Final answer:
Universal Life and Variable Universal Life insurance policies both have flexible premiums allowing policyholders to adjust payment amounts and timing. Variable Universal Life also offers investment options for the policy's cash value, adding potential for higher returns and greater risk.
Option 'C' is the correct.
Step-by-step explanation:
The type of premium that both Universal Life and Variable Universal Life insurance policies have is flexible. Unlike traditional life insurance policies that require a level fixed premium, these policies allow policyholders to adjust their premiums and, in the case of Variable Universal Life, their investment options, giving them a degree of control over their policy's cash value and death benefit.
It's essential to understand that the flexibility comes with additional responsibility to manage the policy actively to ensure that it remains in force and that the investment components are performing as expected.
A Universal Life policy offers flexibility where the policyholder can choose the timing and amount of the premium payments within certain limits. The only requirement is that the policyholder must maintain sufficient cash value within the policy to cover the cost of insurance and other fees.
A Variable Universal Life insurance policy adds an extra layer with the flexibility to adjust premium payments and invest the policy's cash value in various investment options, such as stocks, bonds, and mutual funds. This investment component means that the policy's cash value can fluctuate with the market's performance, providing a potential for higher returns but also carrying greater risk.