What type of account holds assets that back the nonguaranteed values of variable life insurance products?

The correct answer involves understanding the structure of variable life insurance products and how they manage assets. The separate account set up by the insurer is specifically designed to hold the assets that back the nonguaranteed values of these products. This account is distinct from the insurer's general account, which typically holds assets for guaranteed benefits and other fixed obligations.

In a separate account, the investment performance of the assets can directly affect the value of the policyholder's benefits. Since the returns are not guaranteed and can fluctuate based on market performance, this allows policyholders to benefit potential growth with associated risks. The creation of a separate account also helps comply with regulatory requirements, ensuring that funds allocated for variable contracts are segregated from those for more traditional products.

In contrast, other types of accounts like a general account, investment account set up by the insured, or a trust account established by the beneficiary do not serve this specific purpose in variable life insurance. The general account, for instance, does not separate variable product assets from the insurer's other assets and is more about backing guaranteed benefits. Thus, the separate account is tailored specifically to manage the inherent risks and rewards associated with variable life insurance products.