Series 7 practice questionmediumPackaged Products — Variable Life Insurance
In a variable universal life (VUL) policy, which of the following is TRUE?
- APremiums are fixed and cannot be changed
- BThe cash value is invested only in the general account
- CThe death benefit is fixed and cannot increase
- DThe policyholder has flexible premiums and can choose separate account investments✓ Correct answer
Explanation
Why D — The policyholder has flexible premiums and can choose separate account investments
Variable universal life combines the investment flexibility of variable life (separate account choices) with the premium flexibility of universal life (adjustable premiums and death benefit). The policyholder can increase, decrease, or skip premiums (within limits) and direct cash value among various sub-accounts. Both the cash value and death benefit above the guaranteed minimum can fluctuate based on investment performance.
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