Life Insurance Products: Conventional vs With-Profits

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Questions and Answers

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?

Bonuses are smoothed so no sharp rises and falls in your investment (D) Signup and view all the answers

What is a disadvantage of with-profits investments?

Low or no annual bonuses and uncertain final bonuses (A) Signup and view all the answers

What is a characteristic of unit-linked investments?

The premium and benefit are not linked to the number and price of units allocated to the policy (C) Signup and view all the answers

What is a feature of index-linked investments?

The benefit is adjusted for inflation or deflation based on an index (C) Signup and view all the answers

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

With-profits investments are more stable and protected from market fluctuations, while unit-linked investments are less stable and exposed to market fluctuations (B) Signup and view all the answers