PSI Ohio Insurance Practice Exam

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Get ready for the PSI Ohio Insurance Test. Use flashcards and multiple choice questions, each with hints and explanations. Ace your exam!

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Which of the following is a distinguishing feature of a variable life insurance policy?

The cash value earnings are based on the performance of the separate account.
The death benefit is fixed and does not vary.
Premium payments are guaranteed to remain constant.
Investment options are limited to cash and bonds.

The correct answer is: The cash value earnings are based on the performance of the separate account.

A distinguishing feature of a variable life insurance policy is that the cash value earnings are based on the performance of the separate account. In a variable life insurance policy, policyholders can allocate their premiums among various investment options, which are typically focused on stocks, bonds, and other securities held in a separate account. The performance of these investments directly affects the cash value of the policy as well as the death benefit, which can vary based on how well the chosen investments perform. In contrast, a fixed death benefit, guaranteed premium payments, and limited investment options would be characteristics of other types of life insurance policies, such as whole life or term life insurance. Therefore, option A accurately captures the unique aspect of variable life insurance, showcasing its investment component and the associated risks and potential rewards that come with it.