n NISM Certifications
X NISM Series X
Medium

Why is the premium payable on a ULIP higher than that of a term policy for the same sum assured?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The pool of insured is smaller

  2. B

    The period of cover is shorter

  3. A portion of the premium is used for investment

    Correct answer

  4. D

    The risk is higher

Why this is the answer

ULIPs allocate part of the premium towards mortality cover and the remaining for investments, making the premium higher than a pure term policy, which covers only death benefit.

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