Final answer:
John's insurance policy that allows him to share in the insurer's surplus is known as Whole life insurance. This type of policy includes a cash value component that can accumulate wealth over time and may entitle the policyholder to a portion of the insurer's surplus in the form of dividends.
Step-by-step explanation:
The type of insurance policy that gives John the right to share in the insurer's surplus is Whole life insurance.
Whole life insurance is a permanent life insurance that not only provides a death benefit but also includes an investment component known as the policy's cash value. The cash value grows over time and policyholders can use it as a tax-sheltered investment, as collateral for loans, or they may choose to surrender the policy for the cash. Moreover, if an insurance company generates surplus funds, policyholders with participating whole life insurance policies have the right to receive a portion of this surplus in the form of dividends, which can be used to purchase additional coverage, reduce premiums, or even be received as cash.
Other types of life insurance mentioned, such as Term life insurance, Variable life insurance, and Universal life insurance, do not typically include rights to share in the insurer's surplus. Term life is temporary and does not have a savings component. Variable and Universal life insurance policies have cash value components and market investment options but differ in terms of flexibility and management of the investment risk.