Which statement about Equity Indexed Life Insurance is incorrect?

Equity Indexed Life Insurance combines elements of permanent life insurance with an investment component tied to a stock market index. The correct answer indicates that premiums for this type of insurance are not adjustable based on investment performance.

One of the fundamental features of Equity Indexed Life Insurance is that premiums are typically set based on the policyholder’s age at the time of purchase, along with underwriting factors. This means that while the death benefit and cash value growth can be affected by the performance of the underlying index, the actual premium amounts remain fixed for the term of the policy, barring any specific adjustments that the insurer might make in accordance with their underwriting guidelines.

The policy also often includes features such as a minimum guaranteed interest rate, ensuring that no matter how the index performs, there is a safety net regarding the growth of the cash value. Additionally, the benefits provided through the policy can indeed be linked to the performance of the equity index, allowing for potential increases in cash value based on this external performance measure.

In summary, the notion that premiums can be adjusted according to investment performance is not aligned with how Equity Indexed Life Insurance policies typically operate.