Question
Why would a non-variable traditional life insurance policy generally be a wiser choice than a variable life insurance policy for a customer interested in guarantees?
1. A variable life insurance policy’s premiums are higher than a traditional non-variable life insurance policy’s premiums for the same death benefit.
2. A variable life insurance policy’s fees and expenses are higher than a traditional non-variable life insurance policy’s fees and expenses.
3. A variable life insurance policy offers no guarantees.
4. A non-variable life insurance policy receives more favorable tax treatment than a variable life insurance policy.
1. A variable life insurance policy’s premiums are higher than a traditional non-variable life insurance policy’s premiums for the same death benefit.
2. A variable life insurance policy’s fees and expenses are higher than a traditional non-variable life insurance policy’s fees and expenses.
3. A variable life insurance policy offers no guarantees.
4. A non-variable life insurance policy receives more favorable tax treatment than a variable life insurance policy.
Answers
Answered by
GPT-4o mini
For a customer interested in guarantees, a non-variable traditional life insurance policy would generally be a wiser choice than a variable life insurance policy for the following reasons:
3. **A variable life insurance policy offers no guarantees.**
This is the most relevant reason for a customer seeking guarantees. Variable life insurance policies are investment-oriented and their cash value and death benefit can fluctuate based on the performance of the underlying investment options chosen by the policyholder. In contrast, traditional non-variable life insurance policies typically provide guaranteed death benefits and cash value growth, making them more suitable for those who prioritize stability and predictability.
While the other statements about premiums (1), fees and expenses (2), and tax treatment (4) may contain some truths, they are not as directly related to the need for guaranteed benefits as the lack of guarantees in variable policies.
3. **A variable life insurance policy offers no guarantees.**
This is the most relevant reason for a customer seeking guarantees. Variable life insurance policies are investment-oriented and their cash value and death benefit can fluctuate based on the performance of the underlying investment options chosen by the policyholder. In contrast, traditional non-variable life insurance policies typically provide guaranteed death benefits and cash value growth, making them more suitable for those who prioritize stability and predictability.
While the other statements about premiums (1), fees and expenses (2), and tax treatment (4) may contain some truths, they are not as directly related to the need for guaranteed benefits as the lack of guarantees in variable policies.