The correct answer is D. Subsidy.
A life insurance policy is a contract between an insurance policy holder and an insurance company. The policy holder pays a premium to the insurance company, and in return, the insurance company agrees to pay a death benefit to the policy holder’s beneficiaries if the policy holder dies.
The three main elements of a life insurance policy are:
- Risk: The risk of death is the main reason why people buy life insurance. The insurance company takes on this risk in exchange for the premium that the policy holder pays.
- Assets: The insurance company uses the premiums that it collects to invest in assets, such as stocks, bonds, and real estate. These assets generate income that the insurance company can use to pay death benefits and other expenses.
- Principle of mutuality: The principle of mutuality is the idea that all policy holders are part of a group, and that the insurance company is responsible for all of the policy holders. This means that if one policy holder dies, the other policy holders will help to pay the death benefit.
A subsidy is a government payment that is made to help people afford something. In the context of life insurance, a subsidy would be a government payment that is made to help people afford life insurance premiums. However, subsidies are not a common feature of life insurance policies.
In conclusion, the correct answer is D. Subsidy.