CARD Q030
Which feature is associated with universal life insurance?
- Fixed premiums and cash values determined only by a guaranteed schedule
- Flexible premiums subject to maintaining sufficient policy value
- Flexible premiums with coverage continuing regardless of funding
- Premiums that can change only when the policy is renewed
Flexible premiums subject to maintaining sufficient policy value
Flexibility does not remove the cost of insurance and other charges. Inadequate funding can cause lapse unless an applicable guarantee is maintained.
Why each choice is right or wrong
A. Fixed premiums and cash values determined only by a guaranteed schedule
Incorrect. This describes traditional fixed-premium characteristics rather than universal life flexibility.
B. Flexible premiums subject to maintaining sufficient policy value
Correct. Flexibility does not remove the cost of insurance and other charges. Inadequate funding can cause lapse unless an applicable guarantee is maintained.
C. Flexible premiums with coverage continuing regardless of funding
Incorrect. Flexible premiums do not make funding irrelevant.
D. Premiums that can change only when the policy is renewed
Incorrect. Universal life flexibility is not limited to a term-policy renewal date.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.