Final answer:
A life insurance policy that permits the insured to choose where the cash value is invested is known as variable life insurance. It provides more investment control to the policyholder but also entails greater risk.
Step-by-step explanation:
The life insurance policy where the insured can choose where the cash value can be invested is called variable life insurance. Unlike traditional whole life insurance, which offers a guaranteed cash value accumulation, variable life insurance allows policyholders to invest the cash value in various investment options, similar to mutual funds, that can grow based on the performance of those investments. With variable life insurance, policyholders have the potential to increase the policy's cash value more significantly than with whole life insurance; however, they also face more investment risk, as the cash value can fluctuate with the market's performance.