Oklahoma Life Producer Practice Exam

Which of the following describes a Universal Life policy?

1. It has a fixed premium every year.

2. It allows for flexible premiums and death benefits.

3. It combines elements of Term and Whole Life insurance.

4. It is only available for a limited time.

The correct answer is: It allows for flexible premiums and death benefits.

A Universal Life policy is characterized by its flexibility in both premiums and death benefits, which distinguishes it from other types of life insurance. This type of policy allows policyholders to adjust the amount they pay in premiums, rather than being locked into a fixed premium schedule, as is the case with whole life insurance. Additionally, policyholders can also modify the death benefit amount, which can be increased or decreased depending on their changing needs and preferences. The flexibility in a Universal Life policy is particularly beneficial for individuals whose financial circumstances might change over time, allowing them to adapt their life insurance coverage to their current situation. This adaptability is a significant selling point for Universal Life insurance. In contrast, term and whole life insurance have more rigid structures regarding premiums and benefit amounts, and a limited-time availability does not apply since Universal Life policies can remain in force as long as there are sufficient funds to cover the cost of insurance and any other associated costs.