What defines universal life insurance?

Universal life insurance is defined by its combination of a death benefit and a savings element. This type of policy offers flexibility in premium payments, within certain limits, and allows policyholders to adjust the death benefit and accumulate cash value over time. The cash value component grows based on interest rates set by the insurer, which can vary, providing a potential opportunity for growth that isn’t limited to fixed interest rates.

This flexibility is a key feature of universal life insurance, as it allows policyholders to adapt their insurance coverage and savings according to their financial situation and goals. The ability to adjust the death benefit and the premiums makes it distinct from other types of life insurance, which are usually more rigid in these respects. Consequently, the comprehensive nature of universal life insurance is what makes option C the correct choice.