It appears that unit-linked insurance products without guarantees would fall into Category 2.

However cost-profit-participation and risk-profit-participation is not reflected in the market values or the Cornish-Fisher methodology. Please provide guidance on how this is to be taken into account. Pure unit-linked insurance products, i.e. those which do not have a profit participation mechanism and do not depend on other factors that are unobserved in the market, would fall into categories 1, 2 or 3 depending on the nature of the product´s payoff and the availability of data. The same unit-linked product may offer units backed by different investment propositions (funds, structured instruments, etc.) that fall into different categories, (e.g. some being Category 2, whilst others being Category 3); separate Risk Indicators would be displayed for these different units. In the cases of cost and risk profit participation described, the PRIIP or the units offered – depending at what level the participation is occurring -- would not be Category 2, but Category 4. The cost-profit or risk-profit participation is considered an unobserved factor in the market, therefore resulting in the PRIIP being Category 4. Points 25 to 29 of Annex II, Part 1 describe the methodology for calculating the VEV of the part of the PRIIP that depends wholly or partly on factors that are unobserved in the market.