What does a Variable Life Insurance policy provide to the policyholder?

What does a Variable Life Insurance policy provide to the policyholder?

• A. A death benefit and a fixed cash value
• B. A death benefit and a cash value that can vary
• C. A temporary insurance coverage
• D. A guaranteed income for retirement

Answer: (B)

A Variable Life Insurance policy offers a death benefit alongside a cash value component that can fluctuate based on the performance of investment options chosen by the policyholder. This means that the cash value does not remain fixed; instead, it can increase or decrease depending on how the investments, such as stocks or bonds, perform over time. The advantage of this structure is that it allows the policyholder to potentially grow the cash value more aggressively than in policies with guaranteed fixed cash values. However, this also introduces some risk as adverse market conditions could lead to a decrease in the cash value. The death benefit remains crucial as it provides financial protection to the beneficiaries, and it typically includes options to adjust or increase the benefit amount based on the cash value performance. In summary, a Variable Life Insurance policy uniquely combines the opportunity for cash value growth with an adaptable death benefit, making it a flexible financial product for policyholders.

A Variable Life Insurance policy offers a death benefit alongside a cash value component that can fluctuate based on the performance of investment options chosen by the policyholder. This means that the cash value does not remain fixed; instead, it can increase or decrease depending on how the investments, such as stocks or bonds, perform over time.

The advantage of this structure is that it allows the policyholder to potentially grow the cash value more aggressively than in policies with guaranteed fixed cash values. However, this also introduces some risk as adverse market conditions could lead to a decrease in the cash value. The death benefit remains crucial as it provides financial protection to the beneficiaries, and it typically includes options to adjust or increase the benefit amount based on the cash value performance.

In summary, a Variable Life Insurance policy uniquely combines the opportunity for cash value growth with an adaptable death benefit, making it a flexible financial product for policyholders.