The Main Difference Between Whole Life and Universal Life Policies

question 32

Multiple Choice

The main difference between whole life and universal life policies is

• A)whole life is permanent insurance while universal life is more concerned with a portfolio of investments and temporary insurance coverage.
• B)universal life has a guaranteed investment component while whole life has cash value with very conservative rates of return.
• C)in universal life the policyholder has control over investments while the insurance company controls the investments of a whole life policy.
• D)universal life policies are completely taxable while whole life cash values are not taxable.

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs in product costs and treats fixed manufacturing costs as period costs.

Finished Goods

Completed products ready for sale or shipment to customers, found as an inventory category in the balance sheet.

Fixed Overhead

Refers to the total of all indirect costs that remain constant regardless of the level of production or business activity.

Absorption Costing

Absorption Costing is an accounting method that includes all of the manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.