Rhode Island Life Insurance Practice Exam

Which type of life insurance policy offers the ability to adjust premiums and death benefits?

1. Whole Life Insurance

2. Term Life Insurance

3. Universal Life Insurance

4. Variable Life Insurance

The correct answer is: Universal Life Insurance

The type of life insurance policy that offers the ability to adjust premiums and death benefits is universal life insurance. This flexibility is one of the key features of universal life policies, making them distinct from other types of life insurance. With universal life insurance, policyholders can modify their premium payments and, consequently, change the death benefit. This adaptability allows individuals to respond to changing financial circumstances or insurance needs over time. They can pay more than the required premium in some periods, which increases the cash value of the policy, and they can also choose to pay less in others, affecting the death benefit and overall coverage. Additionally, the cash value in a universal life policy typically earns interest based on current market rates, which can further influence the policy's performance and its benefits over time. This level of flexibility paired with the opportunity for cash accumulation makes universal life insurance a popular choice for those seeking customizable life insurance solutions.