Financial loss to beneficiaries due to death of the insured.

The main feature of variable life is that the cash value can be invested in stock funds, bond funds or specialty funds at the discretion of the owner. Variable life has most of the same features as whole life, other than the method by which the cash value is invested. If the underlying investments perform poorly, however, the policy's cash value and death benefit may decrease. Some policies guarantee the death benefit will not fall below a minimum amount.

Some people may choose a variable life policy because it can build significant cash value that can be used for supplemental retirement income or to increase the death benefit without the need for additional underwriting. In particular, the affluent may find this product attractive.

Anyone who may not need life insurance, such as a single person with no dependents. Those who need life insurance and need a guaranteed death benefit should consider term, whole life or universal life. Variable life products also may not be suitable for those unprepared to monitor their asset allocation. Advisers or insurers may provide this service, but contract owners should understand the implications of asset-alllocation decisions.

The product is best purchased during one's working years - the earlier the better. Insurance costs are lower during these years, and when cash values have many years to build, they are unlikely to fall to levels that can lower the death benefit. The product may also be used in business situations to fund supplemental executive retirement plans or business continuation plans.

Premiums that are the same every year.