How does a universal life policy differ from whole life?

A universal life policy differs from whole life primarily in its flexibility regarding premium payments and death benefits, making the selection that highlights this flexibility the most accurate.

With universal life insurance, policyholders have the option to adjust their premium payments within certain limits, meaning they can pay more or less in a given period based on their financial situation. Additionally, the death benefit amount is adjustable; policyholders can choose to increase or decrease the coverage as their needs change over time. This contrasts with whole life insurance, which typically requires fixed premium payments and provides a guaranteed death benefit that does not change.

This adaptability is particularly valuable for individuals whose financial circumstances may vary or for those who expect their life insurance needs might change over time. The characteristics of universal life insurance reflect a more modern approach to life insurance, focusing on the policyholder's changing needs, which is a key advantage of such policies over the more rigid structure of whole life insurance.