What type of policy allows for cash values to change based on the company's investments and expense factors?

Interest-sensitive Whole Life policies are designed to allow the cash values to fluctuate based on the performance of the insurer's investments and the associated expense factors. Unlike traditional whole life policies that typically have a set cash value growth rate, interest-sensitive whole life policies are more flexible and capable of adapting to changing economic conditions.

This type of policy allows policyholders to benefit from potentially higher returns when the insurance company invests wisely, making it attractive in environments with favorable investment returns. The cash value is credited based on a declared interest rate that may change, reflecting the actual performance of investments. This adaptability can help protect the policy's value against inflation and other financial factors.

In contrast, options like Credit Life and Annual Renewable Term do not accumulate cash value, and Adjustable Life, while offering some flexibility, does not specifically tie cash values to investments in the same way interest-sensitive whole life does. Therefore, this distinction makes interest-sensitive whole life the correct answer in regards to policies where cash values can change based on investment performance and expenses.