What key information does a prospectus contain for variable insurance products?

What key information does a prospectus contain for variable insurance products?

• A. Only the insurance rates and premiums
• B. The nature, purpose, and risks of the insurance plan
• C. A summary of all potential profit margins
• D. Details about underwriting criteria

Answer: (B)

A prospectus for variable insurance products provides essential information that helps potential investors or policyholders make informed decisions. This document outlines the nature of the insurance product, its purpose, and highlights the risks involved. By detailing these aspects, the prospectus helps prospects understand how the insurance works and what kind of investment risks are associated with variable products, such as fluctuations in cash value and investment returns based on the performance of underlying assets. This transparency is crucial because variable insurance products often tie the performance of the policy to market conditions, and recognizing the inherent risks allows potential buyers to assess whether the product aligns with their risk tolerance and financial goals. Understanding these details ultimately aids in making a well-informed purchasing decision.

A prospectus for variable insurance products provides essential information that helps potential investors or policyholders make informed decisions. This document outlines the nature of the insurance product, its purpose, and highlights the risks involved. By detailing these aspects, the prospectus helps prospects understand how the insurance works and what kind of investment risks are associated with variable products, such as fluctuations in cash value and investment returns based on the performance of underlying assets.

This transparency is crucial because variable insurance products often tie the performance of the policy to market conditions, and recognizing the inherent risks allows potential buyers to assess whether the product aligns with their risk tolerance and financial goals. Understanding these details ultimately aids in making a well-informed purchasing decision.