State RegulationsMA specificDifficulty 1/5
In a variable life insurance policy sold in Massachusetts, where are the premiums invested?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Variable life insurance under Massachusetts law — M.G.L. c. 175, § 132F et seq., administered with the Division of Insurance's variable product rules at 211 CMR 95 — places the premiums in a separate account invested for the policyowner. Because the account's performance flows through to the policy, the cash value and frequently the death benefit fluctuate with investment results, and the owner, not the insurer, bears the investment risk. That is the defining contrast with fixed products backed by the insurer's general account.
Why the other options are wrong
- A) The general account backs fixed products where the insurer guarantees the rate; variable life's values depend on the separate account under M.G.L. c. 175, § 132F et seq.
- C) The separate account belongs to the insurer's variable product structure, not to a state-run fund; the Division regulates but does not manage the investments.
- D) Producer accounts play no role in policy funding; premiums go to the insurer's separate account under 211 CMR 95.
Memory hook
Variable = separate account: the market, not the general account, moves the value.