What distinguishes variable life insurance from other types?

• A. It has no cash value but a fixed death benefit.
• B. It guarantees a fixed death benefit.
• C. It is always a term policy.
• D. It has a cash value invested in separate accounts, and both cash value and death benefit can vary with investment performance.

Answer: (D)

Variable life insurance stands out because the cash value is invested in separate accounts, and both the cash value and the death benefit can vary with investment performance. This setup puts the investment risk on the policyowner: strong market performance can boost both cash value and the death benefit, while poor performance can reduce them. This is different from term policies, which have no cash value and provide a fixed death benefit, and from traditional whole or universal life policies, where the cash value and death benefit are generally guaranteed or change mainly due to credited interest rather than market performance.