L&HTexaseasy
Where are the investment funds held in a variable life insurance policy?
AIn the insurer's general account, guaranteed by the company
BIn a state-regulated escrow account supervised by TDI
In a separate account, invested in sub-accounts chosen by the policyowner
DIn a fixed-interest trust account managed by the insurer's board
Why this is the answer
Variable life insurance places premium allocations into a separate account — legally segregated from the insurer's general account — so the death benefit and cash value rise or fall with sub-account performance. Because securities are involved, the policy must be registered with the SEC and sold with a prospectus. The insurer bears no investment risk; the policyowner does. This contrasts with whole life, where the general account absorbs investment risk and guarantees cash value growth. The TX outline (§I.B) lists Variable WL under interest/market-sensitive policies. See TX Outline §I.B.
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