South Carolina Insurance Practice Exam

What is a primary feature of universal life insurance policies?

1. Fixed premium payments

2. Flexibility in premium payments

3. Guaranteed cash value

4. Inflexible death benefit

The correct answer is: Flexibility in premium payments

A primary feature of universal life insurance policies is their flexibility in premium payments. This flexibility allows policyholders to adjust the amount and frequency of their premium payments within certain limits. Unlike whole life insurance, which typically requires fixed premium payments, universal life policies give the insured the ability to make higher or lower payments based on their financial situation at the time. Additionally, this flexibility helps policyholders manage their cash flow and adjust their insurance coverage as their financial circumstances change. It also allows for the possibility to pay only the minimum premium required to keep the policy in force, which can be advantageous during periods of financial difficulty. Overall, this adaptability is a distinctive characteristic that sets universal life insurance apart from other types of life insurance products.