Arizona Life and Health Practice Exam

Which statement about universal life insurance is NOT true?

1. It offers flexible premium payments.

2. It usually includes a minimum guaranteed cash value for the policy duration.

3. Its death benefit can be adjusted by the policyholder.

4. It accumulates cash value based on current interest rates.

The correct answer is: It usually includes a minimum guaranteed cash value for the policy duration.

The statement that is not true about universal life insurance is that it usually includes a minimum guaranteed cash value for the policy duration. Universal life insurance is designed to provide flexibility in both premium payments and death benefits. While it does accumulate cash value, which is influenced by current interest rates, it typically does not guarantee a cash value that is set for the entire duration of the policy. Instead, the cash value can vary based on the performance of the policy's investments and can fluctuate over time. The options regarding flexible premium payments, the ability of the policyholder to adjust the death benefit, and accumulation of cash value based on interest rates accurately reflect the characteristics of universal life insurance. This flexibility and variability are key features that distinguish universal life from whole life insurance, which typically offers a guaranteed cash value.