Question

What is the key difference in the pricing of initial costs between traditional policies and Unit Linked Insurance?How is the death benefit calculated in Unit Linked Insurance?

a.

Initial costs are higher in Unit Linked InsuranceIt is a fixed amount determined by the insurer

b.

Initial costs are higher in traditional policiesIt is based on the premiums paid

c.

Initial costs are equally distributed in both typesIt is a multiple of the fund value

d.

Initial costs do not impact the policy pricingIt is the same as the Sum Assured

Posted under IC38 Life Insurance Agent Exam

Answer: Initial costs are higher in traditional policiesIt is a multiple of the fund value Explanation:In traditional policies, initial costs are spread throughout the policy term, making them higher, while in Unit Linked Insurance, these costs are deducted from the initial premiums.In Unit Linked Insurance, the death benefit is a multiple of the fund value (unit price multiplied by the number of units) or the Sum Assured, whichever is higher.

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Q. What is the key difference in the pricing of initial costs between traditional policies and Unit Linked Insurance?How is the death benefit calculated in Unit Linked Insurance?
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