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Earnings on a variable life insurance policy grow tax-free.

Payments to beneficiaries upon the death of the policyholder are taxed as ordinary income.

One variable life policy can be exchanged for another variable life policy without triggering any consequences under Section 1035 of the tax code.

If a policyholder withdraws some of the cash value associated with the policy, taxes need only be paid on the amount that exceeds the total amount of the premiums paid to date.