
IC VUL Exam
QuizĀ by Manny
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A UNIT TRUST is _________.
Which of the following statements are FALSE?
I. The policy value of variable life policies is determined by the offer price at the time of valuation
II. The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at time of surrender
III. The life company needs to maintain a separate account for variable life policies distinct from the general account.
Variable life insurance policy owners may withdraw in terms of
Which one of the following statements is FALSE?
Which of the following statements about variable life policies are TRUE?
I. The cash withdrawal value is not guaranteed
II. The volatility of the returns depends on the investment strategy of the fund
III. The variable life policyholder has direct control over the investment decisions of the variable life fund
Which of the following statements about risks of investing in variable life funds is TRUE?
Which of the following duties of the trustees are FALSE?
Which of the following statements about variable life policies are TRUE?
I. Offer price is used to determine the numbers of units to be cancelled to the account
II. The margin between the bid and offer price is used to cover the management cost of the policy
III. The policy value is calculated based on the bid price of units allocated into the policy
Rank the following in terms of liquidity, from the least liquid to the most liquid:
I. Short Term Securities
II. Property
III. Cash
IV. Equities
Under a variable life insurance policy, the protection costs
I. Are met by a flat initial charges for regular premium loans
II. Are generally covered by cancellation of units in the fund
III. Are generally met by explicit charges stipulated openly in the policy terms
IV. Vary with age of policy owner and level of coverage
Investment diversification involves
Advantages of investing in preferred shares are:
I. It gives shareholders the right to a fixed dividend
II. Has the priority over company assets during dissolution
III. They enjoy benefit of capital appreciation
Which of the following statements about benefits in a variable life fund is FALSE?
In riskāreturn profile of bond funds, cash funds, managed funds, balanced funds and equity funds, a risk-return graph will show that
I. Higher return normally comes with lower risk
II. Higher return normally comes with higher risk
III. At the top end of the graph are the equity funds
IV. The relatively risk-less cash funds sit at the bottom end of the graph
The investment returns under variable life insurance
I. Are not guaranteed
II. Are assured
III. Are linked to the performance of the investment fund managed by the life company
IV. Fluctuate according to the rise and fall of the market prices
The policy fee payable by a variable life insurance policy owner is to cover
What is the most suitable investment instrument for someone who is interested in protecting his principal while receiving a steady stream of income?
Which of the following statements about option to top-up under variable life insurance products is TRUE?
I. Policy owners may buy additional units of the variable life fund and these units will be allocated to new variable life insurance policies.
II. Further premiums at time of top-up will be used in full, after deducting charges for top-ups, to purchase additional units of the variable life funds.
III. To top-up a policy, the policy owner pays further single premium at the time of top-up
IV. Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount
What are the disadvantages when investing in common shares?
I. Dividends are paid not more than fixed rates
II. Investors are exposed to market and specific risks
III. Shares can become worthless if company becomes insolvent
The flexibility of investing in variable life funds includes these benefits:
I. Policy owner can easily change the level of sum assured and switch their investment between funds
II. Policy owners can easily take premium holidays and add single premium to top-ups
III. Variable life insurance products have a simple product design with a clear structure which cater separately for investment and insurance protection
IV. Policy owners can easily change the level of their premium payment
Which of the following statements is FALSE?
Mr. Cruz is currently earning Ps. 30,000/month. He is 35 years old and has a reasonable amount of savings. He has a moderate level for risk tolerance. What kind of policy would you recommend him to buy?
The selling price under a variable life insurance policy is:
Which of the following best describes the benefits of variable life policies?
Variable life funds can be invested in any financial instruments including bond funds, property funds, specialized funds, and equity funds. Equity funds
In traditional life insurance products, the allocations to policy owners in the form of dividends
I. Are not directly linked to the life companyās investment performance
II. Have already been smoothened by the life company
III. Do not have the highs and lows of investment returns as in good investment years of the life company
IV. Are not fixed at the inception of the policy, but are greatly dependent on the investment performance of the life company
Which of the following statements about single premium variable life policies are TRUE?
I. There is no fixed term in a single premium variable life policy and therefore, they are technically whole life insurance
II. Top-up single premium injections are allowed in these plans
III. Policyholders have the flexibility of varying the level cover
An investor in variable life funds gets to enjoy these benefits:
I. Policy owners have access to pooled or diversified portfolios of investment
II. Policy owners can easily change the level of the premium payments as the product design of variable life insurance policies have clear structures which cater separately for investment and insurance protection
III. Policy owners can gain access to variable life funds managed by professional investment managers with proven track records
IV. Policy owners can buy a variable life insurance policy only with a high initial investment
Which one of the following statements about the flexibility features of variable life policies is FALSE?
The differences between traditional participating life insurance and variable life insurance include
I. Variable life insurance policies are less likely to offer more choices in terms of the type of investment funds
II. The investment elements of variable life insurance policies is made known to the policy owner at the outset and is invested in a separately identifiable fund which is made up units of investment
III. Variable life insurance policies offer the potential for higher returns
IV. Traditional participating policies aim to produce a steady return by smoothing out market fluctuation
Why is it important that the customer has to understand the sales proposal completely?
The objective of satisfying the needs of the customers can be achieved by an agent through
I. The giving of freebies to customers
II. Extensive investment training by the company
III. The use of sales plan, where sales goals, strategic and objectives are coordinated with market analysis, segmentation and targeting
IV. The giving of monetary assistance and discount to the customers
In a regular premium, variable whole life insurance plan:
I. Premium top-ups and holidays, subject to the life companyās administrative rules are usually allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose
III. Withdrawals after the payment of a few years premium are usually allowed
IV. A single premium contribution is made to the policy which uses the premium to purchase units in variable life fund and to provide certain level of life cover
In variable life insurance policies
I. There is no guaranteed minimum sum assured for the purposed of declaring dividends
II. There is no guaranteed minimum sum assured as a level of life insurance protection
III. Each of the policy ownerās premium will be used to purchase units, the number of which is dependent on the selling price for each unit
IV. Purchase of units can only be made from the variable life fund itself, which will then create new units and add the investment monies to the value of the fund
What would be the withdrawal value after a year?
Offer PriceĀ =Ps 16.00
Bid-offerspread=4.5%
Number of Units bought = 25,000
Policy Fee = 1,800
Admin and Mortality charge = 8,750
Top-up Fee = 700
Admin for Top-up = 2,000
Sum assured is 190% of single premium or the value of the units, whichever is higher.
ASSUMPTIONS:
1. Charges and Fees are deducted after the single premium has been invested into the account
2. The growth rate of the unit price and the bid-offer spread is maintained at 8% and 4.5% respectively
Which of the following about rebating is FALSE?
I. Rebating is prohibited under the Insurance Code
II. Rebating deals with offering the prospect a special inducement to purchase a policy
III. Rebating will enhance the sales performance and uphold the prestige of an agent
Which of the following statements about variable life policies are TRUE?
I. Variable life policies generally have a larger exposure to equity investment than with participating and other traditional policies
II. The protection costs are generally met by implicit charges, which vary with age and level of cover
III. Commissions and company expenses are met by a variety of explicit charges, some of which are variable
A single premium variable life insurance policy must be issued with
Investing in bonds offer the following advantages with the exception of
Characteristics of a variable life insurance policy include
I. Its withdrawal value and protection benefits are determined by the investment performance of the underlying assets
II. Its protection costs are generally met by implicit charges
III. Its commission and company expenses are met by a variety of implicit charges with normally 6 months notice given by the life companies prior to any change
IV. Its withdrawal value is normally the value of units allocated to the policy owner calculated at the bid price
The facility to do switching under a variable life insurance policy is a very useful
Which of the following statements about surrender value under traditional participating life insurance products is TRUE?
Which of the following are main characteristics of variable life policies?
I. The policies can be used for investment, as a source of regular savings and protection
II. The withdrawal values and protection benefits are determined by the investment performance of the underlying assets
III. The net cash values of the policies are the gross cash values shown in the policy that includes dividends up to the date of surrender, less any indebtedness including interest
Which of the following statements about twisting are TRUE?
I. Twisting is a special form of misrepresentation
II. It refers to an agent inducing a policyholder to discontinue policy with another company without disclosing the disadvantage of doing so
III. It includes misleading or incomplete comparison of policies
IV. It refers to an agent offering a prospect a special inducement to purchase a policy
Which of the following statements about the differences between variable life policies and endowment policies are FALSE?
I. The policy values of variable life and endowment policies directly reflect the performance of the fund of the life company
II. The premiums and benefits of the endowment policies are described at inception of the policy whereas variable life policies are flexible as they are account-driven
III. The benefits and risks variable life and endowment policies directly accrue to the policyholders
There are two particular risk categories in relation to investment. They include
I. The risk of not losing some or all of a personās initial investment
II. The risk of rate of return on the investment not matching up to the individualās expectation
III. The risk of rate of return on the investment matching up to the individualās expectation
IV. The risk of losing some or all of a personās initial investment
In investment objectives, which of the statements is FALSE?
Which one of the following statements about an investor diversifying his portfolio is FALSE?
Which of the following statements is true about cash?
When investing in variable life funds, what are the benefits available?
I. The variable life funds offer policyholders an access to pooled or diversified portfolios
II. The variable life policyholder can vary his premium payments, take premium holidays, add single premium top ups and change the level of sum assured easily
III. The variable life policyholder can have access to a pool of qualified and trained professional fund managers