FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationRegulatory Fundamentals and General Product KnowledgeMedium
A client is interested in an investment product that offers a guaranteed death benefit, flexible premium payments, and cash value accumulation that can grow based on the performance of a separate account. Which of the following products BEST fits this description?
- ATerm Life Insurance
- BUniversal Variable Life Insurance
- CFixed Annuity
- DWhole Life Insurance
Show answer & explanationAnswer & explanation
Correct answer: B. Universal Variable Life Insurance
Universal Variable Life insurance combines the flexible premiums of Universal Life with the investment flexibility and separate account performance of Variable Life, offering a guaranteed death benefit and cash value tied to market performance.
Why the other options are wrong
- A. Term life insurance provides a death benefit for a specific period but does not accumulate cash value or offer investment features.
- C. Fixed annuities offer guaranteed payments but do not have cash value tied to a separate account or flexible premiums.
- D. Whole life insurance has guaranteed cash value and death benefit but lacks flexible premiums and separate account investment options.
Universal Variable Life Insurance
A type of permanent life insurance that offers flexible premiums and a death benefit, with cash value growth tied to the performance of a separate account.
- Combines features of Universal Life and Variable Life.
- Flexible premium payments.
- Cash value fluctuates with separate account performance.
- Guaranteed minimum death benefit.
Memory trick: Life's choices: term's temporary, whole's constant, universal's flexible, variable's market-driven.