Option A (Option 1, level): the death benefit stays at the face amount. As the cash value grows, the insurer's net amount at risk shrinks, so it costs less. For the policy to qualify as life insurance under federal tax law (IRC §7702, added in 1984), the death benefit must stay a minimum distance above the cash value, the corridor. If the cash value climbs too close to the face amount, the death benefit is pushed up.

Option B (Option 2, increasing): death benefit = face amount + cash value. The benefit rises as the cash value grows, so the cost of insurance is higher.