Certified Financial Consultant (CFC) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Certified Financial Consultant Exam. Enhance your understanding with detailed questions, hints, and explanations. Boost your confidence for the CFC test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Universal Life Insurance policies feature two types of interest rates known as:

Fixed and Variable
Guaranteed and Current
Basic and Enhanced
Standard and Premium

The correct answer is: Guaranteed and Current

In Universal Life Insurance policies, the two types of interest rates referred to are guaranteed and current rates. The guaranteed interest rate is the minimum rate that the insurer promises to credit to the policy's cash value, providing a level of security for the policyholder. This rate ensures that the cash value will not decrease below a certain amount over time, regardless of market conditions. The current interest rate, on the other hand, is the rate that the insurance company is currently crediting to the cash value of the policy and can fluctuate based on the company's performance and prevailing market interest rates. This means that while the guaranteed rate provides a safety net, the current rate can offer the potential for growth that is linked to market conditions, giving policyholders a chance to benefit from higher returns during favorable periods. Understanding these two rates is crucial for policyholders as it helps them assess the growth potential of their policy's cash value and make informed decisions regarding their investment in universal life insurance.