Final answer:
Universal life insurance allows the policy owner to modify both the face value of the policy and the premiums. It combines a death benefit with a cash value component that grows over time and can be accessed by the policyholder.
Step-by-step explanation:
Universal life insurance is a flexible type of policy that combines protection and savings elements. One of the key features of universal life insurance is the ability of the policy owner to modify certain aspects of the policy. As for the question on what a policy owner can modify in a universal life insurance policy, the correct answer is: a. face value of the policy and the premiums. This means that the policy owner has the flexibility to adjust the death benefit, which is the face value of the policy, and the amount of premiums paid, depending on their changing needs and financial situation.
The cash value component of the policy accumulates over time based on the premiums paid and the insurance company's interest crediting rates. This cash value can also be accessed by the policyholder through loans or withdrawals, which should be managed carefully to ensure the policy remains in force and the death benefit is not adversely affected.