What does the investment performance of a Variable Life policy directly affect?

The investment performance of a Variable Life policy is closely linked to the cash value and potentially the death benefit due to the nature of the policy. Variable Life is designed to allow policyholders to allocate their cash value across a range of investment options, such as stocks, bonds, and mutual funds. The performance of these investments can fluctuate greatly, directly impacting the growth of the cash value.

As the investments perform well, the cash value can increase, providing a greater financial resource for the policyholder. Conversely, if the investments perform poorly, the cash value may decrease. This directly affects the accumulation of wealth within the policy and impacts the policyholder's financial planning.

Additionally, the death benefit of a Variable Life policy can be linked to the cash value. Many Variable Life policies offer a minimum death benefit that may be guaranteed, but the total death benefit can be adjusted based on the performance of the investment account. Therefore, a strong investment performance can enhance the death benefit available to beneficiaries, making it not only an insurance product but also an investment vehicle.

This connection between investment performance, cash value, and death benefit is a fundamental characteristic of Variable Life policies, making it the correct answer in this context.