What distinguishes variable life insurance from other forms?

• A. It has fixed premiums and guaranteed cash value.
• B. It uses separate accounts with investment risk; the cash value and death benefit can vary and may be tied to subaccounts.
• C. It pays a level death benefit that never changes.
• D. It has no cash value and is term.

Answer: (B)

The main distinction is investment risk and how the policy’s value is built. In variable life, the policy funds go into separate accounts that invest in markets, so the cash value isn’t guaranteed and can go up or down with performance. The death benefit can also vary—often linked to how well the investments perform—so the policyholder bears the investment risk, not the insurer. This contrasts with forms that guarantee a fixed, level cash value and a fixed death benefit, or with term policies that have no cash value at all.