North Carolina Life Insurance Practice Exam

One of the key benefits of universal life insurance is its flexibility, allowing policyholders to adjust both premiums and death benefits. This dynamic feature differs from whole life insurance, which typically involves fixed premiums and guaranteed death benefits for the life of the policy.

With universal life, policyholders have the option to increase or decrease their premium payments within certain limits and can also change the death benefit amount. This means that if policyholders find themselves in a situation where they need to pay more in premiums or decrease the coverage amount, they have the ability to do so without the constraints normally found in whole life policies. This adaptability can be particularly advantageous for individuals whose financial situations may change over time, giving them greater control over their insurance costs and coverage.

In contrast, the other options presented do not effectively highlight the unique advantages of universal life insurance. Fixed premiums are characteristic of whole life policies, guaranteed death benefits can be similar in both types of insurance but are not inherently higher in universal life, and while there is a contestability period in both types of policies, it's not a distinguishing feature of universal life insurance.