Which policy has cash values that vary according to investment performance of stocks?

• A. Variable whole life
• B. Adjustable life
• C. Whole life
• D. Term life

Answer: (A)

The key idea is that cash values tied to investment performance come from variable life policies. In variable whole life, part of the policy’s cash value is allocated to separate investment accounts (often stock-based), so the cash value rises or falls with the market. The policy owner can bear the investment risk, and potential cash value growth isn’t guaranteed.

Other permanent policies don’t tie cash value to stock performance: whole life provides a guaranteed, steadily growing cash value; adjustable life offers flexibility but its cash value is credited by a fixed or credited rate rather than market investments; term life has no cash value at all.