What does a policyowner achieve by selecting the investments in a variable life insurance policy?

Selecting the investments in a variable life insurance policy allows the policyowner to participate in the investment performance of selected accounts, typically including stocks, bonds, and mutual funds. This option gives policyowners the potential for higher returns based on market performance. Unlike traditional life insurance policies, which often guarantee a minimum return, variable life insurance policies depend on the performance of the underlying investment options chosen by the policyowner. This dynamic creates a chance for growth in the cash value component of the policy, aligning with the policyowner's risk tolerance and investment goals.

The other choices do not accurately reflect the nature of variable life insurance. A guaranteed minimum return is typical of other life insurance products but not of variable life policies, which can fluctuate in value. Rights to dividends pertain to participating whole life insurance policies, not variable life policies. Additionally, while premiums paid may be refunded under certain circumstances, this is not a standard benefit associated with investment choices in variable life policies. Thus, the essence of variable life insurance revolves around the potential for higher returns linked to market performance, making it a unique investment and insurance product.