What is a key feature of variable life insurance policies?

Variable life insurance is characterized primarily by its investment component. The key feature lies in the fact that policyholders can allocate their premiums into various investment options, such as stocks, bonds, or mutual funds. This flexibility allows the cash value and death benefit of the policy to fluctuate based on the performance of the chosen investments.

Because of this variability in how the cash value can grow, the policyholder has the potential for greater returns compared to whole life insurance, which has a guaranteed cash value growth rate. However, this also means there is greater risk, as the account value can potentially decrease if the investments perform poorly.

The other options do not accurately describe variable life insurance. For instance, variable life insurance does not guarantee a cash value; rather, the cash value fluctuates with market performance. These policies are generally designed for the long term, rather than being available for only a limited time. Lastly, like most life insurance policies, they require regular premium payments to maintain coverage.