Life Insurance Products: Conventional vs With-Profits
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What is a characteristic of the conventional without profits life insurance product?

  • The premium and benefit may vary depending on the experience and discretion of the insurer
  • It provides a guaranteed amount of benefit on death or survival
  • The premium and benefit are determined at the outset and do not change unless the policy is altered (correct)
  • It provides a share of the profits or losses of the insurer

    • What distinguishes the with-profits life insurance product from the conventional without profits product?

  • The premium and benefit are determined at the outset and do not change unless the policy is altered
  • It provides a guaranteed amount of benefit on death or survival to a specified point in time, plus a share of the profits or losses of the insurer (correct)
  • The premium and benefit may vary depending on the experience and discretion of the insurer
  • There is no participation in the profits or losses of the insurer

    • In what way are bonuses usually distributed in the with-profits life insurance product?

  • As reversionary bonuses added to the benefit or terminal bonuses paid at the end of the policy (correct)
  • As a reduction in the premiums for the subsequent year
  • As an increase in the premium due to increased risk factors
  • As fixed amounts that are added to the premiums or used as part of the benefit

    • What is an advantage of with-profits investments?

    <p>Bonuses are smoothed so no sharp rises and falls in your investment</p> Signup and view all the answers

    What is a disadvantage of with-profits investments?

    <p>Low or no annual bonuses and uncertain final bonuses</p> Signup and view all the answers

    What is a characteristic of unit-linked investments?

    <p>The premium and benefit are not linked to the number and price of units allocated to the policy</p> Signup and view all the answers

    What is a feature of index-linked investments?

    <p>The benefit is adjusted for inflation or deflation based on an index</p> Signup and view all the answers

    How do with-profits investments differ from unit-linked investments?

    <p>With-profits investments are more stable and protected from market fluctuations, while unit-linked investments are less stable and exposed to market fluctuations</p> Signup and view all the answers

    What does a unit-linked investment's premium and benefit depend on?

    <p>The type and allocation of units chosen by the policyholder</p> Signup and view all the answers

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