Question 12

Universal Life insurance does not have fixed premiums.

Universal Life insurance features flexible premiums, allowing policyholders to adjust their payments. Therefore, the statement that "premiums are fixed" is incorrect.

A) it has a flexible premium

This statement is correct. One of the main characteristics of Universal Life insurance is its flexible premium structure, which allows policyholders to vary the amount and timing of their premium payments based on their financial situation.

B) it has an adjustable death benefit

This statement is also correct. Universal Life insurance allows policyholders to adjust the death benefit amount, providing them with the flexibility to increase or decrease the benefit as their needs change over time.

C) premiums are fixed

This statement is incorrect. Unlike some other types of life insurance, Universal Life insurance does not have fixed premiums; instead, it offers flexibility in premium payments, which is a key feature of this policy.

D) there is a guaranteed minimum rate of interest

This statement is correct. Universal Life insurance typically includes a guaranteed minimum interest rate on the cash value component, ensuring that the cash value grows at a minimum specified rate over time.

Conclusion

The correct answer is that Universal Life insurance does not have fixed premiums, as it is designed to be flexible in both premium payments and death benefit amounts. All other options accurately describe features of Universal Life insurance, highlighting its adaptability and guaranteed growth attributes. Thus, option C stands out as the only statement that does not align with the characteristics of Universal Life insurance.