A life insurance policy which contains cash values that vary according to its investment performance of stocks is called

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

Answer: (D)

Cash values that change with stock market performance come from investment-linked life policies. This describes a variable whole life policy. In this type, the cash value is placed in separate accounts that are invested in stocks and other securities, so the value can go up or down based on investment results, and the policyholder bears the investment risk.

Term life has no cash value at all. Whole life provides a guaranteed, fixed cash value growth with level premiums, not tied to investments. Universal life offers flexible premiums and a cash value that grows at credited interest rates, not directly linked to stock performance.