Which statement is true regarding the investments in Variable Life Insurance policies?

In Variable Life Insurance policies, the cash values are directly tied to the performance of the investments selected by the policyholder. Unlike traditional whole life insurance, where the cash value grows at a guaranteed rate, variable life policies allow policyholders to allocate their premiums into a variety of investment options, such as stocks, bonds, or mutual funds. As a result, the cash value can experience fluctuations based on the performance of those underlying investments. This offers the potential for higher returns, but it also introduces investment risk, meaning the value can increase or decrease over time. This characteristic is a key feature of variable life insurance, distinguishing it from other types of life insurance where values are more stable and predictable.