Massachusetts Life Producer Practice Exam

When is evidence of insurability required for a person already covered with a variable universal life policy?

1. When changing the investment options.

2. When applying for a loan against the policy.

3. When the death benefit is increased.

4. When the cash value is withdrawn.

The correct answer is: When the death benefit is increased.

Evidence of insurability is typically required when a policyholder wants to increase the death benefit of their existing variable universal life policy. This requirement ensures that the insurer assesses the current health status and lifestyle of the insured before agreeing to the increased coverage. This process protects the insurer from underwriting risks associated with a higher death benefit, as the increased coverage represents a larger potential payout. In the context of the other options presented, changing investment options or applying for a loan against the policy does not generally trigger the need for evidence of insurability. These actions are related to how the policy's cash value is managed or leveraged, rather than the risk associated with the insured's health. Similarly, withdrawing cash value from the policy does not necessitate evidence of insurability since it does not directly impact the death benefit coverage. The requirement for evidence of insurability specifically connects to changes in the coverage amount, which is why increasing the death benefit is the correct scenario that necessitates this additional underwriting process.