The statement that the premiums purchase units dependent on the price of each unit is accurate because variable life insurance policies function by allowing policyholders to allocate their premiums into various investment options, typically investment subaccounts. Each investment subaccount operates similarly to mutual funds, where the value of the units fluctuates based on the performance of the underlying investments. As the policyholder pays premiums, those funds are used to buy units in the selected investment options, and the policy's cash value and death benefit are directly influenced by the performance of those investments.
This dynamic allows for growth potential as well as risk, as the value of the policy can increase or decrease with market conditions. Each unit's price is determined by the fund's performance, hence linking the premiums paid to the price of these units.
In contrast, the other statements do not accurately portray how variable life insurance policies operate. For instance, while there are some guarantees in certain life insurance products, variable life insurance typically does not provide a guaranteed minimum sum assured for dividends as dividends are not a promised feature but may be paid based on the performance of subaccounts. Additionally, premiums for variable life insurance generally can be flexible rather than fixed, allowing policyholders to adjust their payments. Lastly, the investments made through a