A whole-of-life unit-linked policy is a permanent life insurance policy where the payout depends on the investment performance of the underlying insurance fund.
How It Works:
Premiums are invested in unit-linked funds chosen by the policyholder.
The policy value fluctuates based on the fund’s performance.
Some policies offer a minimum guaranteed payout, while others fully depend on market returns.
Why is Option A Correct?
The value of the policy directly tracks the investment performance of the insurance fund.
Why Not Other Options?
B (CPI) → Inflation affects purchasing power but does not directly determine returns.
C (Inflation-linked) → Some policies may be inflation-protected, but not all.
D (Interest rates) → Returns depend more on equity or bond fund performance than interest rates.
Chosen Answer:
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