Primerica Life Producer Practice Test

Which type of life insurance policy allows the policyowner to skip premium payments?

1. Whole Life

2. Term Life

3. Universal Life

4. Variable Life

The correct answer is: Universal Life

Universal Life insurance is designed with flexibility in mind, which is one of its key features. This policy allows the policyowner to adjust their premium payments, including the ability to skip payments if there's enough cash value built up in the policy to cover the cost of the insurance. Unlike Whole Life, which requires fixed premiums and provides a guaranteed death benefit and cash value accumulation, Universal Life offers more adaptability. Policyowners can choose how much they want to pay in premiums (within certain limits) and can alter the death benefit as their needs change. This flexibility extends to the potential for skipping premium payments, making it suitable for individuals seeking a policy that can adapt to their financial situations over time. Term Life and Variable Life insurance typically do not allow for skipped payments in the same way. Term Life requires regular premium payments for the coverage duration, and Variable Life involves investment components with premiums that are tied to the performance of underlying investments, generally requiring consistent funding to maintain coverage.