The correct answer is D. Charges.
Charges are the fees that are deducted from the policyholder’s investment in a unit-linked policy. These charges can include initial charges, annual charges, and surrender charges.
Initial charges are fees that are deducted from the policyholder’s investment when they first purchase the policy. These charges can be a percentage of the total investment or a flat fee.
Annual charges are fees that are deducted from the policyholder’s investment each year. These charges are used to cover the costs of administering the policy, such as the cost of paying the insurance company’s employees and the cost of marketing the policy.
Surrender charges are fees that are deducted from the policyholder’s investment if they surrender the policy before it matures. These charges are designed to discourage policyholders from withdrawing their money early, as this can cost the insurance company money.
The amount of charges that are deducted from a unit-linked policy can vary depending on the insurance company and the type of policy. It is important to read the policy documents carefully to understand the charges that will be applied.
The other options are incorrect.
- Option A, commission, is a fee that is paid to the insurance agent who sells the policy. This fee is not deducted from the policyholder’s investment.
- Option B, net asset value, is the value of each unit in a unit-linked fund. This value is not deducted from the policyholder’s investment.
- Option C, fund, is the pool of money that is invested by the insurance company on behalf of the policyholders. This fund is not deducted from the policyholder’s investment.