Megan, age 32, is married and has a son, age 1. She recently purchased a cash-value life insurance policy that has the following characteristics:
• The frequency and amount of premium payments are flexible.
• The insurance and saving components are separate.
• The interest rate credited to the policy is tied to current market conditions, but the policy guarantees a minimum interest rate.
• The policy has a back-end surrender charge that declines to zero over some time period.
Based on the above characteristics, what type of life insurance did Megan purchase? Explain your answer.