Which type of life insurance policy allows the policyowner to vary the premium payments and the death benefit amount?

The option that allows the policyowner to vary both the premium payments and the death benefit amount is universal life insurance. This type of policy is flexible, meaning the policyholder can adjust their premiums and, within certain limits, the death benefit according to their financial situation and needs.

Universal life insurance includes a cash value component that grows based on interest rates set by the insurance company, giving policyholders the ability to manage their premiums and adjust how much coverage they want at different times. This flexibility is a key feature that distinguishes universal life from other policy types.

While variable whole life might seem similar, it typically involves investment choices regarding the cash value component rather than a basic flexibility in premium payments and death benefits. Whole life insurance typically has fixed premiums and death benefits, offering stability but no variance for the policyowner. Term life insurance, on the other hand, provides coverage for a specified term without any cash value component or options to adjust the premiums and benefits.