Life Insurance Basics
Where are the assets supporting a variable life policy held, and who bears the investment risk?
Answer and explanation
Answer: B. Variable products place the assets in a separate account invested at the owner's direction, so the cash value rises and falls with performance and the owner carries that risk. General account products put the risk on the insurer, which is why they carry guarantees.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, regulation of variable products
More life insurance basics questions
- What determines the effective date of coverage where no premium accompanies the application?
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- What does a policyowner receive under a participating policy that a nonparticipating policy does not provide?
- What does liquidity mean in the context of a permanent life policy?
- What does the human life value approach measure?
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