Final answer:
Variable life policy premiums can increase or decrease based on the performance of the separate account investments, not based on the insured's age or fixed intervals. They differ from whole life policy premiums as they are influenced by market risks and investment returns. The premiums must ultimately support claims, costs, and profits over time.
Step-by-step explanation:
The question pertains to the nature of premium payments within a variable life insurance policy. Unlike other forms of life insurance, variable life policies offer a combination of death protection and an investment feature. The premiums paid into a variable life policy do not necessarily go up with the insured's age or remain fixed; instead, they can increase or decrease depending on the investment performance of the policy's separate account, which is typically invested in various instruments such as stocks, bonds, and money market funds. Cash-value life insurance, a category that includes variable life policies, combines death benefit protection with a cash accumulation feature. This cash value serves as an accessible account for policyholders' use.
For variable life policies, the premiums are not equivalent to those for whole life for the same age and face amount, as they are dependent upon the separate account's returns. Due to the investment risk, they can fluctuate, reflecting the performance of the chosen investments within the separate account. In accordance with the laws of insurance, over time, premiums must cover the claims, administrative costs, profits of the company, and the risks presented by varying groups with different likelihoods of claiming the insurance.