A life insurance policy that offers a guaranteed interest rate with potential for higher earnings is known as?

The correct answer describes a life insurance policy that provides both a guaranteed interest rate and the potential for higher earnings based on a flexible investment component. This aligns with universal life insurance, which combines a death benefit with a cash value component that grows at a guaranteed minimum interest rate but also allows policyholders the opportunity to earn more based on market performance or interest rates.

Universal life policies are designed to be flexible, giving the policyholder control over premium payments and the ability to adjust the death benefit and cash value accumulation. This flexibility, along with the guaranteed interest feature, makes universal life insurance distinctive from other types of life insurance.

Other types of policies do not encompass these features: group life typically provides a straightforward death benefit without investment components, whole life offers fixed premiums and benefits with stable cash values, and credit life is usually designed to pay off debts and does not focus on investment or cash value growth. Hence, universal life insurance is the most accurate descriptor for a policy with guaranteed interest rates and potential for higher returns.