Insurance Policy Benefits Are Classified on an Insurance Company's Balance

Multiple Choice

Insurance policy benefits are classified on an insurance company's balance sheet as

A) liabilities, because the insurance company may have to pay out the benefits.
B) assets, because policy benefits are valuable to the company.
C) liabilities, because customers may fall behind on their premium payments.
D) assets, because policy benefits are fully covered by premium payments.
E) liabilities, because insurance companies must maintain a capital base to cover the payments of benefits.