Question

All of the following are characteristics of a universal life policy, EXCEPT:

A. The face amount may be increased or decreased annually
B. Premium credited annually increases the coverage amount
C. Premiums paid for coverage may be variable
D. The policy's cash savings may be used to pay premiums

Answer 1

A universal life policy is a type of cash-value life insurance that offers flexible payments and coverage options. The face amount may be increased or decreased annually.

Step-by-step explanation:

A universal life policy is a type of cash-value life insurance that offers flexible payments and coverage options. However, there are certain characteristics that differentiate universal life policies from other types of life insurance. The correct answer to the given question is A. The face amount of a universal life policy may be increased or decreased annually.

For example, policyholders have the option to increase or decrease the death benefit or face amount of their policy based on their changing needs. This flexibility allows policyholders to adjust their coverage as their financial situation evolves.

On the other hand, characteristics B, C, and D are true for universal life policies. Premiums credited annually can increase the coverage amount, premiums paid for coverage may be variable, and the policy's cash savings can be used to pay premiums.