A
whole life insurance policy in which some, or all, of the
premium is allocated to a separate account, which is invested in
common stock. If the common stock
portfolio does well, the
death benefit increases accordingly; if it performs poorly it decreases, though all variable life insurance policies have a
benefit floor. A significant advantage to a variable life insurance policy is the fact that the
policyholder does not have to pay taxes on
earnings from the portfolio until it is cashed in, usually through death. In the United States, variable life insurance policies are considered
securities contracts and, as such, they are regulated by federal law.