What is the characteristic feature of Variable Life Insurance in relation to cash value?

Variable Life Insurance is designed to allow policyholders to allocate a portion of their premiums into various investment options such as stocks, bonds, or mutual funds. The characteristic feature of this type of insurance in relation to cash value is that it may vary based on the performance of these underlying investments.

This means that as the investments grow or decline, the cash value of the policy will reflect those changes, offering the potential for greater growth compared to more traditional types of whole life insurance which might provide guaranteed cash values that do not fluctuate. This variability in cash value is appealing as it allows policyholders to have a more hands-on approach to how their cash value accumulates, but it also comes with the risk that the cash value could decrease if the investments do poorly.

Thus, the key aspect of Variable Life Insurance is its linkage to market performance, creating both opportunities for growth and risks that impact the overall cash value.