What kind of policy is described as having 80% to 90% of the premium invested in fixed income securities and the remainder in contracts tied to a stock index?

• A. Variable universal life
• B. Equity indexed universal life
• C. Equity index whole life
• D. Whole life with indexed rider

Answer: (C)

The concept being tested is how an equity-indexed life policy blends a stable, fixed-income base with index-linked growth. In an equity-indexed whole life policy, premiums flow into the insurer’s general (fixed-income) account to support guarantees, with a portion allocated to an index-linked account that tracks a stock index for potential additional returns. Describing 80%–90% of the premium going into fixed income and the remainder into index-linked contracts fits this structure precisely: most of the cash value is anchored in safe, fixed-income investments, while a smaller portion participates in indexed credits for growth.

This differs from a variable universal life product, which relies on separate investment accounts chosen by the policyholder and carries investment risk; and from an equity-indexed universal life product, which is universal life (flexible premiums) with index crediting rather than a fixed premium whole life structure. A whole life with an indexed rider would add the indexing as a rider rather than as a built-in, fixed-premium–with-indexed-account setup.