In which type of unit funds may a life company refuse policyholder switch instructions?

• A. Unitised with profit
• B. Equity
• C. Property
• D. Managed

Answer: (C)

In unit funds, the life company may refuse policyholder switch instructions particularly in property funds. This is primarily due to the nature of property investments, which are less liquid than other types of assets, such as equities or cash. In property funds, the buying and selling of properties take time, and the fund may not be able to quickly convert the investment into cash to accommodate switch requests. This can lead to complications, such as potentially disadvantaging other policyholders if switches were allowed without consideration of the underlying asset liquidity.

On the other hand, unitised with profit, equity, and managed funds generally allow for more flexible switching because they typically invest in more liquid assets that can be more easily traded without significant delays or complications. This liquidity facilitates the smooth processing of switch instructions from policyholders in these types of funds.