What type of policy involves 80% to 90% of the premium invested in traditional fixed income securities?

The correct answer is associated with a policy that allocates a significant portion of its premium, specifically between 80% to 90%, towards traditional fixed income securities. This is characteristic of an Equity Index Whole Life insurance policy.

Equity Index Whole Life combines elements of whole life insurance with the potential for growth linked to stock market indices. While it offers a cash value component similar to traditional whole life policies, a substantial portion of the premiums is allocated to fixed income investments to stabilize the cash value while also providing a cap on growth linked to market performance.

This structure allows the policy to offer a minimum guaranteed return linked to the indexed performance, making the fixed income investments essential for balancing risk and providing a solid financial foundation for the policyholder. This investment strategy is integral to offering the promised growth potential without exposing the policyholder to the full risks of equity market fluctuations, a feature that is characteristic of equity-indexed products.

In contrast, the other options listed do not share this investment strategy. Modified Endowment Contracts are designed with more aggressive cash value accumulation that may not focus heavily on traditional fixed income, Current Assumptive Whole Life policies may not strictly adhere to the fixed income investment ratio, and Credit Life Insurance typically does not involve this level