Which of the following statements about investment returns under variable life insurance policies is TRUE?

The statement regarding investment returns under variable life insurance policies that is accurate is that returns are linked to the performance and fluctuate with market prices. This is a fundamental characteristic of variable life insurance. Unlike whole life policies, which typically offer guaranteed returns, variable life insurance allows policyholders to allocate their cash value among various investment options, such as stocks and bonds. Consequently, the performance of these investments directly affects the policy's cash value and death benefit.

This fluctuation means that as the market rises or falls, so too does the value of the investment options chosen by the policyholder. It introduces an element of risk and potential reward based on market conditions, aligning the policyholder's returns with the broader economic environment and the performance of the selected investments. Understanding this linkage is critical for policyholders as it impacts their financial planning and risk tolerance.