New Jersey Life Producer Practice Exam 2026 – Your Complete All-in-One Guide to Exam Success!

In a variable life insurance policy, the cash value is directly tied to the performance of the investments that the policyholder chooses within the policy. This means that as the market value of those investments fluctuates—whether increasing or decreasing—the cash value can change accordingly. The policyholder often has the ability to allocate their cash value among various investment options, such as stock or bond funds, which allows for the potential growth of the cash value over time. This characteristic of variable life policies provides policyholders with more control and the opportunity to benefit from market gains, though it also carries the risk of losing value if the chosen investments perform poorly.

The other options do not accurately represent how cash value functions in a variable life insurance policy. The notion that it remains the same until the policy matures does not apply, as cash value can fluctuate. Additionally, while the cash value is not paid out immediately upon death—rather, the death benefit is paid—the cash value is not fixed and allows for investment choices.