Policyholder cannot earn market rate of interest on his cash value
In universal life plan, policyholder can vary payments of premium
Universal life plan is a traditional plan of assurance
Variable life insurance is a temporary plan of insurance
Answer is Right!
Answer is Wrong!
The correct answer is: B. In universal life plan, policyholder can vary payments of premium.
A universal life insurance policy is a type of permanent life insurance that combines the features of term life insurance and whole life insurance. With universal life insurance, you can choose to make level or variable premium payments. Level premium payments are the same amount each month, while variable premium payments can change based on your income or financial situation.
Universal life insurance also allows you to access your cash value while you’re still alive. You can borrow against your cash value or withdraw it, but there are fees and penalties for doing so.
Here is a brief explanation of each option:
- Option A: Policyholder cannot earn market rate of interest on his cash value. This is incorrect. With universal life insurance, you can earn interest on your cash value at a rate that is linked to the performance of the stock market. However, there is no guarantee that your cash value will grow, and it could even decline in value.
- Option B: In universal life plan, policyholder can vary payments of premium. This is correct. As mentioned above, universal life insurance allows you to choose to make level or variable premium payments.
- Option C: Universal life plan is a traditional plan of assurance. This is incorrect. Universal life insurance is a relatively new type of life insurance, and it is not considered to be a traditional plan of assurance.
- Option D: Variable life insurance is a temporary plan of insurance. This is incorrect. Variable life insurance is a permanent type of life insurance, and it is not considered to be a temporary plan of insurance.