The Risk & Return of Variable Insurance Products Table of Contents
What is Risk?	1
What is Risk Tolerance?	2
Time Horizon	2
Investment risk	4
Inflation Risk	4
Protection Against Inflation	5
Diversification	7
Risk reduction	7
Measuring Risks	7
Alpha & Beta	8
Lifecycle Beta	8
Loss Frequency	9
Severity	9
Variation	9
Measuring Risk Further	9
Probability distribution	9
Expected Rate of Return	10
Standard deviation	10
Maximum Possible & Probable Loss	10
Living with Risk & Return	11
Interest Rate Risk	11
Value risk	11
Call risk	12
Business Risk	12
Diversifiable risk	13
Credit Risk	13
Market Risk	13
What is Total Risk?	14
Liquidity Risk	14
Portfolio Risk	16
Covariance & Correlation Coefficient	16
Efficient Portfolios	17
Asset Allocation	18
Guidelines for Asset Allocation	19
Expected Return	20
How Much Return is Required?	20
CAPM	20
Treating Risk	20
Two Basic Methods	20
Risk Control	21
Risk Financing	21
Risk Control Alternatives	21
Risk Avoidance	21
Combination, Segregation	22
Loss Prevention & Reduction	22
Noninsurance Transfers	23
Risk Financing Alternatives	23
Risk Retention	24
Risk Transfer	25
Hedging contract, neutralization	25
Hold-harmless agreement	25
Law of Large Numbers	27
Law of averages	27
A Large Group of Homogeneous	29
The Loss Produced by Peril Must	29
The Occurrence of the Loss Must	29
The Loss Must be Large Enough	29
Affordable Premium Costs	29
The Chance of loss must be calculable	29
The Peril Must be Unlikely to	30
Sales Practices	30
NAIC Section 6. Duties of Insurers and Producers	31
Care Obligation	31
Product Replacement with Best Interest in Mind	32
Full Disclosure	33
Disclosure Obligation	34
Conflict of Interest Obligation	35
Documentation Obligation	35

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