South Carolina Life Insurance Practice Exam

What type of life insurance offers flexibility in premium payments and can also have cash value?

1. Term Insurance

2. Whole Life Insurance

3. Universal Life Insurance

4. Variable Life Insurance

The correct answer is: Universal Life Insurance

Universal Life Insurance is designed to provide flexibility in premium payments, allowing policyholders to adjust the amount and frequency of their premium payments within certain limits. This type of policy not only offers life insurance coverage but also allows for the accumulation of cash value over time. The cash value component of a universal life policy grows based on a credited interest rate, and policyholders can access this cash value through loans or withdrawals. The flexibility in premium payments means that if a policyholder faces financial difficulties, they can choose to pay a lower premium or even skip a payment, as long as there is sufficient cash value to cover the cost of insurance. This adaptability makes universal life insurance appealing to individuals who prefer having control over their financial planning while still securing life insurance coverage.