How does Option B of a universal life policy affect the death benefit?

In a universal life insurance policy, Option B typically refers to a specific structure of the death benefit that allows it to adjust over time based on the cash value of the policy. When a policyholder selects this option, the death benefit is designed to increase annually by the amount that the cash value grows. This means that as the policy accumulates cash value through premiums and investment growth, the total death benefit the beneficiary would receive upon the insured’s death also rises correspondingly.

This structure provides a way for policyholders to potentially enhance the financial legacy they leave behind, as the death benefit can grow alongside their investment component. It creates a dynamic where the policy not only offers protection but also allows for potential wealth accumulation, making it an appealing option for those seeking both insurance coverage and an investment element in their life insurance policy.

The other options do not accurately represent the mechanics of Option B. A decreasing death benefit would not apply to this option, nor would a fixed death benefit remain unchanged or have a capped amount, which limits its potential growth. Hence, choosing the option that states the death benefit increases annually by the cash value increase correctly reflects the intention behind Option B in the context of a universal life insurance policy.