Washington Life Producer Practice Exam

In a universal life policy, which of the following characteristics often applies?

1. Premiums are fixed and cannot change

2. The death benefit can be adjusted

3. There is no cash value accumulation

4. It has no investment component

The correct answer is: The death benefit can be adjusted

In a universal life policy, one of the key features is the flexibility it offers in adjusting the death benefit. Policyholders can often increase or decrease the coverage amount, which allows them to tailor the policy to their changing insurance needs over time. This characteristic makes universal life insurance particularly attractive for individuals who may have evolving financial responsibilities, such as raising children or planning for retirement. The ability to adjust the death benefit is coupled with other features, such as the option to modify premium payments and the accumulation of cash value based on the interest credited by the insurer. This flexibility is a primary distinguishing factor of universal life insurance as compared to other permanent and term life insurance policies.