Question

Which statement is not true about life insurance companies? A. They sell contracts that offer financial protection against premature death and against living too long. B. They invest heavily in short-term highly marketable securities. C. They have relatively predictable inflows and outflows. D. Their liabilities are long-term in nature

Answer 1

Answer:

The statement which is not true about life insurance companies is:

B. They invest heavily in short-term highly marketable securities.

Explanation:

• The option A is true about the life insurance companies as they sell contracts that offer financial protection against premature death and against living too long as this the main purpose of a life insurance policy.
• These companies don't invest heavily in short-term highly marketable securities so the option B is not true about these companies.
• The option C is true about the insurance companies as they have prediction about their inflows and outflows.
• The option D is also correct as their liabilities are long-term in nature as the insurance policy is a long term policy.