Oklahoma Life Producer Practice Exam

What type of death benefit under a Universal Life pays the face amount and the cash value?

1. Type A

2. Type B

3. Type C

4. Type D

The correct answer is: Type B

The type of death benefit under a Universal Life insurance policy that pays both the face amount and the accumulated cash value is known as Type B. In this scenario, the death benefit increases as the cash value grows. This means that when the insured passes away, the beneficiary will receive the face amount of the policy plus the cash value that has accumulated up to that point. This structure is particularly beneficial for policyholders who wish to ensure that their beneficiaries receive an amount greater than just the initial coverage amount, reflecting both the insurance protection and the savings component that has been built up over time. It contrasts with other types of death benefits, which may only offer one of these components instead of both, thereby providing a more comprehensive financial benefit to the insured’s heirs.