How is the selling price of units under a Variable Life insurance policy defined?

Units under a Variable Life insurance policy are defined by the price at which the company offers these units for sale. This pricing is directly tied to the performance of the underlying investment options selected by the policyholder, such as mutual funds or other investment portfolios. As these investments fluctuate in value, the selling price of the units also changes accordingly. This means that policyholders can see their investment value rise or fall based on market conditions, directly impacting the cash value and death benefit of the policy.

By contrast, the fixed price or buyback price, concepts mentioned in the other choices, do not accurately represent how the units are valued and traded in the context of a Variable Life insurance policy. The essence of Variable Life is in its flexibility and market linkage, which reflects in the price established at the point of sale.