West Virginia State Life Insurance Practice Exam

What distinguishes Variable Universal Life from other types of life insurance?

1. Fixed premiums and benefits

2. No investment component

3. Control over investment choices by the policyholder

4. Guaranteed cash value accumulation

The correct answer is: Control over investment choices by the policyholder

Variable Universal Life (VUL) is distinguished by allowing policyholders significant control over their investment choices. In this type of policy, the policyholder can allocate the cash value among a variety of investment options, such as mutual funds or other securities. This means that the cash value can fluctuate based on the performance of these investments, offering the potential for greater growth than more traditional forms of life insurance. This level of control over investment choices is what sets Variable Universal Life apart from other types of life insurance, which may have fixed premiums and benefits, limited or no investment components, and guaranteed cash value accumulation based on a specific schedule. In contrast, VUL provides a blend of flexible premiums and investment opportunities that can cater to the individual financial goals of the policyholder, emphasizing an important aspect of modern life insurance products.