Variable Life: Subaccounts and Death Benefit
As with variable annuities, variable life insurance products are deemed to be investment companies whose insurance premiums must be invested in a separate account apart from their other income and expenses. The separate account allows the investor to select from a variety of investment choices, known as subaccounts. Their cash value is not guaranteed by the insurance company but is based solely on the performance of the subaccounts. If the subaccounts increase by 5%, the cash value will increase by 5%. Similarly, if the subaccounts decrease by 5%, the cash value will decrease by 5%.
The insurance company does prov