Question

A Universal Life policy provides an insured with a combination of death protection and a cash savings plan. It also provides the insured with the ultimate in flexibility. Which of the following statements is true regarding this type of policy?

A. It provides a combination of investment options combined with permanent protection
B. The interest rate paid on the cash savings plan is guaranteed but interest sensitive
C. It provides a guaranteed minimum death benefit
D. It is characterized by a predetermined premium

Answer 1

The true statement about Universal Life policies is that they offer a combination of investment options along with permanent protection, allowing for adjustable premiums and death benefits.

Step-by-step explanation:

A Universal Life policy is a type of cash-value life insurance that offers flexibility to the policyholder. This policy feature is a combination of death protection and a savings element (cash value accumulation), where part of the premium paid into the policy contributes to building cash value, which can grow tax-deferred over time.

Policyholders can also borrow against this cash value, if necessary, and conditions apply. The following statement is true: A. It provides a combination of investment options combined with permanent protection. Universal Life policies allow policyholders to adjust their premiums and death benefits, unlike traditional whole life policies, which have fixed premiums and death benefits.