Which of the following is NOT a typical characteristic of a variable life insurance policy?

A variable life insurance policy is designed to provide flexibility in terms of cash value investment, allowing policyholders to allocate their premiums among various investment options. The cash value in a variable life insurance policy indeed fluctuates based on the performance of these investments, making it quite distinct from traditional whole life or universal life policies that typically offer a fixed and guaranteed rate of return on cash value.

This policy often includes features like a minimum guaranteed death benefit, ensuring that beneficiaries receive at least a certain amount upon the insured’s death, regardless of the investment performance. Furthermore, because the cash value can be directly linked to the market and investment choices, selling these policies usually requires a securities license, given that they are considered investment products.

Thus, stating that a variable life insurance policy has a fixed, guaranteed rate of return on cash value contradicts the nature of the policy, making this characteristic atypical. This distinction highlights the investment-oriented approach of variable life policies compared to other life insurance products.