South Carolina Life Insurance Practice Exam

Between adjustable life and universal life policies, which one is known for providing more flexibility to the policy owner?

1. Adjustable Life

2. Universal Life

3. Whole Life

4. Term Life

The correct answer is: Universal Life

Universal life insurance is recognized for providing more flexibility to policyholders compared to adjustable life policies. This flexibility manifests in various ways, including the ability to adjust premium payments and coverage amounts. Policyholders can vary their monthly premiums and, within certain limits, can modify the amount of death benefit protection they need. In addition, universal life policies often have a cash value component that grows over time, offering policyholders the option to withdraw or borrow against this cash value as needed. This adaptability aligns well with varying financial circumstances and needs throughout the policyholder's life. In contrast, adjustable life policies do allow for some changes, such as adjusting the death benefit or switching between whole life and term coverage, but they are generally more limited in their flexibility regarding premium payments and cash value access. Whole life and term life policies, on the other hand, are even more rigid, with fixed premiums and benefits, hence providing less flexibility overall.