LLQP Life Insurance · Component 2.1 · 30% of the exam
A client wants to know the minimum he must deposit into his universal life policy each year. The answer is:
- AThe same as a whole life premium for the same face amount, since both products cover the same mortality risk
- BThe maximum allowed by the exemption test, since deposits below that level leave the policy under-funded
- Enough to cover the monthly cost of insurance and charges, unless the account value can absorb them
- DZero in every year, since a universal life policy can never lapse once it has been issued and the first deposit made
Correct answer: C) Enough to cover the monthly cost of insurance and charges, unless the account value can absorb them
UL has a floor set by charges, not a fixed premium. A policy with a healthy fund can skip deposits temporarily because charges are drawn from the fund. When the fund runs low, the minimum deposit is what keeps the policy alive.
Why the other options are wrong
- AUL has no fixed premium equivalent to whole life.
- BThe exempt maximum is the ceiling, not the minimum.
- DZero works only while the fund can carry the charges.
Exam tip
UL minimum = cover the charges; maximum = the exempt limit. Between them, flexibility.
Common mistake
Believing UL deposits are optional indefinitely.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.