Maryland Life and Health Insurance License Practice Exam

On which type of life insurance can policyowners change both premium and face amount?

1. Whole life insurance

2. Term life insurance

3. Adjustable life insurance

4. Universal life insurance

The correct answer is: Adjustable life insurance

Adjustable life insurance is a flexible type of policy that allows policyholders to modify both the premium and the face amount of their coverage. This flexibility is a key feature of adjustable life insurance, making it appealing for individuals whose financial situations or coverage needs may change over time. Policyowners can increase or decrease the death benefit, which can also affect the premium amount, allowing them to tailor the insurance policy to fit their current needs. In contrast, whole life insurance typically offers set premiums and benefits throughout the life of the policy, while term life insurance provides coverage for a specified period with fixed premiums and does not allow for changes in face amount. Universal life insurance has some flexibility in adjusting premium and face amount, but it typically functions within a framework that is less adjustable than adjustable life insurance. Thus, adjustable life insurance is specifically designed to offer both premium and face amount adjustments, making it the correct answer.