What is 'variable life insurance' and how does it differ from traditional life insurance?

Variable life insurance is a permanent policy where the cash value is invested in 'subaccounts' that function like mutual funds. The policyowner chooses the allocation among stock, bond, and money market subaccounts, and the cash value rises or falls with the investments' performance. The death benefit may also vary based on performance, though a minimum guaranteed amount is typical. Because variable life involves securities (the subaccounts), producers must hold both a life insurance license and a securities license (Series 6 or 7 plus state securities registration). Variable Universal Life (VUL) combines variable life's investment features with universal life's flexible premiums. Variable products carry investment risk for the policyowner and are subject to prospectus delivery requirements.