Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

A life insurance policy with a "flexible premium" option allows the policyholder to have the ability to choose different payment amounts within specified limits. This means that the policyholder can adjust their premium payments based on their financial situation or specific needs at any given time, rather than being locked into a fixed payment schedule. This flexibility can be particularly beneficial for individuals whose income may fluctuate or who wish to manage their cash flow more actively.

For instance, in a flexible premium universal life insurance policy, the policyholder might choose to pay a higher premium one year when they have extra funds and a lower premium in another year, provided they stay within the policy's minimum and maximum limits. This adaptability gives policyholders more control over their insurance coverage and financial planning strategy.

Other options do not appropriately capture the essence of flexible premiums. A rigid monthly payment requirement would contradict the very principle of flexibility, while a fixed premium restricts the policyholder's ability to adjust payments. Lastly, the notion of paying a higher premium for preferred coverage does not relate to the concept of flexible premiums, as it addresses coverage type rather than payment variability.