South Carolina Insurance Practice Exam

What is typically higher in a variable universal policy compared to other life insurance options?

1. Policy loans

2. Flexibility in premium payments

3. Guaranteed death benefit

4. Cash surrender value

The correct answer is: Flexibility in premium payments

In a variable universal life insurance policy, the flexibility in premium payments is significantly higher than in other life insurance options. This type of policy combines features of both whole life and universal life insurance, allowing policyholders to adjust their premium payments and coverage amounts over time. Unlike traditional policies where premium payments are fixed, variable universal life policies give policyholders the ability to increase or decrease their premiums according to their financial situation and needs. This flexibility allows individuals to better manage their insurance according to changes in their life circumstances, such as income fluctuations or shifts in financial goals. The combination of variable investments and flexible premiums can enhance the policyholder's ability to tailor their life insurance to their personal situation, which is a distinct advantage of this product. Other features, like guaranteed death benefits, policy loans, and cash surrender values, do not offer the same level of adjustability and personalization, making the flexibility in premium payments a hallmark of variable universal life insurance policies.