What defines "variable life insurance"?

Variable life insurance is defined as a type of permanent life insurance that allows policyholders to allocate a portion of their premiums to various investment options, such as stocks, bonds, or mutual funds. This investment component gives the policy the potential for cash value accumulation and the ability to adjust the death benefit based on the performance of the chosen investments.

The flexibility in investment choices distinguishes variable life insurance from traditional whole life policies, which typically offer guaranteed cash values and fixed premiums. The policyholder can also adjust their premiums and death benefits within certain limits, adding further customization.

The structure of variable life insurance allows for growth that can potentially exceed the traditional fixed interest earnings of other insurance products, making it appealing to those who are comfortable with investment risks and looking for both insurance coverage and a vehicle for wealth accumulation.