it’s a sophisticated product with inherent risks and costs that demand careful consideration and expert guidance. The “best” policy isn’t found on a generic online list; it’s discovered through a personalized assessment of your needs and a thorough comparison of options available in the market.

Don’t navigate this complex decision alone. Let the experienced team at Insurance By Heroes put their independent advantage and service-oriented approach to work for you. We understand the importance of trust and finding the right protection, just like in our previous careers serving the community.

Ready to explore whether variable life insurance is the right fit for your financial plan and see how different top carriers compare? Get personalized insights and a no-obligation quote comparison from advisors who prioritize your needs. Fill out the quote form on this page now, and let Insurance By Heroes shop the market to find the best options tailored specifically for you.