Which is not a characteristic of a universal life policy?

• A. Flexible Premiums
• B. Adjustable death benefit
• C. Cash value earns interest credited by the insurer
• D. Fixed Surrender Value

Answer: (D)

Universal life is defined by three main features: flexible premiums, an adjustable death benefit, and a cash value that earns interest credited by the insurer. The cash value grows (or shrinks) based on credited interest and policy charges, and it can be affected by how much premium is paid and any loans or withdrawals taken. Because of this fluid structure, the surrender value is not locked in; it changes over time as the cash value fluctuates and charges or loans are applied. A fixed surrender value would imply a guaranteed, unchanging amount, which universal life does not provide. That’s why the statement about a fixed surrender value doesn’t fit universal life.