State RegulationsMA specificDifficulty 1/5
What is the defining feature of an equity indexed whole life policy as Massachusetts treats it under DOI Bulletin 98-17?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An equity indexed whole life policy credits interest to the cash value based on the performance of an equity index, subject to the contract's participation terms, while a guaranteed minimum preserves the policy's base value if the index falls. The Massachusetts Division of Insurance addressed equity indexed products in DOI Bulletin 98-17, treating them within the state's insurance framework rather than the federal securities regime. The combination of index-linked upside with a downside floor is the product's signature.
Why the other options are wrong
- B) Nothing in the equity indexed structure doubles the death benefit; the index affects credited interest to cash value, not a benefit multiplier.
- C) The consumer price index is an inflation measure, not the equity index used for crediting; premium schedules do not float monthly.
- D) Dividends, where payable, depend on the insurer's own experience — not on competitors' performance — and are unrelated to the equity indexed crediting method under DOI Bulletin 98-17.
Memory hook
Index upside, floor underneath — equity indexed grows with the market but can't sink the base.