Question 27

Universal life allows for a partial surrender.

Universal life insurance policies provide the flexibility to make partial surrenders of the cash value accumulated in the policy, while maintaining coverage.

A) Variable whole life.

Variable whole life insurance policies typically allow for cash value accumulation, but the ability to make partial surrenders can vary based on the policy's terms and investment performance. Generally, while they can have cash value, they are not primarily designed for partial surrenders as a standard feature.

B) Term life.

Term life insurance provides coverage for a specific period and does not accumulate cash value. Therefore, partial surrenders are not applicable as there is no cash value from which to withdraw funds.

C) Universal life.

Universal life insurance is designed with flexible premium payments and allows policyholders to make partial surrenders from the cash value. This feature is a key advantage, enabling policyholders to access funds while keeping their insurance coverage in force.

D) Modified whole life.

Modified whole life insurance policies have fixed premiums but typically do not allow for partial surrenders in the same way as universal life policies. The structure of modified whole life usually does not accommodate withdrawals without affecting the policy's death benefit.

Conclusion

Universal life is the correct answer as it explicitly allows for partial surrenders of the cash value, providing flexibility that other options do not offer. In contrast, term life lacks cash value altogether, while variable and modified whole life policies do not consistently support partial surrenders as a core feature.