Which statement correctly describes variable life insurance policies?

Variable life insurance policies are unique in that they allow policyowners to choose their investment options. Unlike traditional life insurance products that may have set investment components, variable life insurance includes an array of investment choices, often ranging from stock funds to bond funds. This flexibility enables policyowners to tailor their investment strategy according to their risk tolerance and financial goals.

The investment performance of these chosen options influences the cash value that accumulates over time, which can vary significantly based on market conditions. This is why it is critical for policyowners to actively manage their investment choices to align with their overall financial objectives.

While it's true that variable life insurance does not provide guaranteed cash value like some other products, the freedom to select investments is a defining characteristic that distinguishes it from more conventional life insurance policies.