Variable life combines a life-insurance contract with investment choices held in separate accounts, where selected portfolios' performance affects policy value. The policyowner bears that investment risk. Learn where guarantees apply and where market performance can change value. Variable universal life adds flexible premiums and policy deductions to this investment risk.
Learning path
- Variable Life and Variable Universal Life: Separate accounts, variable whole life, variable universal life, premium patterns, policy values, and death-benefit design.
- Investment Risk and Variable Contract Disclosures: Market risk, charges, lapse exposure, prospectus review, and the disclosures needed to understand contract options.
Apply the unit
An applicant wants market exposure but also expects the policy to guarantee a specific account value.
- Separate the insurance guarantees from investment results and identify the charges, investment options, and lapse assumptions the applicant should understand.
Study checkpoint
- Can you distinguish a fixed account from a separate account?
- Can you compare variable life with variable universal life?
- Can you explain why a prospectus describes risk and does not promise a return?