Tennessee Insurance Practice Exam

Adjustable Life insurance satisfies which of the following needs?

1. Fixed premium payments

2. Insured's need for flexible premiums

3. Simple death benefit options

4. Non-variable cash value growth

The correct answer is: Insured's need for flexible premiums

Adjustable life insurance is specifically designed to meet the insured's need for flexible premiums. This type of policy allows the policyholder to adjust the premium payments and the death benefit amount based on their current financial situation and coverage needs. The flexibility inherent in adjustable life insurance makes it an attractive option for individuals whose financial circumstances may change over time, as it allows them to adapt their insurance coverage without having to purchase a new policy. In contrast, fixed premium payments do not change and would not apply to an adjustable life policy, which is characterized by its flexibility. Simple death benefit options are typically more associated with traditional life policies rather than adjustable ones, which often provide various options for adjusting both coverage and premiums. Lastly, non-variable cash value growth is not a feature specific to adjustable life policies, as they can have variable cash value components that fluctuate based on the performance of underlying investments. This further underscores the unique benefit of flexibility that adjustable life insurance offers to policyholders.