Variable Life Licensing Practice Exam 2025 – Full Prep Resource

Question: 1 / 400

Which statement is false regarding variable life insurance policies?

Policies are indirectly linked to life company performance

Life companies evaluate their funds annually for dividends

Both whole life and endowment policies can serve as investments

The investment element remains consistent regardless of assets

The statement that the investment element remains consistent regardless of assets is false. In variable life insurance policies, the cash value and death benefit are directly linked to the performance of the investment options chosen by the policyholder, such as mutual funds or similar investments. This means that as the underlying assets fluctuate—whether they increase or decrease in value—the performance of the investment component of the policy changes accordingly. Therefore, the investment element is not consistent; it varies with the performance of the selected investments.

Understanding the nature of variable life insurance is crucial, as it reflects the inherent risk and potential for growth associated with these types of policies. The link to asset performance differentiates variable life insurance from other types of permanent life insurance where the cash value tends to grow at a more stable and predictable rate.

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