What is "universal life insurance"?

• A. A term life policy with a fixed premium
• B. A flexible premium insurance policy that combines life coverage with a cash value component
• C. A type of insurance for the elderly only
• D. A policy with guaranteed renewable benefits only

Answer: (B)

Universal life insurance is a type of flexible premium insurance that not only provides a death benefit but also incorporates a cash value component that accumulates over time. This type of insurance offers policyholders the ability to adjust their premiums and death benefits, allowing for greater customization based on individual financial situations and needs.

The cash value grows tax-deferred, giving policyholders the opportunity to potentially accumulate savings that can be accessed during their lifetime. This flexibility is a key characteristic of universal life insurance, distinguishing it from other types of life insurance such as traditional whole life policies or term life policies which do not offer such features.

Overall, universal life insurance provides a combination of life insurance protection and savings potential, making it a versatile option for those who seek both life coverage and a way to grow their savings within their insurance policy.