In a variable life policy, which statement is true?

In a variable life policy, which statement is true?

• A. The death benefit is fixed
• B. The policy has no investment component
• C. The premiums are always fixed
• D. The death benefit can fluctuate with investment performance

Answer: (D)

In a variable life policy, the death benefit is tied to the performance of investments in separate accounts funded by the premiums. As those investments earn returns (or incur losses), the cash value grows or shrinks, and the death benefit can increase or decrease accordingly. Some contracts guarantee a minimum death benefit, but the actual death benefit isn’t fixed and varies with investment results. This is why the statement about the death benefit fluctuating with investment performance is true. The policy does have an investment component, and premiums aren’t necessarily always fixed across all contracts, so those other points aren’t correct.

In a variable life policy, the death benefit is tied to the performance of investments in separate accounts funded by the premiums. As those investments earn returns (or incur losses), the cash value grows or shrinks, and the death benefit can increase or decrease accordingly. Some contracts guarantee a minimum death benefit, but the actual death benefit isn’t fixed and varies with investment results. This is why the statement about the death benefit fluctuating with investment performance is true. The policy does have an investment component, and premiums aren’t necessarily always fixed across all contracts, so those other points aren’t correct.