Which of the following best defines "variable life insurance"?

Variable life insurance is characterized by its provision for policyholders to allocate the cash value among various investment options. The performance of these investments can directly influence both the cash value and the death benefit of the policy. As the cash value fluctuates based on the underlying investments, this type of insurance provides the potential for higher returns compared to traditional whole life insurance, which usually offers guaranteed returns.

In essence, variable life insurance stands apart from more straightforward products because it involves a connection to investment markets, giving the policyholder control over how their premiums are invested. This duality of offering both a life insurance component and an investment element allows individuals to tailor their financial strategy according to their risk tolerance and investment goals.