South Carolina Life Insurance Practice Exam

Which type of insurance policy typically offers flexible premiums and death benefits?

1. Whole Life

2. Term Life

3. Universal Life

4. Guaranteed Issue Life

The correct answer is: Universal Life

Universal life insurance is designed to provide both flexibility in premium payments and adjustability in death benefits. This type of policy allows policyholders to modify their premium payments within certain limits, which means they can pay more or less than the scheduled premium on any given occasion. Furthermore, the death benefit can also be adjusted by the policyholder, depending on their needs, making it a highly adaptive coverage option. This flexibility is a key distinguishing feature of universal life compared to other types of life insurance policies. Whole life insurance, for instance, has fixed Premiums and fixed benefits that do not change over time, while term life insurance provides a death benefit for a specific period without offering any flexibility in premiums or benefits. Guaranteed issue life insurance typically assures coverage without health assessments but does not provide flexibility, concentrating more on acceptance rather than customized coverage terms.