Which action is NOT possible with a Universal Life policy?

With a Universal Life policy, the flexibility in premium payments and options available for cash value management are key features. A policyholder can adjust their premium payments, allowing them to pay more or less than the scheduled premium depending on their financial situation. This adaptability can be beneficial for individuals who may have varying income levels over time.

Additionally, policyholders have the option to switch between different investment options within the cash value accumulation of the Universal Life policy. This feature enables them to align their investments based on changing financial goals or market conditions.

However, when it comes to the treatment of premiums and taxation, the statement about premiums being applied as a credit against income tax does not accurately reflect the possibilities with a Universal Life policy. Premium payments for life insurance, including Universal Life, are generally not deductible from income taxes. While the growth of the cash value within the policy is tax-deferred and the death benefit can be received tax-free by beneficiaries, the premiums themselves do not provide a direct tax credit.

Thus, the action of applying premiums as a tax credit is not permitted under this type of insurance policy, making it the correct answer in this context.