Final answer:
Interest Sensitive Whole Life (ISWL) is a cash-value life insurance policy that adjusts based on interest rates and offers potential for higher returns. The correct statements are A and B.
Step-by-step explanation:
Interest Sensitive Whole Life (ISWL) is a type of cash-value (whole) life insurance policy that adjusts the cash value and premiums based on changes in interest rates. It offers flexibility and potential for higher returns compared to traditional whole life policies.
Statement A: The expense component deducted from the premium is not unlimited by the policy. The policy sets a maximum limit on the expense charges that can be deducted.
Statement B: Interest earnings may indeed drop below minimum rates if the policy owner is notified 45 days in advance. However, the policy owner typically has the option to continue the policy even with lower interest earnings.
Statement C: The face amount of the policy does not adjust based on the expense experience of the company. It remains constant throughout the life of the policy.
Statement D: The policy allows the cash value to earn interest rates equal to or greater than the guaranteed rate set in the policy. However, the actual interest rates earned may vary based on market conditions and the performance of the investments supporting the policy.