Life & Health: Chapter 5 Quiz

An adjustable policy allows the policyowner to change the type of insurance, while Variable, Convertible, and Renewable policies do not offer the same flexibility.

Variable Whole Life insurance is a type of permanent life insurance that combines a death benefit with a savings component. It offers fixed premiums and allows policyholders to allocate a portion of their premiums to a separate account that can be invested in various sub-accounts.

Variable Universal Life is a type of life insurance policy that provides both a death benefit and an investment component. It offers flexibility in premium payments and allows policyholders to choose how to invest their cash value among a variety of sub-accounts. Whole Life Insurance, Term Life Insurance, and Indexed Universal Life do not offer the same level of flexibility in premiums and investment options as Variable Universal Life.

Universal Life policies offer flexible premiums and provide a combination of term insurance and a savings component, unlike Whole Life which is a permanent policy with fixed premiums, Variable Universal Life which combines elements of universal and variable life insurance, and Term Life which offers coverage for a specific term.

Variable Universal Life and Variable Whole Life policies have a separate account where policyholders can choose how to invest their premiums, unlike other types of life insurance policies.

Universal and Variable Universal life insurance policies allow the policyholder to take a partial surrender of the Cash Value while Whole Life and Term Life policies do not offer this feature.

Universal life insurance policies provide a guaranteed minimum interest rate on the cash value component, ensuring growth over time. Term life insurance does not have a cash value component, while Whole Life policies have a guaranteed cash value component but may not provide the same growth potential as Universal life policies. Variable Universal life policies do not guarantee growth of cash value as the cash value is invested in separate accounts.

In the case of a Variable policy, it is the policyowner who is responsible for directing the investment of funds in the separate account. This gives the policyowner more control and flexibility in managing the investments within the policy.

Cash Value in Universal Life grows based on the interest earned on the policy's cash account, which is typically on an interest sensitive basis. This means that the growth is directly tied to prevailing interest rates.