What type of life insurance policy has cash values that vary with investment performance?

• A. Variable Whole Life
• B. Whole Life
• C. Term Life
• D. Universal Life

Answer: (A)

This question tests understanding of which life policy ties cash value to investment results rather than a fixed amount. In a variable policy, the cash value is placed into separate investment accounts chosen by the insured, and the cash value (and often the death benefit) can rise or fall based on how those investments perform. The policy owner bears the investment risk, and fees or charges can affect the value.

That’s why the best answer is the variable whole life option: it explicitly links cash value to investment performance. The other types don’t fit as neatly. Whole life provides a guaranteed, fixed cash value growth and a level death benefit; term life has no cash value at all; universal life pools cash value growth to current credited interest and flexible premiums, not to market performance in separate investment accounts (unless it’s a variable form).