If an insured's cash value significantly decreases in one month, what type of policy do they likely have?

The correct answer is indicative of a variable policy because this type of insurance combines life coverage with an investment component that can fluctuate based on market performance. In a variable life insurance policy, the cash value is not fixed; instead, it is invested in a variety of separate accounts that may include stocks, bonds, or money market funds.

If the investments do poorly in a given month, the cash value can significantly decrease. This volatility is a characteristic feature of variable policies, as they allow the policyholder to participate in investment opportunities, which can lead to variable returns depending on market conditions.

In contrast, term insurance provides pure death benefit protection without any cash value component, so a decrease in cash value is not applicable. Securities and stock refer to investment vehicles and do not pertain to life insurance products at all, further solidifying that they do not fit the context of a cash value decrease in the typical life insurance policies discussed.