Tennessee Insurance Practice Exam

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Which of the following elements is associated with a Variable Life policy?

A fixed, level premium
Adjustable death benefit
Guaranteed cash value accumulation
Investment in equity markets

The correct answer is: A fixed, level premium

A Variable Life policy is specifically designed to allow policyholders to have flexibility in their investment choices and often aligns with changing market conditions. One key feature of a Variable Life policy is the adjustable death benefit. This means that the policyholder can increase or decrease the death benefit amount based on their investment performance and personal needs, which differentiates it from traditional whole life policies that offer a fixed, level death benefit. The investment component of a Variable Life policy enables policyholders to invest in a variety of options, including equity markets. This investment potential does not guarantee cash value accumulation, as it depends on market performance. While a fixed, level premium characteristic is common in many types of life insurance policies, it does not represent the variable nature and adaptability of a Variable Life policy. Thus, the adjustable death benefit is a core characteristic of Variable Life insurance, making it the accurate answer to the question regarding the elements associated with this type of policy.