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Variable Death Benefit

What is 'Variable Death Benefit'

The amount paid to a decedent's beneficiary that is dependent on the performance of an investment account within a variable universal life insurance policy. The policyholder can choose among several investment options offered by the insurer, ranging from guaranteed interest to mutual funds to stocks and bonds. The variable amount (the policy's cash value) is added to any guaranteed minimum death benefit (the policy's face value) to form the total death benefit.

Explaining 'Variable Death Benefit'

The variable death benefit is one of three death benefit options available with variable universal life insurance policies. The other two are a level benefit and a return of premium benefit. Each of these three benefit types is not taxable to the beneficiary, and if the policyholder borrows against the policy, the death benefit is reduced. The variable death benefit is also called an "increasing benefit," but this is somewhat of a misnomer because a variable death benefit can either increase or decrease depending on investment performance.


Further Reading


The titanic option: valuation of the guaranteed minimum death benefit in variable annuities and mutual funds
www.jstor.org [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Valuing the guaranteed minimum death benefit clause with partial withdrawalsValuing the guaranteed minimum death benefit clause with partial withdrawals
www.tandfonline.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Variable annuities: A unifying valuation approachVariable annuities: A unifying valuation approach
www.sciencedirect.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

An FFT approach to price guaranteed minimum death benefit in variable annuities under a regime-switching modelAn FFT approach to price guaranteed minimum death benefit in variable annuities under a regime-switching model
en.cnki.com.cn [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Statutory financial reporting for variable annuity guaranteed death benefits: Market practice, mathematical modeling and computationStatutory financial reporting for variable annuity guaranteed death benefits: Market practice, mathematical modeling and computation
www.sciencedirect.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Application of data clustering and machine learning in variable annuity valuationApplication of data clustering and machine learning in variable annuity valuation
www.sciencedirect.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Optimal consumption and allocation in variable annuities with guaranteed minimum death benefitsOptimal consumption and allocation in variable annuities with guaranteed minimum death benefits
www.sciencedirect.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

A Universal Pricing Framework for Guaranteed Minimum Benefits in Variable AnnuitiesA Universal Pricing Framework for Guaranteed Minimum Benefits in Variable Annuities
www.cambridge.org [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

Financial valuation of guaranteed minimum withdrawal benefitsFinancial valuation of guaranteed minimum withdrawal benefits
www.sciencedirect.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …

The valuation of guaranteed lifelong withdrawal benefit options in variable annuity contracts and the impact of mortality riskThe valuation of guaranteed lifelong withdrawal benefit options in variable annuity contracts and the impact of mortality risk
www.tandfonline.com [PDF]
… that was entirely devoted to the topic of investment guarantees in variable annuities and … THE TITANTIC OPTION: VALUATION OF THE GUARANTEED MINIMUM DEATH BENEFIT. . . 105 … in North America have recently introduced very (complex and) lucrative benefits that have …



Q&A About Variable Death Benefit


What does the term "whole of life assurance" mean?

The term "whole of life assurance" means that the policy will remain in force for the insured's entire lifetime.

What is whole life insurance?

Whole life insurance is a type of

What is variable death benefit?

Variable death benefit is the amount paid to a decedent's beneficiary that is dependent on the performance of an investment account within a variable universal life insurance policy.

How do each of these three benefits differ from one another?

Each type differs in how it affects taxes and borrowing against the policy.

Is there any difference between increasing and decreasing death benefits?

Yes, there is a difference between increasing and decreasing death benefits.

What are the three types of death benefits available with variable universal life insurance policies?

The three types are level benefit, return of premium benefit and variable death benefit.

How do you pay premiums on a whole life policy?

Premiums are usually paid monthly or quarterly until death, except for limited pay policies which may be paid up in one year, two years, or at age 65.

What are some other terms used to describe whole life policies?

Some other terms used to describe whole life policies include straight-life and ordinary-life.