A more thorough explanation:

Variable life insurance is a type of life insurance that allows the policyholder to invest their premiums in a separate account. This account is similar to a mutual fund and can accumulate cash value on a tax-deferred basis. The policyholder can choose how to invest their premiums, and the cash value of the policy will vary based on the performance of those investments.

Like other life insurance policies, variable life insurance provides a minimum death benefit to the policyholder. However, part of the death benefit may also be variable based on the performance of the investments. Variable life insurance policies are considered securities and must follow federal securities laws as well as state insurance regulations.

It's important for companies to clearly explain the risks associated with variable life insurance to individuals. Many issues arise when companies do not follow securities and consumer protection laws. Additionally, variable life insurance policies often have many fees involved in their creation and management, which may make them unsuitable for some individuals.

John purchases a variable life insurance policy and invests his premiums in a separate account that is managed by the insurance company. The cash value of his policy increases as the investments in the account perform well. However, if the investments perform poorly, the cash value of his policy may decrease. John's policy provides a minimum death benefit, but part of the death benefit may also be variable based on the performance of the investments.

This example illustrates how variable life insurance allows policyholders to invest their premiums in a separate account and potentially earn a higher return than traditional life insurance policies. However, it also highlights the risks associated with investing in the stock market and the importance of understanding the fees and risks associated with variable life insurance policies.