Final answer:
A variable life insurance policy allows the policyowner to choose where their funds are invested, combining life insurance with an investment component.
Step-by-step explanation:
The life insurance policy that allows the policyowner to choose where they want their funds invested is the variable life insurance policy.
Unlike straight life (or traditional whole life), adjustable life, or universal life policies, a variable life insurance policy includes an investment component that lets the policyholder invest the policy's cash value in various investment options, typically including stocks, bonds, and money market funds.
This can provide potential for higher returns, but also comes with greater risk, as the policy's value can fluctuate based on the performance of the investments selected.