Glossary

Level death benefit (option A)

A universal life setting in which beneficiaries receive a fixed specified amount; cash value growth lowers the insurer's risk instead of adding to the payout.

Also called: option A, type A death benefit, option 1

A level death benefit, called option A (or option 1 by some insurers), is the universal life death benefit choice in which the payout stays equal to the specified amount no matter how much cash value has built up. It contrasts with an increasing death benefit, or option B, which pays the specified amount plus the cash value.

Under option A, cash value is part of the death benefit, not an addition to it. The insurer's real exposure, the net amount at risk, equals the specified amount minus the cash value. Say, hypothetically, a $500,000 policy has $120,000 of cash value: the insurer is risking only $380,000, so cost-of-insurance charges are based on $380,000. As cash value grows, charges are lower than under option B, which helps cash value grow faster.

If cash value becomes very large relative to the death benefit, federal tax rules under Section 7702 push the death benefit above the specified amount, through the corridor, so the policy still qualifies as life insurance. The trade-off is that heirs receive the same amount whether cash value is $10,000 or $200,000. Option A suits people who mainly want the death benefit at the lowest cost. See universal life death benefit options A and B.

Last reviewed October 4, 2026

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Related terms

Increasing death benefit (option B) A universal life setting in which beneficiaries receive the face amount plus the accumulated cash value, so the payout grows as cash value builds. Net amount at risk The part of a death benefit the insurer would pay from its own funds: the total death benefit minus the policy's cash value or reserve. Corridor (death benefit corridor) The minimum gap the tax code requires between a universal life policy's death benefit and its cash value to keep the policy's tax advantages. Universal life insurance Permanent life insurance with flexible premiums and an adjustable death benefit, built on an account credited with interest and charged monthly costs. Cost of insurance (COI) The monthly charge a universal life policy deducts to pay for its death protection, based on the insured's age, rate class and the amount at risk.

Related guides

Inflation and life insurance: is your coverage shrinking A fixed death benefit buys less every year as prices rise. How to measure the erosion, with BLS CPI data, and the practical ways to keep coverage adequate. Universal life death benefit options A and B Option A pays a level death benefit; option B pays the face amount plus the account value. How each affects cost, cash value and what your family receives.