Which statement about Variable Life insurance policies is false?

The statement that Whole Life can only be an investment medium is misleading. Whole Life insurance is primarily designed to provide a death benefit to the policyholders' beneficiaries while also accumulating cash value over time. This cash value grows at a guaranteed rate and can be borrowed against or withdrawn, but it does not represent the sole purpose of the policy; the main function is providing life insurance coverage. In contrast, Variable Life insurance policies are different because they allow for investment in various sub-accounts, which means the cash value and death benefit can fluctuate based on market performance.

The other statements about Variable Life policies accurately reflect their characteristics. For instance, policies being indirectly linked to life company performance suggests that they may benefit from the overall financial health of the life insurance company, impacting the returns on the investment component. Additionally, surplus being allocated to participating policyowners is relevant to participating whole life policies, which also ties into how some variable policies might offer returns reflecting company performance. Lastly, the investment element varying with underlying assets is a fundamental trait of Variable Life insurance, reflecting the policyholders’ ability to choose among different investment options, which can yield different results based on the performance of those assets.