Universal Life

A client wanting a death benefit plus market-linked growth with a floor is suited to:

1. A.Accidental death coverageThis pays only when death results from an accident and accumulates nothing along the way. It supplies neither the broad death benefit nor the growth component described.
2. B.A fixed immediate annuityAn immediate annuity does offer a kind of floor, since the payments are fixed, which gives it some appeal. But it begins paying out at once, has no index linkage, and provides no death benefit.
3. C.Level term insuranceLevel term supplies the death benefit and stops there. With no cash value there is nothing to link to an index and no floor to protect.
4. D.Indexed universal lifeCorrect - index-linked with a floor.

Why: Indexed universal life links cash-value growth to an index with a cap and a floor.

Someone wanting permanent protection plus cash value to borrow against should consider:

1. A.Accidental death coverage onlyThe trigger here is narrow, reaching only accidental death, and nothing accumulates behind it. A client who dies of illness leaves nothing, and there is no fund available to borrow against.
2. B.Level term onlyLevel term holds the premium steady, which can make it feel permanent. But the coverage still expires at the end of the period and no reserve ever builds up to borrow from.
3. C.Whole life or universal lifeCorrect - permanent, cash-value policies.
4. D.A pure disability policyThis addresses lost income during life rather than protection at death. It covers a different risk altogether and creates no borrowable value.

Why: Whole life or universal life provide lifelong coverage and accessible cash value.

Universal life insurance generally allows:

1. A.Changing the insuredUniversal life is flexible about premiums and death benefit, which is what makes this tempting. That flexibility never reaches the insured, though; the mortality risk was underwritten on one life and stays there.
2. B.Partial withdrawals from cash value (which may reduce the benefit)Correct - UL allows withdrawals.
3. C.Tax-free unlimited withdrawalsWithdrawals are permitted, but not on these terms. Amounts above the owner's basis become taxable, and taking money out reduces the death benefit, so neither unlimited nor uniformly tax-free holds up.
4. D.No access to cash value everThis describes term insurance. Access to accumulated value is one of the defining features of universal life.

Why: Universal life typically permits partial withdrawals from cash value, which may reduce the death benefit.

In a universal life policy, a waiver of monthly deduction rider:

1. A.Covers the monthly charges if the insured is disabledCorrect - UL analog to waiver of premium.
2. B.Refunds all premiumsRefunding premiums is what the suicide clause does within its stated window. This rider looks forward instead, absorbing the ongoing charges so the coverage survives the insured's disability.
3. C.Doubles the death benefitDoubling belongs to the accidental death rider. This one protects the policy's funding rather than enlarging what gets paid on a claim.
4. D.Adds a child riderExtending coverage to children is a separate rider altogether. This one absorbs the internal charges of the existing policy and brings no new insured under it.

Why: This rider covers the policy's monthly deductions/charges if the insured becomes disabled, keeping the policy in force.