Life License Qualification Program (LLQP) Practice Exam

Which type of life insurance policy typically allows for flexible premiums and death benefits?

1. Term Life

2. Whole Life

3. Universal Life

4. Variable Life

The correct answer is: Universal Life

Universal Life insurance is known for its flexibility in both premiums and death benefits, making it a popular choice for policyholders seeking adaptable coverage. With Universal Life policies, individuals can adjust their premium payments and death benefits to better suit their financial situations and long-term goals. Policyholders can pay more than the minimum premium, allowing for tax-deferred investment growth within the policy's cash value component. They also have the option to decrease or increase their death benefit, as long as it meets certain requirements set by the insurer. This level of flexibility is attractive for individuals who want control over their insurance coverage based on changing life circumstances. In contrast, Term Life policies generally have fixed premiums and do not build cash value, while Whole Life policies have fixed premiums with guaranteed death benefits and cash values. Variable Life insurance allows for investment options but does not provide the same level of premium and death benefit flexibility as Universal Life. Therefore, Universal Life stands out as the policy that embodies the flexibility sought after in this context.