Final answer:
Independent audits of separate accounts for variable life insurance policies are conducted annually to ensure financial integrity and provide transparency, thereby safeguarding the interests of policyholders.
Step-by-step explanation:
The separate accounts backing up variable life insurance policies are indeed required to undergo independent audits. These audits are often conducted annually to ensure the financial integrity and accuracy of the account's records. It operates akin to mutual funds but is only accessible through the life insurance framework.
The purpose of the independent audit is to provide policyholders and regulators with an assurance that the assets in the separate account are being managed properly and that the account statement accurately reflects the true value of the investments. The audits confirm that the funds comply with the stated investment objectives and policies of the insurance company.
Regular independent audits of separate accounts contribute to the overall financial stability and transparency of the life insurance industry. They protect the interests of policyholders by verifying that the underlying investments of the variable policies are properly managed and valued.