The correct answer is: A. Policyholder, unitholder
In traditional life insurance policies, the insurance company promises to pay a death benefit to the policyholder’s beneficiaries upon the policyholder’s death. The insurance company invests the premiums paid by the policyholder and bears the investment risk. If the investments perform poorly, the insurance company may have to reduce the death benefit or even go bankrupt.
In unit linked plans, the policyholder invests in a fund of units that are linked to the performance of underlying assets, such as stocks, bonds, or other investments. The policyholder bears the investment risk, and the value of the units can go up or down. If the investments perform poorly, the policyholder may lose money.
Here is a brief explanation of each option:
- Option A: Policyholder, unitholder. This is the correct answer. In traditional life insurance policies, the policyholder bears the investment risk, while in unit linked plans, the unitholder bears the investment risk.
- Option B: Insurance company, unitholder. This is incorrect. In traditional life insurance policies, the insurance company bears the investment risk, while in unit linked plans, the unitholder bears the investment risk.
- Option C: Insurance company, insurance company. This is incorrect. In traditional life insurance policies, the insurance company bears the investment risk, while in unit linked plans, the unitholder bears the investment risk.
- Option D: Policyholder, insurer. This is incorrect. In traditional life insurance policies, the policyholder bears the investment risk, while in unit linked plans, the unitholder bears the investment risk.