PSI Ohio Insurance Practice Exam

Which type of policy allows the policyowner to change face value, premium amount, length of coverage, and type of coverage without changing policies?

1. Term life policy

2. Universal life policy

3. Adjustable life policy

4. Whole life policy

The correct answer is: Adjustable life policy

The adjustable life policy is designed to provide flexibility to the policyowner regarding various aspects of the insurance contract. This type of policy allows the policyowner to make changes to the coverage without needing to cancel or issue a new policy. Specifically, the policyowner has the ability to adjust the face value, premium amount, length of coverage, and even switch between different types of coverage. The flexibility is a key characteristic of adjustable life policies; as life circumstances change, such as income variations or changes in family needs, the policyholder can modify their insurance coverage to better match their current situation. This adaptability is crucial for individuals striving for both insurance protection and financial planning. In contrast, term life policies typically provide a fixed benefit for a specified period and do not offer such flexibility for changing coverage details. Whole life policies come with fixed premiums and a guaranteed death benefit, making them less adaptable than adjustable life policies. Universal life policies do allow for some adjustments, but generally, they are not as comprehensive in altering both premium and face value as adjustable life policies are.