Final answer:
Life insurance company regulation includes legal limitations on asset investments and restrictions on surplus accumulation to ensure solvency and protect policyowner dividends. These regulations are designed to balance the needs of the company with the interests of policyholders.
Step-by-step explanation:
The regulation of life insurance companies is designed to ensure their solvency and protect policyholders. The following statements regarding the regulation of life insurance companies are accurate:
The percentage of assets a life insurance company may invest in a specific type of asset (e.g., stocks or bonds) is generally limited by law. This is to prevent taking on excessive risk and helps ensure the insurer can meet its obligations to policyholders.
The purpose of limiting the accumulation of surplus is to prevent an insurer from increasing its surplus at the expense of policyowner dividends. A balance must be struck to be fair to policyholders who might expect reasonable returns on their policies while maintaining the company's financial health.