Forced Asset Allocation Model

The Forced Asset Allocation Model refers to a predefined strategy set by the insurance company dictating how the policyholder's premiums are to be allocated among different index accounts and fixed accounts within an Indexed Universal Life insurance policy.

In this model, the insurer decides the proportion of funds that are to be placed in various investment options, such as equities, bonds, or other indices, with the aim of optimising returns while managing risk. Policyholders have limited or no control over these allocations, and the strategy is designed to provide a balance between steady growth and protection of the capital.

In essence, the Forced Asset Allocation Model seeks to simplify investment decisions for the policyholder by automatically distributing funds in a manner deemed optimal by the insurance company. This can be beneficial for individuals who prefer a hands-off approach to managing their policy's cash value growth.