Which type of life policy includes self-directed investment choices?

The correct answer is Variable Universal Life Insurance, which is designed to offer policyholders the flexibility to make self-directed investment choices. In this type of policy, the policyholder can allocate the cash value among a variety of investment options, typically including stocks, bonds, and money market funds. This allows for the potential for higher returns on the cash value than traditional whole or universal life policies.

Additionally, Variable Universal Life Insurance combines features of both universal life insurance and investment in securities, providing the insured with the ability to adjust premiums, death benefits, and investment strategies. The policy's performance can vary based on the investment choices made by the policyholder, which adds an element of risk and potential reward that is not present in more traditional life insurance policies.

In contrast, the other types of life insurance mentioned have fixed structures that do not allow for self-directed investment. While term life insurance provides coverage for a specified period, and whole life and universal life insurance offer more predictable cash value growth without investment flexibility, they do not include the investment choices that characterize Variable Universal Life Insurance.