Which statement about an adjustable life policy is true?

• A. The death benefit and premiums are adjustable
• B. Premiums are fixed for the life of the policy
• C. There are no cash value components
• D. Dividends are guaranteed

Answer: (A)

Adjustable life policies are built for flexibility: you can change both how much coverage you have (the death benefit) and how much you’re paying in premiums over time, within the policy’s limits. This setup lets you tailor protection to changing needs, such as income levels or family obligations, and then adjust payments to stay aligned with those changes. The policy usually includes a cash value component that grows with premiums and credited interest, which is another part of how the plan remains flexible and can fund future changes.

Why other statements aren’t correct: premiums aren’t fixed for life in this type of policy—flexibility is the point. There is a cash value component, so saying there are no cash values would be inaccurate. Dividends aren’t guaranteed in most cases, and while some policies may pay dividends, they aren’t guaranteed outcomes.