Which statement is true regarding a variable whole life policy?

In a variable whole life policy, the cash value of the policy is indeed tied to the performance of the underlying investments chosen by the policyholder, which can include stocks, bonds, and mutual funds. This means that the cash value can increase or decrease based on how those investments perform, making it distinct from traditional whole life policies where the cash value growth is guaranteed and fixed.

This characteristic is crucial because it provides the policyholder with the potential for higher returns, albeit with greater risk, as the cash value and potentially even the death benefit can fluctuate depending on market conditions. Thus, option B accurately reflects this dynamic aspect of variable whole life insurance.

The other options do not apply as appropriately to variable whole life policies. While a minimum guaranteed death benefit is typically associated with whole life insurance, variable life policies depend greatly on investment performance, so the death benefit can also fluctuate. Premiums being fixed is a feature more commonly associated with traditional whole life insurance rather than its variable counterpart. Lastly, limiting coverage duration is not a characteristic of variable whole life policies, which are designed to provide lifelong coverage as long as premiums are paid.