Oklahoma Life Producer Practice Exam

What two types of death benefits fall under a Universal Life policy?

1. Term A and Term B

2. Type A and Type B

3. Flexible A and Flexible B

4. Fixed A and Fixed B

The correct answer is: Type A and Type B

Under a Universal Life policy, the two types of death benefits available are referred to as Type A and Type B. Type A, or Level Death Benefit, pays the face amount of the policy upon the death of the insured. This means that the death benefit remains consistent throughout the life of the policy, providing a predictable payout for beneficiaries. Type B, or Increasing Death Benefit, offers a death benefit that includes the face amount of the policy plus the accumulated cash value. This option allows the death benefit to increase over time as the cash value grows, potentially providing a larger payout to beneficiaries if the insured passes away later in life. Understanding these options is crucial for potential policyholders, as they help in tailoring the policy to meet specific financial needs and goals, whether one seeks stable coverage or the growth of benefits over time. This distinction is fundamental to Universal Life insurance, offering flexibility that aligns with individual financial strategies.