What is true about the investment returns under Variable Life insurance policy?

The investment returns under a Variable Life insurance policy are indeed influenced by the performance of the underlying investments selected by the policyholder. Unlike traditional whole life insurance policies where returns are typically guaranteed and fixed, Variable Life insurance allows policyholders the flexibility to allocate their premiums among a variety of investment options, such as stocks, bonds, or mutual funds.

This means that as market conditions change, the performance of these investments can rise or fall, resulting in fluctuating returns. The value of the cash value accumulation and any death benefit is therefore dependent on the success of the chosen investment allocations. This characteristic makes Variable Life insurance an investment-oriented product, providing the potential for higher returns with commensurate risks associated with market volatility.

Other options reflect characteristics not applicable to Variable Life insurance, such as guaranteed returns or fixed benefits, which are more typical of other types of life insurance products.