South Carolina Insurance Practice Exam

What type of insurance product allows clients to vary their premiums and offers potential growth based on investment performance?

1. Permanent life insurance

2. Universal life insurance

3. Term life insurance

4. Whole life insurance

The correct answer is: Universal life insurance

The insurance product that allows clients to vary their premiums and offers potential growth based on investment performance is universal life insurance. This type of insurance combines a death benefit with a savings component that can earn interest based on market performance or other investment options within the policy. Clients have the flexibility to adjust their premium payments and may also increase or decrease their death benefit, depending on their financial needs and goals. In contrast, permanent life insurance usually refers to policies with fixed premiums and guaranteed death benefits, while whole life insurance provides a set premium and cash value growth at a guaranteed rate without the investment flexibility that universal life offers. Term life insurance, on the other hand, does not have a cash value component and is meant to provide coverage for a specific period. Universal life insurance meets the criteria of allowing varying premiums and potential investment growth, setting it apart from the other options.