Final answer:
Variable life policy owners can modify or skip premiums if their policy's cash value allows it, but care must be taken to prevent policy lapse. Insurance regulators create rules for premiums, but overly strict regulations can push insurance companies to exit markets.
Step-by-step explanation:
With a Variable life policy, policy owners have the flexibility to modify or even skip premiums under certain conditions, though it's not without potential consequences. The cash-value component of this policy type accumulates an amount that can be used to cover premiums if necessary. However, it's important to ensure that the cash value is sufficient to maintain the policy to avoid lapse.
State insurance regulators oversee the establishment of premiums and often set regulations to maintain affordability. Nevertheless, insurance companies must manage the balance of premiums paid and benefits provided to maintain solvency and profitability. Strict regulations on low premiums may lead to companies withdrawing from markets that no longer prove viable for their business models, as evidenced by historical cases in New Jersey and Florida.