Definition of Minimum Death Benefit

Minimum Death Benefit is the minimum guaranteed death benefit that will be paid to the beneficiaries if the holder of a variable life insurance policy dies.

Applying "Minimum Death Benefit" to Securities Exams:

Variable life insurance has both a general account and a separate account. The general account is where the insurance company invests premiums, and the separate account is the securities component i.e.: where the investors chosen mutual funds are held. Since variable life requires the insured to make fixed premium payments, the insurance company can guarantee the minimum death benefit the beneficiaries will receive upon the death of the insured. If the separate account increases in value the death benefit will increase beyond the minimum.

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