Life License Qualification Program (LLQP) Practice Exam

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

1. Joint Life

2. Adjustable Life

3. Variable Universal Life

4. Universal Life

The correct answer is: Variable Universal Life

The type of life policy that features a monthly mortality charge along with self-directed investment choices is known as Variable Universal Life (VUL). This policy combines elements of both universal life and variable life insurance. In Variable Universal Life insurance, the policyholder has the flexibility to choose how their cash value is invested among a range of investment options, typically consisting of mutual funds or other securities. This allows for potential growth linked to the performance of these investments. The monthly mortality charge refers to the cost of insurance that is deducted from the policy's cash value, and it varies based on the insured's age and health status. This combination of investment options and a variable cost structure allows policyholders to have both a life insurance component and the ability to pursue investment growth based on their preferences and risk tolerance. The intricacies of this type of policy cater to individuals looking for both insurance protection and investment opportunities, which distinguishes it from other life insurance products. In contrast, other types of policies, such as Joint Life, Adjustable Life, or Universal Life, may have different features and structures concerning investment choices or how charges are applied. Thus, the characteristics of Variable Universal Life make it the correct choice for the question posed.