Variableinsurance (VI) funds while sharing common features with mutual fundsare distinguished in that they havelong term maturity, minimum benefit guarantee, and insurance functions. We analyzed how these features influence the behavior of parties interested in VI fund and the effect of parties’ behavioral changes on guarantee risk. We confirmed that mutual fund investors showed non-linear “flow-performance relationship” in agreement with the previous literature andmutual fund managers showed non-linear “performance-risk relationship” consistent with the investors’ behaviors.However, VI fund investorschoose funds based on fund characteristics rather than previous performance,causing a more significant growth in stable funds. VI fund managers reduceretained risk following poor performance to satisfy risk-averse investors.