Rhode Island Life Insurance Practice Exam

Which type of life insurance allows for flexible premium payments and an adjustable death benefit?

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 that allows for flexible premium payments and an adjustable death benefit is universal life insurance. This insurance product is designed to provide policyholders with the ability to tailor their policy according to their financial needs and circumstances. With universal life insurance, policyholders can adjust both the premium payments and the death benefit amount within certain limits. This flexibility means that as one's financial situation changes, they can either increase or decrease their premium contributions or modify the death benefit. Additionally, universal life insurance typically includes a cash value component that grows over time, offering the policyholder potential access to funds if needed, while still providing life insurance coverage. This combination of flexibility in payment and adjustability in benefits makes universal life insurance distinct in comparison to other types, such as whole life insurance, which generally offers fixed premiums and benefits, or term life insurance, which is typically more straightforward with no cash value and fixed coverage limits for a specific term. Variable life insurance does allow investment options for the cash value, but it doesn't provide as much flexibility in premium payments as universal life insurance does.