A lot of people think of life insurance as an expense and thus would rather place their money elsewhere like on savings or investments. However, insurance is indeed very important and an essential part of financial security (to know more about financial security, click here). But insurance usually have very conservative returns and most young people who are unmarried and no children don't see the value in it yet.

Due to this, insurance companies have come up with a new product that would address this issue - variable life insurance.

Variable Life Insurance is an insurance policy with an investment component. A portion of the amount you pay goes to paying the insurance while the leftover portion are invested in mutual funds of your choice - stock, bonds or balanced funds. With the portion that goes to mutual funds, you can build your savings and get good returns that if you keep long enough to accumulate significantly, can serve as your retirement fund or your inheritance to your children.

As with all investments, there is associated risk. The associated risk would be the same risk of the underlying investment. So if you choose stock funds as your choice of mutual fund, then there is bigger risk compare to a bonds mutual fund, but the potential return, is of course bigger with a stock mutual fund. This risk will be shouldered by the policy holder - meaning the insurance company will not guarantee returns and depending on the performance of the market, the returns may be positive or negative (loss).

The advantage of this type of insurance is that it allows you to potentially earn bigger returns due to the investment component, which you don't have in regular life insurance. It is also equally as flexible as traditional life insurance as you can also add riders and dictate paying years. As such, a big chuck of the business insurance companies have is on this product. Almost 70% of life insurance availed nowadays is variable life insurance.

This type of instrument is usually very attractive to young professionals as their willingness to get insurance early would also mean, not only cheaper cost of insurance, but also potential bigger returns to them in the long run. So if you are contemplating to get insurance or not thinking about it at all, try to know more about this instrument first and give it a chance.

Will discuss this product in more detail and with numbers soon.