The correct answer is: B. Two
Universal life insurance is a type of permanent life insurance that combines the features of term life insurance and whole life insurance. It offers a death benefit, cash value accumulation, and flexible premium payments.
The cash value of a universal life policy grows on a tax-deferred basis, and the policy owner can borrow against the cash value or surrender the policy for its cash value.
Universal life policies typically have a minimum premium requirement, but after two years, the policy owner may be able to reduce or eliminate the premium payments. This is known as the “premium flexibility” feature of universal life insurance.
The premium flexibility feature allows the policy owner to adjust the premium payments based on their financial situation. This can be helpful if the policy owner experiences a financial hardship or wants to save money.
However, it is important to note that reducing or eliminating the premium payments can also reduce the cash value accumulation and death benefit of the policy.
Therefore, it is important to discuss the premium flexibility feature with an insurance professional to determine if it is right for you.
Here is a brief explanation of each option:
- Option A: One year. This is not the correct answer because universal life policies typically have a minimum premium requirement for the first two years.
- Option B: Two years. This is the correct answer because after two years, the policy owner may be able to reduce or eliminate the premium payments.
- Option C: Three years. This is not the correct answer because universal life policies typically have a minimum premium requirement for the first two years.
- Option D: Four years. This is not the correct answer because universal life policies typically have a minimum premium requirement for the first two years.