Life Universal Life, Riders & Group Life question: account value at year-end

LifeUniversal Life, Riders & Group Life

Amara, 44, owns a universal life policy with a $20,000 account value at the start of the policy year. She deposits $3,000 at the start of the year. For simplicity, assume the insurer then deducts a $900 cost of insurance charge and a $120 administration fee, and the remaining balance earns 4% for the year. What is her account value at year-end?

A $21,980.00
B $22,859.20
C $22,900.00
D $23,920.00

Show the answer and explanation

Answer: B. $22,859.20

Universal life unbundles deposits, insurance charges, expenses and interest. Balance after charges: $20,000 + $3,000 − $900 − $120 = $21,980; with 4% interest, $21,980 × 1.04 = $22,859.20. $23,920.00 ignores the charges, $22,900.00 credits interest before deducting them, and $21,980.00 leaves out the interest. Real policies deduct charges monthly, but the logic is the same. Source: CISRO LLQP Curriculum (May 2015; current as at 12 Oct 2026), Life component 2.1 (how the three separate parts of a UL policy are unbundled: insurance, investments and expenses); arithmetic on the simplified terms in the stem (as at 12 Oct 2026).

Common mistake

Crediting interest on money that has already gone to pay insurance charges.

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Original study material mapped to the public CISRO curriculum; not a real test question.Not affiliated with CISRO, CCIR or any provincial insurance regulator. Verify figures and rules against current guidance before relying on them.