Which of the Following Did NOT Occur in the Life

question 17

Multiple Choice

Which of the following did NOT occur in the life insurance industry during the most recent financial crisis?

• A)Low equity values reduced asset-based fees on separate account assets.
• B)Losses were incurred on holdings of commercial mortgage-backed securities and commercial loans.
• C)Asset-based fees declined on products such as variable annuities and pension fund assets that were tied to equity returns.
• D)Low interest rates and harsh economic conditions caused many policyholders to terminate or surrender their policies.
• E)Historically low interest rates caused increased demand for whole life policies.

Understand the ramifications of investment decisions on divisional performance.

Understand the concept of Return on Investment (ROI) and how it is calculated.

Grasp the concept and calculation of residual income.

Comprehend the importance of turnover in evaluating divisional performance.

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Definitions:

Invisible Hand

A term coined by Adam Smith to describe the self-regulating behavior of the marketplace, where individual self-interests inadvertently contribute to the economy's overall health.

Childcare Center

A facility that provides care and education to young children during the working hours, facilitating parental employment.

Profitable

Describing a business or activity that generates more revenue than it costs to operate, resulting in a financial gain.

Centrally Planned Economies

Economic systems where decisions about production, investment, and distribution are made by the government rather than the market.