Variable life insurance and indexed universal life insurance are both types of permanent life insurance policies, but they differ in how the cash value of the policy is invested. In variable life insurance, policyholders can allocate their cash value among various investment options such as stocks, bonds, and mutual funds. The cash value and death benefit can fluctuate based on the performance of these investments. On the other hand, indexed universal life insurance allows policyholders to link the cash value growth to a specific stock market index, such as the S&P 500. The cash value is not directly invested in the market but earns interest based on the index’s performance.