Final answer:
The life insurance type that offers both a savings component and flexible premium options is Universal life insurance (C). It is a cash-value life insurance policy allowing adjustments in premiums and benefits, providing a flexible financial planning tool.
Step-by-step explanation:
The type of life insurance that combines a savings element along with a flexible premium option is C) Universal life insurance.
Unlike term life insurance, which only provides coverage for a specified term without any savings component, universal life insurance includes a cash value account that can grow over time.
The owner of a universal life insurance policy typically has the flexibility to adjust both the premium payments and the death benefit amount, making it a versatile financial tool.
This cash value accumulates tax-deferred and can be used during the insured's lifetime.
Because of this investment component, universal life insurance is also considered a type of cash-value life insurance similar to whole life insurance, which also provides both a death benefit and cash value, but usually with fixed premiums.
Life insurance plays a vital role in financial planning. It provides a safety net for dependents in the event of the insured individual's death.
Knowing the different types of insurance and their characteristics helps in choosing the right policy that aligns with one's financial goals and preferred level of flexibility.