Life & Health Insurance Exam (National Portion)Policy Provisions, Options, and RidersMedium
A policyholder with a Universal Life (UL) insurance policy wants to increase the death benefit. What is typically required for this change?
- AA new policy application and medical exam for the entire policy.
- BOnly the written request of the policyowner.
- CApproval from the state insurance department.
- DEvidence of insurability for the increase.
Show answer & explanationAnswer & explanation
Correct answer: D. Evidence of insurability for the increase.
Increasing the death benefit on a Universal Life policy, or any life insurance policy, typically requires evidence of insurability for the *increase* to prevent adverse selection, as the insurer is taking on greater risk.
Why the other options are wrong
- A. A new application and full medical exam for the *entire* policy is usually not necessary; only for the amount of the increase.
- B. While a written request is needed, it's usually not sufficient on its own for a death benefit increase due to underwriting considerations.
- C. State insurance departments regulate policy forms and practices, but individual death benefit changes don't require their direct approval.
Universal Life Death Benefit Increase
A feature of Universal Life policies allowing the policyowner to increase the death benefit, which typically requires the insured to provide evidence of insurability for the additional coverage amount.
- UL policies offer flexible death benefit adjustments.
- Increases usually require proof of good health.
- Prevents adverse selection.
- Decreases are often easier and don't require underwriting.
Memory trick: UL: Underwriting for Larger coverage.