Which kind of life policy has a death benefit that fluctuates based on investment performance?

Which kind of life policy has a death benefit that fluctuates based on investment performance?

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

Answer: (B)

The type of life policy that features a death benefit which fluctuates based on investment performance is variable life insurance. This policy combines life insurance coverage with an investment component, allowing the policyholder to allocate a portion of their premium payments into various investment options, such as stocks, bonds, or mutual funds. The cash value and death benefit of a variable life policy can increase or decrease depending on the performance of these chosen investments. This provides potential for higher returns, but also comes with higher risk compared to guaranteed policies. In contrast, other types of life policies, like universal life, whole life, and term life, have fixed or predictable elements regarding their death benefits, and do not have the same level of investment fluctuation.

The type of life policy that features a death benefit which fluctuates based on investment performance is variable life insurance. This policy combines life insurance coverage with an investment component, allowing the policyholder to allocate a portion of their premium payments into various investment options, such as stocks, bonds, or mutual funds. The cash value and death benefit of a variable life policy can increase or decrease depending on the performance of these chosen investments. This provides potential for higher returns, but also comes with higher risk compared to guaranteed policies. In contrast, other types of life policies, like universal life, whole life, and term life, have fixed or predictable elements regarding their death benefits, and do not have the same level of investment fluctuation.