Which of the following policies combines life insurance with an investment component?

Universal life insurance is the correct choice because it explicitly combines a life insurance component with an investment element. This policy offers the flexibility to adjust both the premium payments and the death benefit, allowing policyholders to invest the cash value portion in various financial instruments. The investment component has the potential to grow based on current interest rates or market performance, providing policyholders with the opportunity to accumulate cash value over time while ensuring life coverage.

The versatility of universal life insurance makes it stand out from other options. For example, term life insurance is strictly intended for providing a death benefit for a specified period and does not accumulate any cash value. Whole life insurance, while it does include an investment component, is generally more rigid, offering fixed premiums and guaranteed death benefits with conservative growth in cash value. Endowment insurance primarily focuses on providing a benefit after a specific term or upon death, with less emphasis on the investment flexibility seen in universal life policies. Thus, universal life insurance uniquely fulfills the requirement of blending life coverage with investment opportunities.