Connecticut Life & Health Insurance Practice Exam

The statement about cash value accumulations having a guaranteed minimum interest rate accurately reflects one of the key features of universal life insurance. This type of policy is designed to provide flexibility in premium payments and death benefits while also allowing for the accumulation of cash value.

The cash value accumulates based on a credited interest rate, which is typically determined by the insurance company. Importantly, there is a guaranteed minimum interest rate that the insurer is obligated to provide, ensuring that policyholders' cash values will not decrease due to lower-than-expected interest earnings. This aspect of universal life insurance is crucial for policyholders looking for a product that not only provides insurance coverage but also allows for potential savings growth over time.

In contrast to this, the other statements do not accurately reflect the characteristics of universal life insurance. For example, there are indeed cash value accumulations, as opposed to the claims made in other options. Additionally, premiums in universal life insurance can be flexible rather than fixed, and policyholders have the ability to adjust their premium payments and death benefits according to their financial situation and needs.