Question

Death benefits in a variable life insurance policy are prone to fluctuation for all of the following reasons EXCEPT:

a. Outstanding loans reduce the death benefit
b. Overdue premiums decrease the death benefit
c. Management, administrative, and mortality costs reduce the death benefit
d. Investment returns may be in excess of the Assumed Interest Rate

Answer 1

Death benefits in a variable life insurance policy can be prone to fluctuation due to various factors, but investment returns may not contribute to the fluctuation as they can be in excess of the Assumed Interest Rate.

Step-by-step explanation:

Variable life insurance policies have death benefits that are prone to fluctuation due to various factors. These factors include outstanding loans that can reduce the death benefit, overdue premiums that decrease the death benefit, and management, administrative, and mortality costs that also reduce the death benefit.

However, investment returns may be in excess of the Assumed Interest Rate, which means that the death benefit can potentially increase. Therefore, the correct answer is d. Investment returns may be in excess of the Assumed Interest Rate, as this is the reason that does not contribute to the fluctuation of death benefits in a variable life insurance policy.