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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

Which feature distinguishes a participating (with-profits) whole life policy from a non-participating one?

A participating whole life policy shares in the insurer's surplus by way of bonuses declared from the participating fund. Non-participating policies do not receive bonuses and offer only fixed or guaranteed benefits stated at the outset.

  1. AIt pays no death benefit
  2. BIt shares in the insurer's surplus through bonusesCorrect
  3. CIts premium is always lower than a term plan's
  4. DIts returns are linked to the Nifty daily

Explanation

Participating policies let policyholders share in the surplus of the life fund, typically through reversionary and terminal bonuses. Non-participating policies have guaranteed or fixed benefits and no bonuses. Returns linked to an index describe market-linked products, not participating ones.

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