Utah Life Producer Practice Exam

Variable life insurance is characterized by its investment options that can significantly affect the policy's cash value and death benefit. Unlike fixed life insurance, where the premiums and benefits are predetermined and largely unaffected by market fluctuations, variable life insurance allows policyholders to allocate a portion of their premiums into a variety of investment choices such as stocks, bonds, and mutual funds. This means the cash value can grow at different rates depending on the performance of those investments, offering potential for growth but also introducing risk.

The ability to choose from various investment options is what fundamentally distinguishes variable life insurance from fixed life insurance, providing a level of flexibility and performance that can appeal to policyholders looking to grow their cash value. This feature makes variable life policies unique in that they can adapt to changing market conditions, whereas fixed insurance products typically offer stable, predictable growth based on contractual guarantees.