Which of the following is typically true for variable life insurance?

Variable life insurance provides policyholders with the opportunity to influence their investment strategies, which is a hallmark of this product. Unlike traditional life insurance policies that offer guaranteed returns, variable life insurance allows individuals to choose from a variety of investment options, such as stocks, bonds, or mutual funds, depending on their risk tolerance and investment goals. This flexibility means that the cash value and death benefit can fluctuate based on the performance of the investments selected by the policyholder.

This characteristic distinguishes variable life insurance from options that provide fixed returns or guarantees. In traditional policies, benefits do not change with the market—contrarily, in variable life insurance, the outcome is directly tied to the policyholder’s investment choices and market performance. This dynamic can lead to potentially higher returns but also involves greater risks, as the value may decrease if the selected investments perform poorly. Hence, option B accurately reflects the essence of variable life insurance, emphasizing the role of policyholder involvement in determining investment strategies.