Oklahoma Life Producer Practice Exam

Which type of insurance offers flexible premium schedules, differentiating it from other Whole Life options?

1. Modified Life

2. Universal Life

3. Term Life

4. Graded Premium Life

The correct answer is: Universal Life

Universal Life insurance is designed to provide flexibility in premium payments, which distinguishes it from traditional Whole Life insurance. With Universal Life, policyholders can adjust the amount and frequency of their premium payments. This means that during certain periods, they can pay less than the standard required premium, or even skip payments, as long as there is enough cash value in the policy to cover the cost of insurance. This flexibility accommodates changing financial situations, allowing individuals to manage their insurance costs while maintaining the benefits of a life insurance policy. Additionally, Universal Life policies typically include a cash value component that grows tax-deferred, giving policyholders the opportunity to access or borrow against that accumulated cash value. In contrast, other types of life insurance options like Term Life provide coverage for a specific period with no cash value and fixed premiums, while Whole Life insurance offers guaranteed premiums and death benefits without the premium flexibility that Universal Life does. Graded Premium Life features premiums that increase over time but does not offer the same level of flexibility in premium payments as Universal Life. Thus, the unique aspect of premium flexibility in Universal Life makes it the correct choice in this scenario.