Variable Whole LIfe Insurance is much like a traditional whole life policy in that it has a fixed premium with the addition of an underlying investment account commonly referred to as a "separate account". It does not however, contain the same guarantees of principle or interest that are typically found in traditional whole life contracts.

The major distinction between the two is that the owner of the policy (policyowner) may allocate the policy premium, after deductions for expense costs, into a sub or separate account that is held by the insurer.

This is different from other forms of permanent coverage that have the monies held in a "general account".

In a sub or separate account, monies can be invested into bonds, growth stock funds, money market accounts, real property accounts and a balanced fund account. The insurer has to keep a separate account for the purposes of these sub accounts that are available to the policyowner. This is primarily due to the fact that insurance companies are partially restricted as to what types of investments that they can make with monies held in general accounts.

Variable Whole Life Insurance was primarily designed to act as a "hedge against inflation". In return for the POTENTIAL growth of investments in these sub accounts, the owner of the policy has to assume the downside risk of poor investment performance.

When selecting a company to purchase a Variable Whole Life Insurance Policy, be sure to carefully review the accompanying prospectus filed with the SEC, which should always be provided by the insurance company prior to contract signing.

Before you make a decision, compare the rates, investment accounts and policy premiums of several companies.

Make an educated decision. http://www.lifeinsurance4all.com is a free tool that you can use to instantly compare life insurance policies and quotes from the nation's top insurers. Christy Love is a retired life insurance agent with over 30 years of experience in helping people protect what matters most... their families. As an Ezinearticles.com expert author, Christy enjoys sharing her knowledge of life insurance with the online community. Article Source: http://EzineArticles.com/?expert=Christy_Love