If an insured receives a monthly summary showing a significantly lower cash value, what type of policy might this indicate?

A significantly lower cash value in a monthly summary typically suggests that the policy in question is a variable life insurance policy. This type of policy features a cash value component that is directly tied to the performance of underlying investments, such as stocks and bonds. Because the investment returns can fluctuate widely based on market conditions, the cash value may decrease depending on the performance of those investments. Therefore, if an insured sees a lower cash value, it may indicate that market conditions have negatively affected the investment component of the policy.

In contrast, other types of policies, such as whole life or universal life, generally have more stable cash values that are less susceptible to drastic fluctuations due to market performance. Term life insurance, on the other hand, does not accumulate cash value at all, so it would not be associated with variations in cash value. Thus, a reduced cash value consistently points toward a variable policy rather than the others.