What does the selling price under a variable life insurance policy represent?

What does the selling price under a variable life insurance policy represent?

• A. The average cost of investments in the portfolio
• B. The price at which units are sold by the company
• C. A fixed price determined by the policy terms
• D. The total cash value of the policy at maturity

Answer: (B)

The selling price under a variable life insurance policy represents the price at which units are sold by the company. This is important because variable life insurance policies typically have an investment component, where the cash value is linked to the performance of an underlying portfolio of investments, such as stocks or bonds. As the value of the investments changes, the price of the units in the policy can fluctuate accordingly. When a policyholder pays premiums, those payments are used to purchase units in the investment account, and the selling price reflects the current value of those units. Therefore, the selling price is not a fixed or predetermined amount; instead, it varies based on market conditions and the performance of the investment portfolio associated with the policy. Understanding this concept is crucial for policyholders, as it directly impacts the cash value and potential death benefits of the policy.

The selling price under a variable life insurance policy represents the price at which units are sold by the company. This is important because variable life insurance policies typically have an investment component, where the cash value is linked to the performance of an underlying portfolio of investments, such as stocks or bonds. As the value of the investments changes, the price of the units in the policy can fluctuate accordingly.

When a policyholder pays premiums, those payments are used to purchase units in the investment account, and the selling price reflects the current value of those units. Therefore, the selling price is not a fixed or predetermined amount; instead, it varies based on market conditions and the performance of the investment portfolio associated with the policy. Understanding this concept is crucial for policyholders, as it directly impacts the cash value and potential death benefits of the policy.