South Carolina Life Insurance Practice Exam

Which type of insurance policy allows for flexible premium payments?

1. Term Life Insurance

2. Universal Life Insurance

3. Whole Life Insurance

4. Endowment Insurance

The correct answer is: Universal Life Insurance

Universal Life Insurance is the type of policy that allows for flexible premium payments. This flexibility is one of its defining characteristics, enabling policyholders to adjust the amount and timing of their premium payments within certain limits. This adaptability makes it an attractive option for individuals whose financial situations may vary or for those who want more control over their insurance budgeting. In universal life insurance, the policyholder can choose to pay more than the minimum required premium to build cash value or can opt to pay less during times of financial strain, as long as there is sufficient cash value to cover the cost of insurance. This ability to modify premium payments can help maintain the policy over time as circumstances change. In contrast, term life insurance typically has fixed premium payments for the duration of the term, whole life insurance has structured premium payments that are generally consistent throughout the life of the policy, and endowment insurance combines life coverage with a savings component but does not offer the same level of flexibility in premium payments as universal life insurance.