All of these are characteristics of a universal life insurance policy EXCEPT

• A. Flexible premiums
• B. Cash value credited at a credited interest rate
• C. Fixed Surrender Value
• D. Policy loans available

Answer: (C)

Universal life centers on flexibility and a cash value that grows with interest credited by the insurer. Premiums can be adjusted, and as long as enough premium is paid to cover the cost of insurance and expenses, you can modify or even skip payments. The cash value earns interest at a rate declared by the insurer, which can change over time rather than being locked in at a single guaranteed amount. You can also borrow against the cash value, using policy loans if you need access to funds without surrendering the policy.

The surrender value, however, is not fixed in universal life. When you surrender, you receive the cash value minus any surrender charges, so the amount can vary. A fixed surrender value is more typical of traditional whole life contracts, where the policy guarantees a set cash value. So the statement about a fixed surrender value doesn’t describe a universal life feature.