Question

Which of the following products best fit the description “the policyholder can determine how to invest the premiums and the face amount of insurance would decrease if the investment results are poor”? Select one:
a. Universal life insurance b. Preferred risk life insurance c. Term life insurance d. Second-to-die life insurance e. Unit-linked life insurance

Answer 1

Correct Answer	Reason for correct answer	Reason for incorrect answers
e. Unit Linked Life insurance	e. is correct as a unit-liked life insurance policy is one in which a small amount of the paid premium is kept aside for the security of the policyholder, while the rest is invested in financial markets. The risk is borne by the policyholder.	a. is incorrect as Universal life insurance is a policy in which an amount in excess of the premium is transferred to a cash credit account which earns interest over time. b. is incorrect as a preferred risk life insurance plan is one which prefers policyholders with a lower risk of claims c. is incorrect as a term life insurance is a plan which expires at the end of a term d. is incorrect as a second-to-die life insurance plan is one in which a pair is insured together, and the surviving person of the two gets the claim amount.