What is a variable life insurance policy?

A variable life insurance policy is designed to provide the policyholder with both a life insurance benefit and an investment component. This type of policy allows the cash value to be invested in a variety of options, such as equities, bonds, and other investment vehicles. The main feature of a variable life insurance policy is its flexibility concerning the investments that can be selected, giving the policyholder the opportunity to potentially grow their cash value based on market performance.

Unlike a fixed cash value policy, where the cash accumulation does not fluctuate, a variable life policy's cash value can vary significantly depending on the investment performance of the selected options. This variability is what differentiates it from other forms of life insurance. Additionally, while premiums can be flexible in a variable life policy, the focus on investment choices and potential growth sets it apart from other insurance products that may offer fixed premiums or limit investment options.