Colorado Life Producer License Practice Test

Which feature is NOT associated with variable universal life insurance?

1. Flexible premium payments

2. The ability to withdraw cash value

3. Guaranteed death benefits at age 100

4. Investment options within the policy

The correct answer is: Guaranteed death benefits at age 100

Variable universal life insurance is characterized by several important features that distinguish it from other types of life insurance. One of the critical aspects is its flexibility, particularly regarding premium payments. Policyholders can adjust their premium payments and the amount of insurance coverage, which allows for a more tailored insurance solution to meet changing financial needs. Additionally, variable universal life insurance provides the ability to withdraw cash value from the policy. This cash value can grow based on the policyholder's selected investment options, which typically include a variety of sub-accounts ranging from stock and bond funds to money market options. This ability to invest the cash value in different financial instruments offers the policyholder a degree of control and potential for higher returns compared to fixed premiums and guaranteed interest policies. However, guaranteed death benefits at age 100 are not a feature associated with variable universal life insurance policies. While some policies might offer a guaranteed death benefit under specific conditions, many variable universal life insurance products do not guarantee a death benefit at any specific age, including age 100. Instead, these policies are designed to integrate investment performance with life insurance coverage, leading to variability in potential death benefits based on the performance of the underlying investments. In summary, the correct understanding here addresses why a guaranteed death benefit at a specific