Question

Which of the following statements about Equity Indexed Life insurance is TRUE?

a. The policyowner can decide which separate accounts to invest the policy's cash values into
b. The insured/owner bears all risk regarding cash surrender value, as negative stock market performance can cause the cash values to decrease
c. The interest credited to the policy is based off of the performance of a stock market index like the S&P 500
d. To sell Equity Indexed Life, a producer only needs a securities license

Answer 1

C. The interest credited to the policy is based off of the performance of a stock market index like the S&P 500

Step-by-step explanation:

The appeal of this strategy is that the interest credit will theoretically be greater than what the general account of a traditional insurer will pay by linking the potential interest credit to a stock market index. Based on the policy's design, there is no negative impact on existing cash values if the index falls in value.