South Carolina Life Insurance Practice Exam

What are the death benefit options in universal life policies?

1. For 10 years or until the policyholder's death

2. For 20 years or until the insured's death, whichever occurs first

3. For a lifetime with no specified limits

4. For a set number of years with decreasing amounts

The correct answer is: For 20 years or until the insured's death, whichever occurs first

In universal life insurance policies, one of the key features is the flexibility in death benefit options. The correct choice indicates that the death benefit is available for a specific duration, such as 20 years, or until the insured's death, whichever occurs first. This reflects the common structure of universal life policies, which often provide choices between a level death benefit or an increasing one tied to the cash value of the policy. This option illustrates the blend of living benefits and coverage provided by universal life insurance, especially in how it relates to the policyholder's lifetime and the death benefit term. It showcases the potential for coverage over a significant period of time while also aligning with the insured's lifetime, which is crucial for policyholders considering long-term financial planning needs. The other choices do not adequately represent the standard features of universal life insurance policies concerning death benefit options. For example, a lifetime option without limits does not reflect the term aspect inherently offered within universal life insurance frameworks. Similarly, a set number of years with decreasing amounts typically refers to a different type of policy structure, lacking the flexibility that is a hallmark of universal life.