B is correct. HRS §431:10D-118 authorizes domestic life insurers to establish separate accounts to support variable life insurance and variable annuity benefits. The statute provides that income, realized or unrealized gains, and losses attributable to assets allocated to a separate account are credited to or charged against that account without regard to other income, gains, or losses of the insurance company .
This separation is fundamental to variable insurance. Policy values linked to the separate account fluctuate according to the investment performance of the selected assets or investment divisions rather than simply receiving a fixed general-account interest credit.
The Hawaiʻi Insurance Division likewise explains that variable life contains an investment element and can use separate accounts involving stocks, bonds, money-market instruments, and other funds. Cash values and death benefits may vary according to investment performance.
Option A incorrectly treats separate-account performance as part of the insurer's general investment results. Option C is incorrect because investment returns are not guaranteed by the Commissioner. Option D is also false because separate-account values are determined throughout the life of the contract, not only upon surrender.
Reference topics: HRS §431:10D-118; Variable Life; Separate Accounts; Investment Risk; Variable Contracts.
===============
