What is a common feature of life insurance policies that offer risk pooling?

Life insurance policies that incorporate risk pooling are designed to spread the risk of financial loss among a larger group of policyholders. This is a fundamental principle of insurance, where the financial contributions (premiums) from many individuals are pooled together to provide benefits to a few who experience a claim, such as a death.

Survivor benefits are a key feature of life insurance policies that exemplifies risk pooling, as they provide a death benefit to the designated beneficiaries of the policyholder upon their passing. This benefit is possible because premiums collected from all policyholders create a fund that is used to pay out these claims. The pooling of risk allows insurers to manage the uncertainty and distribution of claims over time, which is critical in maintaining financial stability within the insurance framework.

In contrast, features such as guaranteed returns and investment opportunities are more aligned with certain financial products or investment-related insurance policies, rather than the fundamental purpose of traditional life insurance. Variable contributions typically refer to policies with flexible premium payments, which do not directly relate to the concept of risk pooling and benefits distribution in life insurance.