Which policy feature makes a universal life policy different from a whole life policy, in terms of premium payments?

• A. Fixed premium schedule
• B. A flexible premium schedule
• C. Step-up premium schedule
• D. None of the above

Answer: (B)

Universal life policies let you control how much and when you pay premiums, which is different from whole life that uses a fixed, level premium. In universal life, premiums are flexible: you can pay more or less than the planned amount as long as the charges and cost of insurance are covered, and the policy’s cash value can be used to fund part of the cost over time. If you pay more, the cash value grows and can help fund future costs; if you pay less, the cash value may be used to cover the difference, or the policy could lapse if the minimum is not met. This ability to adjust the premium schedule is what distinguishes universal life in terms of premium payments.