What are the main characteristics of variable life policies?

Variable life policies are designed to offer both a death benefit and a cash value component that can fluctuate based on the performance of the underlying investment options selected by the policyholder. This means that policyholders have the opportunity to allocate their premiums among a variety of investment options, such as stocks, bonds, and mutual funds.

The main characteristic that makes option C correct is this dual function: variable life policies are not just life insurance products; they also serve as an investment vehicle that can potentially build cash value over time, depending on the performance of the selected investments. This flexibility allows policyholders to potentially increase their cash value and adjust their investment portfolio according to their financial goals and risk tolerance.

In contrast, the other options do not accurately reflect the nature of variable life policies. Fixed benefits (Option A) and the inability to generate savings or protection (Option B) are characteristics of different types of policies, such as whole life or term life insurance, which do not offer the same investment flexibility as variable life. Additionally, variable life policies are not limited to short-term investments (Option D); they are often intended for longer-term wealth building and financial planning.