New York State Life Insurance Exam Questions Practice Question
A life insurance policy with values based on an insurer's separate account is a
Correct Answer: A
Rationale: A variable life insurance policy allows policyholders to allocate their premiums among various investment options within the insurer's separate account, directly linking cash value and death benefits to market performance.
In contrast, an adjustable life insurance policy offers flexibility in premium payments and death benefits but does not base values on a separate account. An equity indexed life insurance policy ties returns to a stock market index but has less direct control over investments. Current assumption whole life insurance policies provide guaranteed benefits based on current interest rates, without the investment variability found in variable policies.
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