What defines variable life and variable annuity products?

Variable life and variable annuity products are characterized by their inherent investment options that allow policyholders to allocate their premiums among various investment options, often including mutual funds or similar investment accounts. This means that the amount of cash value and death benefit in a variable life insurance policy can fluctuate based on the performance of the investments chosen by the policyholder.

In the case of variable annuities, the payouts during retirement can vary depending on the performance of the chosen investments, allowing for potential growth but also introducing risk.

The option regarding insurance provided under variable life contracts and variable annuities acknowledges the nature of these products, as they offer both insurance coverage and an investment component. This dual feature differentiates them from other types of insurance that offer fixed returns or guaranteed benefits and aligns with the concept of risk and potential reward inherent in variable products.

Other options focus on characteristics that do not apply to variable life or variable annuity products; they fail to account for the investment aspect that defines these financial instruments.