Massachusetts State Life Insurance Practice Exam

What is required for an individual covered under a variable universal life policy if the death benefit is increased?

1. No additional requirements

2. Proof of income stability

3. Evidence of insurability

4. Completion of a financial assessment

The correct answer is: Evidence of insurability

In a variable universal life policy, if the death benefit is increased, the insurer typically requires evidence of insurability from the policyholder. This requirement is in place to assess the risk associated with the new higher death benefit. The insurance company needs to ensure that the individual’s health status has not deteriorated since the initial policy was issued, as this affects their risk profile. Evidence of insurability may involve a medical examination, health questionnaires, or other assessments to confirm that the individual remains an acceptable risk for the increased coverage. This step helps protect the insurer from potential losses due to unexpected claims arising from a change in the insured’s health status. The other options, such as proof of income stability or completion of a financial assessment, are generally not required when increasing the death benefit in a variable universal life policy. While considerations of financial circumstances may play a role in insurance decisions overall, they are not standard prerequisites for simply increasing a death benefit in this context.