The correct answer is C. I and II are true.
Universal life insurance is a type of permanent life insurance that allows the policy owner to vary the premium payments and earn a market-based rate of return on the cash value. The policy owner also has the flexibility to borrow against the cash value or surrender the policy for its cash surrender value.
Here is a brief explanation of each option:
- Option I: It allows policy owner to vary payments.
This is true. With universal life insurance, the policy owner can choose to make higher or lower premium payments than the policy’s minimum premium. This flexibility can be helpful if the policy owner’s income fluctuates or if they want to save money on their premiums.
- Option II: Policy owner can earn market based rate of return on cash value.
This is also true. The cash value of a universal life insurance policy is invested in a variety of assets, including stocks, bonds, and mutual funds. The policy owner can choose the investment options that they want their cash value to be invested in. The investment performance of the cash value will affect the amount of interest that the policy owner earns on their investment.
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