Final answer:
In an adjustable life policy, the elements determining the rate at which dividends are credited include the insurance company's investment performance, expenses, and mortality assumptions. Earned interest, though related, is the result of investment performance and is not a determining factor itself.
Step-by-step explanation:
The question asks which of the following is NOT one of the elements that determine the rate at which dividends are credited in an adjustable life policy: A. Expenses, B. The company's investment performance, C. Earned interest, D. Mortality assumptions. Adjustable life policies are a type of permanent life insurance that combines features of term life insurance and whole life insurance.
They offer flexibility in terms of premiums, the death benefit, and the accumulation of cash value within the policy. The elements that typically affect the dividends or interest credited to an adjustable life policy are the company's investment performance, earned interest, and mortality assumptions, along with other factors like expenses and the overall cost of insurance.
However, earned interest itself is not a determining factor but rather a result of the investment performance.
Earned interest is the interest income generated from the insurance company's invested assets.
The factors that directly affect this earned interest are the company's investment performance, as well as the policy expenses which involve the cost of managing the policy and the mortality assumptions which account for the expected rate at which policyholders will die.
Therefore, earned interest (C) is the component that does NOT directly determine the dividend rate but is instead influenced by the aforementioned factors.