South Carolina Life Insurance Practice Exam

The death protection component of a universal life policy is expressed as what of coverage?

1. Cash value

2. Maximum limit

3. Death benefit

4. Premium Payment Mode

The correct answer is: Death benefit

In a universal life policy, the death protection component refers to the amount that will be paid out to beneficiaries upon the death of the insured. This is known as the death benefit, which is a core feature of life insurance policies. The death benefit provides financial security for the insured's beneficiaries and is typically expressed as a specified amount in the policy. The death benefit can be structured in different ways, such as being level (remaining the same throughout the life of the policy) or increasing (growing over time), but regardless of its structure, it is fundamentally designed to provide protection against the financial impact of the insured’s death. Understanding the death benefit is crucial for policyholders, as it affects the policy's value and the decisions they make regarding coverage amounts and premiums. While cash value, maximum limit, and premium payment mode are important features of other aspects of the policy, they do not specifically address the protective coverage aspect provided primarily through the death benefit.