Washington Life Producer Practice Exam

What is the feature that differentiates a universal life policy from a whole life policy?

1. Guaranteed cash value

2. A flexible premium schedule

3. Fixed death benefit

4. Non-participating policies

The correct answer is: A flexible premium schedule

A universal life policy is characterized by its flexible premium schedule, which is one of its distinguishing features compared to a whole life policy. In a universal life policy, policyholders have the ability to adjust their premium payments - they can choose to pay more than the minimum premium or even skip payments, provided there is enough cash value to cover the cost of insurance. This flexibility allows policyholders to adapt their insurance coverage based on their financial situation and needs. In contrast, a whole life policy typically has fixed premiums that must be paid consistently over the life of the policy. This provides predictability in scheduling payments but lacks the adaptability offered by universal life. While guaranteed cash value, fixed death benefits, and non-participating policies are all terms typical in discussions about life insurance, they do not define the core differentiation between universal and whole life policies as effectively as the flexible premium schedule does. So, the ability to adjust premium payments significantly marks the universal life policy's flexibility as compared to the more rigid structure of whole life policies.