What does "portfolio rebalancing" allow policyholders to do in Variable Life Insurance?

Portfolio rebalancing in Variable Life Insurance is essential for policyholders because it allows them to readjust their investment allocations to manage their risk levels. Within this type of insurance, the cash value is invested in various sub-accounts, often similar to mutual funds. Over time, the performance of these investments can fluctuate, which may lead to a portfolio that no longer aligns with the policyholder's risk tolerance or investment goals.

Through rebalancing, policyholders can shift funds among different investment options to either take advantage of better-performing assets or reduce exposure to underperforming ones. This strategic adjustment helps maintain the desired asset allocation—ensuring the portfolio remains aligned with their personal investment strategy and overall financial objectives. By actively managing their investment choices, policyholders can potentially enhance growth while managing risk effectively.