Which statement about the management of a Variable Life policy’s assets is FALSE?

Study for the Variable Universal Life/Universal Life Plan (VUL/ULP) Exam. Prepare with flashcards and multiple choice questions, each question is accompanied by helpful hints and explanations. Ace your exam!

The statement regarding management costs being irrelevant to investment performance is incorrect because management costs can significantly impact the overall returns on investment in a Variable Life policy. These costs, which may include administrative fees, fund management fees, and other charges, reduce the net gains that a policyholder can expect to realize from the investment options available within their policy.

In a Variable Life policy, the growth of policy values is influenced directly by the underlying investment performance, which is in turn affected by the fees deducted from the gross returns. Therefore, understanding and considering management costs is crucial for policyholders to make informed decisions about their investments and to effectively manage their policies to align with their long-term financial goals.

On the other hand, the other statements reflect accurate aspects of how Variable Life policies operate. The management of assets is indeed focused on ensuring growth, policyholders can switch funds based on their investment preferences, and the investment strategy is typically designed to align with the objectives and risk profile of the policyholder. Understanding these elements is key to effectively navigating the complexities of Variable Life insurance products.

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