Oklahoma Life Producer Practice Exam

Which type of life insurance allows the policyholder to allocate funds among various investment options?

1. Whole Life Insurance

2. Term Life Insurance

3. Variable Life Insurance

4. Universal Life Insurance

The correct answer is: Variable Life Insurance

Variable Life Insurance is designed to allow policyholders the opportunity to allocate their premium payments among a variety of investment options, typically including stocks, bonds, and mutual funds. The value of the policy can fluctuate based on the performance of these investments, which means that the cash value and potentially the death benefit can increase or decrease depending on how the investments perform. This characteristic provides policyholders with the possibility for growth that aligns with their risk tolerance and investment strategy. In contrast, Whole Life Insurance provides a guaranteed death benefit and a fixed cash value that grows at a predetermined rate, limiting the policyholder's ability to invest in different funds. Term Life Insurance, on the other hand, offers coverage for a specific period without any cash value accumulation, and therefore does not provide any investment options. Universal Life Insurance allows for flexibility in premium payments and death benefits, but it does not provide the same investment choices as Variable Life Insurance. Thus, it is Variable Life Insurance that specifically allows policyholders to choose among various investment options.