What distinguishes whole life insurance from variable life insurance?

Whole life insurance is designed to provide a guaranteed death benefit and a level premium over the life of the policy, along with a cash value component that grows at a predictable rate. This means that policyholders have a clear understanding of what their beneficiaries will receive upon death, regardless of market conditions.

In contrast, variable life insurance allows policyholders to allocate their premiums across a variety of investment options, such as stocks and bonds. This investment flexibility means that the death benefit and cash value can fluctuate based on the performance of the chosen investments. Therefore, variable life insurance does not guarantee a specific death benefit, as it can increase or decrease depending on market performance.

The distinction lies in the guarantees associated with whole life insurance versus the investment component and associated risks present in variable life insurance. Understanding this key difference helps policyholders make informed decisions about their insurance needs and financial goals.