Question

Universal life offers one of two death benefit options to the policy owner. Name the 2 options:

a) Level Death Benefit and Increasing Death Benefit.
b) Joint Life Option and Survivorship Option.
c) Term Life Option and Whole Life Option.
d) Standard Death Benefit and Enhanced Death Benefit.

Answer 1

Universal life insurance offers two death benefit options: the Level Death Benefit, where the benefit remains constant, and the Increasing Death Benefit, which includes the cash value in the death benefit. Cash-value policies build up savings that can be used by the policy owner. When calculating life insurance premiums, the risk is assessed based on factors like family health history and life tables are used to estimate life expectancy.

Step-by-step explanation:

Universal life insurance offers two death benefit options to the policy owner. Those options are:

1. Level Death Benefit: With this option, the death benefit remains constant throughout the life of the policy.
2. Increasing Death Benefit: This option includes the amount of the cash value in the death benefit, meaning that as the cash value grows over time, so does the death benefit.

Cash-value life insurance policies, such as whole life insurance, include a death benefit and build up a cash value over time. This cash value can act as a savings account that the policy owner can use during their lifetime. When considering the actuarial fairness of life insurance premiums, insurers must assess the risk of each individual or group.