Which of the following best characterizes the cash value of a variable life policy?

The cash value of a variable life policy is best characterized by its variability, which is directly tied to the performance of the investments that the policyholder selects. Unlike whole life policies that have a guaranteed cash value that increases steadily over time, the cash value in a variable life policy fluctuates depending on the success of the underlying investment options chosen by the policyholder.

This means that if the investments perform well, the cash value can increase, but if the investments perform poorly, the cash value can decrease. The flexibility of investment choices is a key feature of variable life insurance, allowing policyholders to potentially grow their cash value more significantly than through a guaranteed approach. This inherent variability distinguishes it from other types of life insurance products that offer fixed or guaranteed cash values.