Final answer:
Regulating insurance company investments is important to protect their solvency. Life insurers are regulated in their investments and there are limits to investing in common stocks.
Step-by-step explanation:
The purpose of regulating insurance company investments is to prevent insurers from making unsound investments which could threaten their solvency. This is true because insurance companies receive income from insurance premiums and investment income, and they typically invest in safe and liquid investments to ensure they can access funds when needed. This regulation helps protect the financial stability of insurance companies and safeguard policyholders.
However, the statement that life insurers can invest an unlimited amount of their assets in common stocks is false. Insurance companies are subject to investment regulations that vary by jurisdiction and type of insurance. While they may invest in common stocks, there are usually limits or guidelines on the percentage of assets that can be allocated to such investments to manage risk.