Variable Life Insurance is different from traditional cash value life insurance in a number of ways:
Whole Life and Universal Life Insurance have cash value accounts that are managed as part of the Insurance Company’s General Fund. They normally have a minimum guaranteed return (IE: 3%).
Most Insurance Companies invest in Corporate Bonds in their General Fund. These have a higher return than government bonds.
Variable Life Insurance comes in two forms. Variable Whole Life and Variable Universal Life. See my section on Whole Life and Universal Life to understand the difference.
In Variable Life Insurance Policies the Insurance Company Contracts with a Broker Dealer. They can also contract with a Mutual Funds Family to manage Cash Values.
These are set up as Unit Investment Funds and you pay a Management Fee for to the Investment Advisor or Mutual Fund Company. They manage your life insurance cash values investments.