What is the primary distinction between fixed and variable life insurance?

The primary distinction between fixed and variable life insurance lies in the investment feature of the policies. Fixed life insurance provides guaranteed death benefits, meaning that the policyholder's beneficiaries are assured of a specific payout upon the death of the insured, regardless of market conditions. This provides a sense of security and predictability for policyholders and their beneficiaries.

On the other hand, variable life insurance allows the policyholder to allocate a portion of the premium payments into various investment options such as stocks, bonds, or mutual funds. The value of the death benefit and any cash value can fluctuate based on the performance of these investments. This introduces a level of risk and the potential for growth, but also means that the death benefit is not guaranteed to remain constant.

Understanding this key difference helps in assessing the individual needs and risk tolerance when choosing between fixed and variable life insurance options.