Which type of insurance combines elements of term and whole life insurance?

The correct answer is universal life insurance because it incorporates features of both term and whole life insurance.

Universal life insurance is designed to provide flexible premium payments and a death benefit, much like term insurance, while also including a cash value component that can grow over time, similar to whole life insurance. This means policyholders can adjust their premium payments and death benefits according to their financial needs and circumstances. The cash value accumulates based on interest rates, which can vary, giving the policyholder options that reflect changes in their financial situation.

In contrast, term life insurance provides coverage for a set period with no cash value accumulation, while whole life insurance offers a fixed premium and guaranteed cash value but lacks the flexibility found in universal life insurance. The limited life policy is generally less common and does not combine the features in a meaningful way. Thus, universal life insurance uniquely blends the characteristics of the other types, allowing for flexibility and the potential for cash value growth.