Oklahoma Life Producer Practice Exam

What type of death benefit under a Universal Life pays the face amount only?

1. Type B

2. Type A

3. Type C

4. Type D

The correct answer is: Type A

In a Universal Life insurance policy, the type of death benefit that pays only the face amount of the policy is known as Type A. This means that upon the death of the insured, the beneficiary will receive the total death benefit equal to the policy's face amount, without any additional account value included. Type A is often referred to as the "level death benefit" option. Here, the cash value accumulated within the policy does not affect the death benefit; the amount remains constant as long as premiums are paid according to the policy requirements. This provides a straightforward and predictable benefit to the beneficiaries. In contrast, other benefit types, such as Type B, typically provide a death benefit that includes both the face amount and any accumulated cash value, which can result in a higher payout but also introduces more complexity. This distinction is essential for individuals evaluating universal life policies and considering their specific financial needs or goals concerning life insurance.