Question

An insurer's general account is for non-variable products, in which premium dollars are invested in conservative funds such as bonds and certificates of deposit. Variable products premiums are invested in more aggressive investments such as stocks and securities, requiring the insurer to keep a _______ ______.

Answer 1

Insurance companies have two types of accounts: the general account and the separate account. The general account is for non-variable products, while the separate account is for variable products. The insurer keeps a separate account for aggressive investments like stocks and securities.

Step-by-step explanation:

Insurance companies have two types of accounts: the general account and the separate account. The general account is used for non-variable products, where premium dollars are invested in conservative funds like bonds and certificates of deposit. These investments are considered safe and easily accessible.

On the other hand, the separate account is for variable products, where premium dollars are invested in more aggressive investments such as stocks and securities. The insurer is required to keep a separate account to ensure the funds are managed and segregated appropriately.