A variable death benefit is a payout from a variable life insurance policy that is provided to the designated beneficiary of the policy. It is the amount paid from the policy when the insured person passes away. The amount of the variable death benefit depends on the state of the equity markets and how well the invested funds have performed in the investment or cash value account associated with the policy.

Variable life insurance policies offer targeted death benefits to the beneficiaries that can increase with changes in equity markets. Money invested in things such as stocks and equity mutual funds in the policy’s cash-value account can lead to returns that are more substantial than those offered by a traditional life insurance policy. The policy relies on the performance of the equity markets for greater returns.

However, depending on the performance of the equity markets as well as any management fees that accompany the policy, the variable death benefit may be lower than initially anticipated. For this reason, it is important to understand the financial risks associated with a variable life insurance policy, as well as the potential implications on the death benefit payout.

It’s worth noting that the variable death benefit may not be what is expected of the policy due to investments losses or mistakes made by the policyholder. For this reason, understanding key considerations such as the market volatility and administrative fees associated with the investment account are important prior to investing in a variable life insurance policy.

Overall, variable death benefits offer an opportunity for individuals to increase their wealth through investment over time. However, it’s important to understand the associated risks and have an understanding of the possible outcomes when investing in variable life insurance policies. With the right preparation, a variable death benefit may be a valuable tool in many people’s financial strategies.