Primerica Life Producer Practice Test

A Universal Life insurance policy features which types of interest rates?

1. Fixed and Variable

2. Guaranteed and Current

3. Minimum and Maximum

4. Accrued and Simple

The correct answer is: Guaranteed and Current

A Universal Life insurance policy features guaranteed and current interest rates. This means that the policy has a minimum guaranteed interest rate that the cash value will earn, providing a safety net for the policyholder. In addition to the guaranteed rate, there is also a current interest rate, which is variable and can change based on the insurer's performance or prevailing economic conditions. This structure allows policyholders to benefit from potentially higher returns when the insurer performs well while still having the security of a guaranteed minimum rate. The combination of guaranteed and current interest rates is key to understanding the flexibility and benefits of Universal Life insurance, as it can adapt to different market conditions while also keeping some level of assurance for the cash value buildup. This dual-rate system is a distinctive feature that sets Universal Life policies apart from other types of life insurance, making it important for producers to communicate effectively to clients the advantages that come with this insurance product.