In universal life insurance, which option allows the beneficiary to collect both the death benefit and the cash value upon the insured's death?

In universal life insurance, the option that allows the beneficiary to collect both the death benefit and the cash value upon the insured's death is known as Option B. This option is often termed the "return of premium" or "cash value" option. With this structure, the death benefit consists of the face amount of the policy plus the accumulated cash value. This can be particularly advantageous for beneficiaries as it provides a larger financial benefit compared to options that only pay the death benefit alone.

Option B allows the policyholder to include the cash value in the payout, effectively enhancing the financial support provided to the beneficiaries after the death of the insured. This structure can serve as a means of preserving wealth for future generations or covering significant expenses that may arise after death.

By contrast, other options, such as Option A, generally provide only the face amount of the insurance coverage. This means that the beneficiaries would not receive the cash value component, limiting the total death benefit. Thus, Option B is particularly valuable for those looking to maximize the benefits passed on to their loved ones.