Types of Policies
Who bears the investment risk for policy cash values held in a variable whole life policy's separate account?
Answer and explanation
Answer: C. In variable contracts, cash values are invested in separate account subaccounts, and the policyowner bears all investment risk.Source: SEC Investor Bulletin: Variable Life Insurance — Investment Risk in Separate Accounts
More types of policies questions
- How is the payout phase (annuitization) structured under a straight life income annuity settlement option?
- If current interest rates exceed expectations in an interest-sensitive whole life policy, what options may the insurer offer the owner?
- If the reference equity index suffers a severe negative loss (-20%) during a policy year, what protects the equity-indexed policyowner's cash value?
- In a fixed annuity contract, where are the contract funds invested by the insurance company?
- In variable life insurance, what most directly causes the policy’s cash value to fluctuate?
- Most modern fixed annuity contracts allow what penalty-free withdrawal percentage annually during the surrender charge period?
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