Question

Which statement regarding universal life insurance is correct?

A. Cash value accumulations have a guaranteed minimum interest rate.
B. Policy owner can change the face amount but not the premium.
C. Policy owner can change the premium but not the face amount.
D. Partial withdrawals cannot be made from the policy's cash value.

Answer 1

In universal life insurance, the policy owner can change the premium but not the face amount.

Step-by-step explanation:

The correct statement regarding universal life insurance is option C: The policy owner can change the premium but not the face amount.

In universal life insurance, the policy owner has the flexibility to change the premium amount. This means that the policy owner can increase or decrease the premium payments based on their financial situation. However, the face amount, which is the death benefit, remains the same unless the policy owner applies for a new policy or makes specific changes to the policy terms.

For example, if the policy owner wants to pay a higher premium to accumulate more cash value, they have the option to do so. On the other hand, if they want to reduce the premium payments, they can adjust it accordingly. But the face amount, which is the amount paid to the beneficiary upon the insured's death, remains constant.