Separate Account

The policyowner, because the cash value and death benefit vary with the performance of the underlying investments — In variable life insurance, premiums are invested in a separate account made up of securities such as mutual funds, and the policyowner assumes the investment risk. The cash value and, subject to a guaranteed minimum, the death benefit fluctuate with the performance of those underlying investments. The insurer provides the policy mechanics and guarantees only minimum amounts; it does not guarantee a return on the separate account. Licensing and securities registration issues are addressed under objective LIFE-II.B.2.

National insurance concept

It has a guaranteed minimum death benefit regardless of investment performance — Traditional variable life insurance invests premiums in subaccounts held in a separate account, so cash values rise and fall with investment performance. However, the policy guarantees a minimum death benefit equal to the face amount stated at issue. Investment performance can increase the cash value and drive the death benefit above the guaranteed minimum, but the benefit cannot fall below it. This floor is what distinguishes variable life from variable universal life, which does not offer the same guaranteed minimum death benefit.

National insurance concept