A variable life policy is characterized by which feature?

A variable life policy is characterized by the feature where the death benefit varies to reflect the investment results of the underlying separate account, but it never falls below a guaranteed minimum. This means that unlike whole life insurance policies, which have a fixed death benefit, a variable life policy allows policyholders to invest the cash value in various investment options that can generate higher returns.

As the investments perform well, the death benefit may increase, providing potential for greater financial protection for beneficiaries. However, if the investments perform poorly, the death benefit may decrease, but the policy ensures that it will not drop below a specified guaranteed minimum. This unique characteristic aligns with the goal of variable life insurance to provide both a death benefit and the opportunity for cash value growth through investment.

This option underscores the core principle of variable life insurance, which is the combination of insurance coverage with investment components, offering both risk and opportunity for policyholders.