Question 15

Universal life allows for a partial surrender.

Universal life insurance policies provide flexibility in premium payments and death benefits, along with the option for partial surrenders, which enables policyholders to withdraw a portion of their cash value while keeping the policy in force.

A) Modified whole life.

Modified whole life policies typically do not allow for partial surrenders, as they are designed to provide a level premium and death benefit over the life of the policy without the flexibility found in universal life policies. Thus, this option does not meet the criteria for allowing partial surrenders.

B) Universal life.

Universal life insurance is characterized by its flexible premium payments and the ability to adjust the death benefit, making it the correct choice for policies that allow partial surrenders. Policyholders can access the cash value accumulated in the policy while maintaining their coverage.

C) Variable whole life.

While variable whole life insurance policies do have a cash value component that can potentially be accessed, they generally do not offer the same level of flexibility for partial surrenders as universal life policies. Instead, the focus is on investment performance, which makes this option less applicable to the question.

D) Term life.

Term life insurance is primarily designed to provide coverage for a specific period and does not accumulate cash value; therefore, it does not permit partial surrenders. This option is not suitable for the question as it does not align with the characteristics of policies that allow for cash value access.

Conclusion

Universal life insurance is the only option that explicitly permits partial surrenders, offering the policyholder the ability to withdraw cash value while maintaining their policy. In contrast, modified whole life, variable whole life, and term life insurance do not provide this feature, making them unsuitable answers for the question.