In variable life, which factor affects changes in the policy's cash value and death benefit?

• A. The insurer's general account performance.
• B. The investment performance of the policy's separate accounts.
• C. Fixed schedule of premiums and benefits.
• D. The policy's underwriting class at issue.

Answer: (B)

In variable life, changes in the policy’s cash value and death benefit come from how the policy’s separate accounts perform. Premiums are allocated into subaccounts that invest in securities, and the returns on those investments directly drive the cash value up or down. Because the death benefit is tied to these same underlying investments (depending on the policy option), it can increase if the separate accounts perform well. The insurer’s general account doesn’t affect the cash value, since that value comes from the separate accounts, not the insurer’s guaranteed funds. A fixed premium schedule doesn’t by itself cause changes in value, and the underwriting class at issue influences initial pricing but not the ongoing fluctuations in cash value or death benefit.