Oklahoma Life Producer Practice Exam

What investment types are typically included in an insurance company's general account?

1. Equities, bonds, real estate

2. Bonds, real estate, and mortgages

3. Mortgages, commodities, and stocks

4. Stocks, bonds, and cash

The correct answer is: Bonds, real estate, and mortgages

Insurance companies typically manage two types of accounts: the general account and the separate account. The general account holds the majority of the company's assets and is composed primarily of more stable and conservative investments. The correct choice highlights the types of assets generally found in an insurance company's general account, specifically bonds, real estate, and mortgages. Bonds are a significant component because they provide a steady income stream and are less volatile than stocks, making them suitable for the long-term liabilities that insurance companies face. Real estate is also included as it can offer both steady income through rental payments and potential appreciation in value over time. Mortgages fall into this category as they represent loans secured by real estate, generating consistent payments over time. In contrast, other options contain components that do not align with the conservative investment strategy typical for general accounts. Equities are riskier and tend to be included more in separate accounts, while commodities and stocks are also considered more volatile and are not as commonly found in the general account focused on stability and capital preservation. Cash is a more liquid asset but is not as prominent in the general account compared to the options noted in the correct answer.