What happens to a policyholder's investments if they neglect to manage their Variable Life Insurance account?

When a policyholder neglects to manage their Variable Life Insurance account, the investments remain in the default options set by the insurance company. Variable Life Insurance policies allow policyholders to allocate their premiums among a variety of investment options, and if no active management is performed, the account will default to pre-selected investment choices established by the insurance company. These defaults are typically conservative and aim to safeguard the policyholder’s cash value within reasonable risk parameters.

It’s important for policyholders to be aware that without their active involvement in managing their investments, they may not benefit from potentially better-performing funds, but they also avoid the risk of more volatile investments. This ensures that the policyholder’s funds remain invested in a manner that aligns with the insurer's guidelines, although it may not optimize returns as effectively as active management would.