NASAA Series 65, Uniform Investment Adviser Law ExaminationInvestment Vehicle CharacteristicsMedium
A client approaches you seeking an investment that provides tax-advantaged growth potential, a death benefit, and flexibility in premium payments and investment choices. Which of the following insurance-based products would best meet these needs?
- AFixed Annuity
- BTerm Life Insurance
- CWhole Life Insurance
- DUniversal Life Insurance
Show answer & explanationAnswer & explanation
Correct answer: D. Universal Life Insurance
Universal Life Insurance offers a death benefit, tax-advantaged growth of the cash value, and provides flexibility in premium payments and investment options for the policyholder. This aligns well with the client's stated needs.
Why the other options are wrong
- A. A fixed annuity is primarily an income product and does not offer a death benefit or the same investment flexibility as universal life insurance.
- B. Term life insurance provides a death benefit for a specific period but does not accumulate cash value or offer investment choices.
- C. Whole life insurance has fixed premiums and less investment flexibility compared to universal life.
Universal Life Insurance
A type of permanent life insurance with a flexible premium and adjustable death benefit, offering a cash value component that grows tax-deferred and allows for investment choice.
- Flexible premiums and death benefit.
- Cash value grows tax-deferred.
- Offers investment choices within sub-accounts.
- Provides a death benefit.
Memory trick: Universal Life is Universally Flexible for your future.