What type of surrender value is associated with variable life policies?

Variable life insurance policies are unique because their cash value and death benefit can fluctuate based on the performance of the investment options that the policyholder selects. The surrender value in these policies is described as non-guaranteed because it is dependent on the investment performance of the underlying sub-accounts chosen by the policyholder. As the value of these investments increases or decreases, so too does the surrender value, which means that there is no assurance of a specific amount being returned to the policyholder upon surrendering the policy.

This non-guaranteed aspect reflects the underlying nature of variable life insurance where the policyholder participates in market risks and rewards. Unlike guaranteed or fixed surrender values associated with other types of insurance policies, the variable nature of these options means that the policyholder's financial outcome can vary significantly based on market performance.