The fateful meeting of insurance and funds, variable insurance

If you look at insurance products, you can often find the term ‘variable’. For those unfamiliar with insurance, ‘variable insurance’ exists! Since there are so many different types of insurance, it is important to know the difference between each product and purchase it. In today’s Word of the Day, we’ll take a look at the true nature of ‘variable insurance’.

‘Flat-rate insurance’ that receives promised insurance money

Life insurance can be broadly divided into two types, fixed-rate insurance and variable insurance, depending on whether the amount of insurance to be paid is confirmed or not. Flat-rate insurance is a product in which the amount of insurance is fixed at the time of the insurance contract, while variable insurance is a product in which the amount of insurance paid is variable.

First of all, flat-rate insurance refers to insurance in which the amount of insurance to be paid is fixed at the time of the insurance contract, regardless of the time of the insured accident and whether or not actual damage is caused by the insured accident. American International Group AIG life insurance covers this. You can contact your Insurance provider and ask them about this facility.

‘Variable insurance’ in which the amount of insurance varies during the insurance period

On the other hand, variable insurance is a performance dividend insurance product that has the ‘guarantee function’, which is the original function of insurance, and the ‘investment function’ of securities and funds.

Variable insurance is a form of insurance that separates the accumulated premiums from the premiums paid by policyholders, excluding business expenses and risk premiums, invests them in highly profitable securities such as stocks, public bonds, and bonds, and distributes the investment profits to the policyholders according to the management performance. it’s running Therefore, it can produce high returns depending on the asset management method and performance, and it is called ‘variable’ insurance because the amount of insurance money or cancellation refund to be received later varies. The death benefit amount fluctuates every month, and the cancellation refund amount changes every day.

Photo by Luis Villasmil on Unsplash

Insurance policyholders can determine the type of asset management according to their investment propensity. Since each insurance company has different business expenses and the amount of money (insurance money, annuity, etc.) paid may vary depending on the fund management and management capabilities of the insurance company, it is necessary to compare and subscribe. You can check the variable insurance business cost, fund status, etc. on the website of insurance companies and life insurance associations!

In addition, if variable insurance is maintained for more than 10 years and meets the tax-free requirements, interest income tax equivalent to about 15.4% of investment income can be reduced.

Variable insurance, is there anything to watch out for?

In variable insurance, if the investment performance is good, the death benefit and cancellation refund will increase. Since variable insurance is a dividend-based product, it is important to recognize that the principal may be lost and the policyholder is responsible for the investment. Therefore, the insurance company must notify the policyholder of the investment performance every half year.

It is important to remember that variable insurance is basically a ‘long-term product’. The longer the maintenance period, the more tax-free you can enjoy, but in the case of short-term cancellation, the refund may not be much equal to the principal (total amount of insurance premiums paid). On average, it takes more than 7 years for the cancellation refund to reach the principal.

It is also essential to keep an eye on your investment performance, such as checking the funds you signed up for and changing funds if necessary, rather than just joining and leaving it alone!

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In other words, before purchasing variable insurance, it is really important to review whether you can maintain and manage the insurance for a long time, and choose the type of product that suits you, considering your financial goals and investment propensity.

As such, variable insurance is an insurance product that includes the concept of investment, so only an insurance solicitor with separate qualifications can sell it.

Let’s find out the types of variable insurance!

Variable insurance can be divided into three types: variable life insurance, which is a variable life insurance for protection against death and illness, variable annuity insurance for old age, and variable universal insurance that allows free deposits and withdrawals.

variable life insurance

Variable whole life insurance is designed to pursue profitability through investment to compensate for the shortcomings of the insured amount of whole life insurance not reflecting the inflation rate. Simply put, it is a life insurance with an investment function, and the amount of coverage varies depending on the investment performance.

variable annuity insurance

Variable annuity insurance is a savings-type variable insurance, and insurance companies focus on stability as well as profitability and operate more bond-type products than other variable annuities. This product can also be paid an annuity based on the performance of the investment.

Variable universal insurance

Variable universal insurance is an insurance that adds the features of free deposit and withdrawal that allows for premium withdrawals and additional payments in addition to variable life insurance. Thus, the policyholder can flexibly operate the product.


The wide and complex world of insurance. Today, we learned about the types of insurance that are classified according to changes in the insurance amount. Do you have a good understanding of variable insurance, which is attracting attention for its high interest rates and tax-free benefits in the era of low interest rates and low growth? I hope that you will not be embarrassed even if variable insurance is out now!


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