Universal life insurance:

Question

Quizplus · Accepted Answer

Universal life insurance is a type of flexible permanent life insurance where a portion of the premium paid is placed in a cash value account. This account earns interest and can be used to pay premiums or increase the death benefit. The policy also includes a renewable term insurance component. Therefore, option C correctly describes universal life insurance as a policy comprised of both a term policy and a cash accumulated fund. The other options are incorrect: A is false as whole life insurance and universal life insurance differ in terms of premium flexibility and investment options; B is false as universal life insurance typically pays higher interest rates than passbook savings; D is false as universal life insurance pays out upon the death of the insured regardless of the cause, and not just in the case of "universal death"; E is false as universal life insurance premiums are determined based on the insurer's underwriting guidelines and the applicant's health status and age.

Universal Life Insurance