Variable Life Insurance
Permanent coverage with cash value invested in subaccounts - a security.
What is Variable Life Insurance?
Premiums are fixed; cash value rides on the subaccounts the owner chooses, so it can fall. The death benefit has a guaranteed minimum but can rise with good performance. Because the owner bears the investment risk, it is a security and requires a prospectus.
Variable Life Insurance: a worked example
Strong subaccount returns raise the cash value and the death benefit above the guaranteed minimum.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.