Massachusetts Life Producer Practice Exam

What do universal life insurance policies generally offer that traditional whole life policies do not?

1. Fixed premiums.

2. Flexible premium payments.

3. Guaranteed death benefits.

4. Higher cash values.

The correct answer is: Flexible premium payments.

Universal life insurance policies are designed to provide policyholders with greater flexibility compared to traditional whole life insurance policies. One of the key features that distinguishes universal life from whole life is the ability to adjust premium payments. With universal life, policyholders can opt to pay more than the minimum premium during certain periods, or they can reduce their premium payments if necessary, as long as there is enough cash value to cover the policy's cost. This flexibility can be particularly advantageous for individuals whose financial situations may change over time. In contrast, traditional whole life policies typically require fixed premiums that do not allow for adjustments based on the policyholder's current financial status. This means that policyholders are committed to a set payment schedule, which may not suit everyone's needs over time. The ability to adjust premium payments in universal life policies allows for a more tailored approach to life insurance, making it appealing for those who value financial flexibility.