Glossary

Variable life insurance

Permanent life insurance whose cash value is invested in market subaccounts, so values and sometimes the death benefit rise or fall with performance.

Also called: variable life, variable universal life, VUL

Variable life insurance is permanent coverage in which the policy owner directs the cash value into subaccounts invested in stock, bond or money market portfolios. The most common form today is variable universal life (VUL), which combines investment choice with universal life's flexible premiums. Traditional variable life has fixed premiums and a guaranteed minimum death benefit.

Because the owner takes on investment risk, variable life is a security. It's sold with a prospectus by representatives who are registered with FINRA as well as licensed by the state, and it's regulated by both the SEC and state insurance departments. Each month the insurer deducts the cost of insurance, administrative charges and a mortality and expense charge, while subaccount values change daily. Hypothetically, if a VUL account worth $80,000 drops 25 percent in a bear market to $60,000 while monthly charges continue, the owner may need to pay more premium to keep the policy from lapsing.

Variable life suits people who want permanent coverage, can tolerate market swings and will monitor the policy. Costs are typically higher than for term, and poor returns combined with rising insurance charges can cause a lapse. See Variable universal life (VUL) insurance and variable life insurance and the securities rules that govern it.

Last reviewed October 4, 2026

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Related terms

Subaccount An investment option inside a variable annuity or variable life policy, similar to a mutual fund, whose value rises and falls with its holdings. Universal life insurance Permanent life insurance with flexible premiums and an adjustable death benefit, built on an account credited with interest and charged monthly costs. Permanent life insurance Life coverage designed to last for the insured's whole life as long as it is funded, usually with a cash value account that grows over time. Cash value The savings component that builds inside whole life, universal life and other permanent policies, which the owner can borrow against or withdraw. Mortality and expense (M&E) charge An annual variable annuity fee, charged as a percentage of account value, that pays for the insurer's guarantees, sales costs and administration. Guaranteed minimum death benefit A variable annuity feature that pays heirs at least a set floor, such as premiums paid minus withdrawals, even if the account has lost value.

Related guides

How life insurance is regulated in the U.S. States regulate life insurers under the McCarran-Ferguson Act. What state regulators check, where federal agencies step in, and how it protects you. Life insurance sales trends: who is buying LIMRA data on record 2025 life sales, the tilt toward whole life and IUL, Q2 2026 results, ownership rates and the coverage gap, and what the figures miss. The types of life insurance, explained Term, whole, universal, indexed, variable and final expense life insurance compared: how long each lasts, what is guaranteed and who each one suits. Variable life insurance and the securities rules that govern it Variable life is both insurance and a security. How SEC registration, the prospectus, FINRA licensing and state insurance law apply, and how to check a seller. Variable universal life (VUL) insurance Variable universal life lets you invest policy cash value in market-based subaccounts. How VUL works, what it charges, how it can lapse, and who it suits.

Related insurers

Ameritas Lincoln, Nebraska mutual holding company selling term, participating whole life, universal and variable life through advisors, plus dental and disability. Axcelus Financial Formerly Lombard International US, a Philadelphia carrier of private placement life insurance and annuities for the wealthy, owned by BroadRiver since 2023. Equitable A New York insurer founded in 1859 that sells term, indexed and variable universal life through its own advisors and brokers; merging with Corebridge Financial. Everlake Life The former Allstate Life Insurance Company, sold to Blackstone funds in 2021. It services about 1.5 million Allstate-era policies and sells no new ones. Investors Preferred Life A small South Dakota carrier that writes only private placement life insurance and annuities for accredited, ultra-wealthy investors through their advisors. John Hancock Boston-based U.S. arm of Canada's Manulife, sold through financial professionals and known for its Vitality wellness program and universal life.