Variable Life

Use this sheet to separate insurance guarantees from investment results and funding risk.

How Do Separate Accounts Affect the Policy?

• A separate account holds investments supporting variable benefits apart from the insurer’s general account. The owner selects offered subaccounts linked to portfolios or funds.
• Results and expenses can raise or lower value, and the owner bears that investment risk without gaining unrestricted ownership of outside securities.
• A minimum death-benefit guarantee may apply under contract conditions but does not promise positive cash-value performance.
• Ordinary whole life uses a guaranteed value schedule; indexed life uses a crediting formula. Neither uses variable-life subaccounts.

How Do Variable Life and Variable Universal Life Differ?

• Traditional variable life generally has scheduled premiums; variable universal life adds flexible premiums and adjustable death benefits.
• Check guarantees, benefits, charges, surrender terms, loans, and withdrawals. Flexible premiums do not remove deductions or funding needs.
• Poor performance, low premiums, withdrawals, loans, and interest can increase lapse risk.
• A no-lapse or death-benefit guarantee applies only under its stated conditions and does not guarantee cash value.
• A value decline does not turn variable whole life into term insurance.

What Do the Prospectus and Illustration Tell You?

• Contract and fund prospectuses describe features, objectives, risks, performance, and fee categories, but not the buyer’s actual insurance amount or personalized fees.
• Review the policy, illustration, and purchase materials. A prospectus does not assure results or prove suitability.
• An illustration uses assumptions, not promises. Consider lower performance, protection needs, time horizon, goals, risk tolerance, and capacity for loss.

How Do You Compare Investment Options and Total Costs?

• An option’s name does not establish holdings or risk. Diversification can reduce concentration risk but cannot guarantee profit or prevent every loss.
• Compare policy charges and investment expenses using the same insured, coverage, period, assumptions, and time basis.
• If $10,000 falls 5% and then incurs a $200 deduction, $9,300 remains. A $700 deposit restores a $10,000 planning target if fully credited, without guaranteeing future results or lifetime coverage.

Which Gotchas Trip Students Up?

• The policyowner, not the insurer, bears separate-account investment risk.
• A separate account is not a bank deposit, and its value can decline.
• Flexible premium does not mean the owner can skip funding without consequences.
• A death-benefit guarantee does not guarantee cash value.
• A prospectus discloses product and investment information. It does not promise returns or supply every buyer-specific cost.
• Policy charges and fund expenses must be compared on the same time basis.

One-Breath Recap

Variable life uses separate-account investment options, so the policyowner bears market risk and policy value can rise or fall. Traditional variable life generally has scheduled premiums; variable universal life adds flexible premiums and adjustable benefits. Low funding, poor performance, withdrawals, loans, interest, and charges can raise lapse risk. A death-benefit or no-lapse guarantee applies only under its stated conditions and does not guarantee cash value. Prospectuses describe features, risks, and fee categories, while the policy, illustration, and purchase materials supply contract and buyer-specific details. Compare total costs on the same basis.

Need more than the recap? Read the full Variable Life unit.