Why is a term in a unit linked life policy that allows the life company to reset the unit price every day not deemed to be an unfair term?

• A. The fluctuating value of the unit fund's assets is outside the control of the life company
• B. The regulations do not apply to life assurance policies
• C. The policyholder had the opportunity at the outset to cool off and cancel the policy without cost
• D. There is no obligation on the consumer to take out the policy in the first place

Answer: (D)

Unfair terms are judged by whether a contract term creates a significant imbalance to the consumer’s detriment, in a way the consumer did not freely accept. In a unit‑linked life policy, a term that lets the life company reset the unit price daily reflects the actual market value of the underlying units. This pricing mechanism is not inherently unfair, because it mirrors outside market movements and is part of how unit-linked policies operate.

The key reason this term isn’t deemed unfair here is the absence of an obligation to take out the policy in the first place. If a consumer is free to decide not to enter the contract, the existence of a price‑reset clause does not impose a one‑sided burden on someone who never chose to bind themselves to the contract. The consumer has a real choice at the outset.

The other options don’t fit as well. The fact that fund values fluctuate is a characteristic of how unit-linked contracts work, not a proof of unfairness. Regulations do apply to life assurance products, so claiming they don’t is incorrect. While a cooling‑off right can mitigate concerns, it isn’t the central reason this term isn’t unfair; the essential point is the voluntary nature of entering the contract.