Quick Answer: Which Is Not True About A Variable Universal Life Insurance Policy?

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Which is true concerning a variable universal life policy?

With Variable Universal Life, the policyowner controls the investment of cash values and selects the timing and amount of premium payments. T has a term policy that allows him to continue the coverage after expiration of the initial policy period.

Which of the following is not a characteristic of a variable universal life policy?

Which of the following is not a characteristic of a variable universal policy? The variable universal life policy DOES have cash value that varies with the performance of the investment. The correct answer is: It has no cash value.

Which of the following is true about universal life insurance?

Which of the following is true of universal life insurance? The amount of insurance coverage cannot be changed. Premiums are set and cannot be changed. It does not clearly state the rate of interest that is credited on the policy reserves.

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How is a variable universal life insurance policy different from a universal life insurance policy quizlet?

Universal life insurance guarantees some minimum level of interest for the cash value. Variable life insurance: Has level premiums —Does not guarantee a rate of return on the cash value — Variable life insurance does not guarantee a rate of return on the cash value.

Why is variable universal life insurance bad?

When a variable universal life policy isn’t adequately funded from the outset, a low return on invested premiums will hasten the policy’s failure. The cost of insurance in a variable universal life policy is so high that inadequate growth of the cash value will result in increased premiums.

How does a variable universal life insurance policy work?

Variable universal life ( VUL ) insurance is a type of permanent life insurance policy that allows for the cash component to be invested to produce greater returns. VUL insurance policies are built on traditional universal life insurance policies but have a separate subaccount that invests the cash piece in the market.

How do I get out of a variable in universal life policy?

For variable life insurance policies, if you withdraw a greater amount of cash value than the total amount you’ve paid in premiums, you pay taxes on the difference. This also applies if you surrender the policy. You would have to pay surrender charges to make a withdrawal during the first several years.

What is a corridor in relation to a universal life policy?

What is a corridor in relation to a Universal Life insurance policy? The gap between the total death benefit and the policy’s cash value. The gap between when a claim is filed and when the death benefit is received. The amount of interest that has accumulated in the policy’s cash value.

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What is an element of variable life policy?

Variable universal life is a type of permanent life insurance policy with features that include cash value, investment variety, flexible premiums and a flexible death benefit.

What happens when a universal life insurance policy matures?

When a policy reaches its maturity date, you generally receive payment and coverage ends. Depending on the policy, the payment might be the death benefit or a specified dollar amount, but it’s usually equal to the policy’s cash value.

What are the benefits of a universal life policy?

It’s permanent life insurance – like whole life – with coverage that lasts a lifetime and builds actual cash value. A universal life policy also gives you the flexibility to raise or lower premium payments within certain limits, so it can cost less than whole life coverage.

Does a universal life policy expire?

A universal life policy will expire if you stop paying the premiums and the cash value becomes depleted. If you need life insurance, it’s best to keep the policy payments up to date. If you have to buy a new policy later you’l be charged at your older age and may have to take a new life insurance medical exam.

Who regulates a variable universal life policy?

FINRA has jurisdiction over the investment professionals and firms that sell variable life and variable universal life products. Insurance products often are developed to meet specific objectives. For example, long-term care insurance is designed to help manage health care expenses as you age.

What is the greatest risk in a variable life insurance policy?

The greatest risk in a variable life insurance policy is that the policyholder assumes the full risk of their investments. The insurance company doesn’t guarantee any rate of return, and doesn’t offer protection for investment losses.

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What are the two components of a universal policy?

How Does Universal Life Insurance Work? Universal policy premiums include two components: the cost of insurance amount and the savings component amount, also known as the cash value.

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