What does a variable life insurance policy use to establish the protection benefits?

A variable life insurance policy utilizes the investment performance of the underlying investment fund to determine the protection benefits. The cash value and the death benefit of a variable life insurance policy can fluctuate based on the performance of the chosen investments, which may include stocks, bonds, or mutual funds. This variability is a key feature of these policies, allowing policyholders to potentially benefit from market gains while also exposing them to the risks inherent in the investment choices.

In contrast to the other options, the gross cash values shown in the policy represent a snapshot and do not indicate ongoing performance. Similarly, relying on an average return from historical performance does not reflect current market circumstances and is not a determining factor in the actual benefits provided by a variable life insurance policy. The consumer price index adjustments relate more to inflation and general cost-of-living adjustments rather than the specific investment performance tied directly to the policy’s benefits.