Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly describes a variable universal life (VUL) policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
VUL merges two product features: the premium flexibility of universal life and the separate-account investment options of variable life. The policyowner directs cash value into subaccounts whose performance is not guaranteed, so the owner bears the investment risk; a minimum death benefit is generally guaranteed only while the required premiums are paid. Because the product has a securities component, selling VUL requires both a life insurance license and securities registration, and the policy must be offered with a prospectus.
Why the other options are wrong
- B) A fixed guaranteed general-account rate describes traditional fixed products such as whole life, not VUL, whose subaccounts fluctuate with market performance.
- C) VUL is permanent coverage that builds cash value; it is not term insurance and does carry a savings element.
- D) Fixed premiums and a guaranteed cash-value schedule describe ordinary whole life, which lacks the flexibility and investment control of VUL.
Memory hook
VUL = universal flexibility + variable risk. You steer the subaccounts; you own the market swings.