What additional feature does a variable life insurance policy offer?

Variable life insurance policies are designed to provide policyholders with the ability to allocate their cash value among a variety of investment options, such as stocks, bonds, or mutual funds. This feature allows for potential growth of the cash value based on market performance, making it distinct from traditional whole or term life insurance which typically offer a fixed death benefit and guaranteed interest rates on cash value accumulation.

This flexibility in investment choices means that policyholders can tailor their investment strategy according to their risk tolerance and financial goals. The performance of these investments can impact both the cash value and the death benefit, which can fluctuate accordingly. This characteristic makes variable life insurance particularly appealing for individuals looking for life insurance coverage along with the opportunity for investment growth.

Other choices, such as a fixed interest rate or guaranteed death benefit, are typically associated with other types of life insurance policies rather than variable life insurance, and lower premiums relative to whole life insurance can vary depending on individual circumstances and policy features, thus not being a definitive characteristic of variable life insurance.