Which of the following statements are FALSE? I. The bid-offer spread is used to provide death benefit for the Variable life insurance policy. II. The bid-price is always higher than the offer price. III. The bid-offer is usually about 5%. IV. There are two types of death benefit under the variable life insurance product. They may offer either or both types depending on the product design.

The death benefit under regular premium variable life insurance policies is either I. The sum insured chosen by the life insured plus the value of units in the fund at the bid price. II. The sum insured chosen by the life insured or the value of units in the fund at the bid price whichever is higher. III. The minimum sum insured or the value of the units in the fund at the bid price, whichever is higher. IV. The minimum sum insured plus the value of the units in the fund at the bid price.

If the current offer price = P 2.50 and the Bid offer spread = 4%. Calculate the Bid Price

Which of the following statements about switching are TRUE? I. Switching allows a policyholder the liberty to move part or all money from one fund to another. II. Switching can be used for retirement and education fees planning. III. A company which offers only one fund to its policyholders will normally include a switching facility. IV. It is advisable for policyholders to switch assets in the bond type funds which are more variable in returns.

Identify charges that are applicable to single premium policy:

The difference between the offer price and the bid price is?

The switching facility is very useful for

For variable life policy, the definition of selling price is:

Policy owners of variable life insurance policies may make withdrawal in terms of

Which statement regarding the risk of investment in variable life is TRUE?

The administrative fee, insurance charge, and fund management charge under Variable Life are I. not subject for review II. usually guaranteed III. always upfront charges IV. subject to change by the life company after written notice to its policyowners

Mr. Pascual wishes to invest P20, 000 in a single premium Variable Life Policy with the following parameters: Offer Price = P1.20 Bid-Offer Spread = 5% Policy Fee = P120.00 Administrative and Mortality Charge = 2.5% of single premium If the charges and fees are deducted by canceling units from the policy at inception, how many units can Mr. Pascual purchase?

Which of the following statements about variable life policies are true? I. The margin between the bid and the offer price is used to cover the management cost of the policy. II. The policy value is calculated based on the price of units allocated into the policy. III. The offer price is used to determine the number of units to be credited to the account.

Which statement best describes the policy benefits of variable life insurance policies?

What is the reason why a customer must fully understand the sales proposal?

The statements below are true about top-up option of a variable life insurance product EXCEPT:

Under variable life insurance policies ______________. I. There is no guaranteed minimum sum insured for the purpose of declaring dividends. II. There is no guaranteed minimum sum insured as a level of life insurance protection. III. Each of the policy holder’s single premium will be used to purchase units, the number of which is dependent on the offer price of 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 to the value of the fund

Under the dual pricing method of single premium policies

To satisfy customers, the agent must: I. Give freebies. II. Give discount and monetary assistance to them. III. Undergo extensive investment training by the company. IV. Use sales plan – where sales goals, strategies, and objectives are coordinated with market analysis, segmentation, and targeting.

Rank the following in terms of liquidity, from the most to the least liquid. I. Short term securities II. Property III. Cash IV. Equity

Mr. Claro bought a Variable Life policy with the following details: Offer Price = P16 Bid Offer Spread = 4.5% Units = 25,000 Pol fee = P1,800 Admin and Mortality Charges = P8,750 Top up fee 700 Admin top up P2,000 Presuming all charges are deducted by canceling units and that the Bid Price increases by 8%, what is the withdrawal value after a year?

Which of the following statements are TRUE? I. The life company needs to maintain a separate account for variable life policies distinct from the general account. II. The policy value of variable life policies is determined by the offer price at the time of valuation. III. The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at the time of surrender.

Under the traditional participating life insurance products, which statement about the surrender value is TRUE?

The offer price under a variable life policy is _______?

Which of the following is a combination of equity and fixed income securities?

Which of the following statements about the characteristics of variable life policies are TRUE? I. Variable life policies generally have a larger exposure to equity investment than traditional policies. II. The protection costs are generally met by implicit charges, which may vary with age and level of coverage. III. Commission

Under the regular premium variable whole life plan I. Premium top-ups and holidays, subject to the company’s administrative rules, are usually allowed. II. Life protection is the main objective of the plan with investment as a nominal purpose. III. Partial and full withdrawals, usually after the payment of a few years premium, are allowed. IV. A single premium contribution is made to the policy which is

Ms. Santos wishes to invest P25, 000 in a single premium variable life insurance policy with the following parameters: Bid Price= P1.33 Bid-Offer Spread= 5% Policy fee= P100 Administrative and Mortality Charge= 2.0% of single premium If the charges and fees are deducted by canceling units from the policy at inception, how many units were bought net of charges.

Using the details in question no. 29, calculate the yield if after 10 years the bid price increased to P 2.62

If an investor is interested in protecting his principal and in receiving a steady stream of income, what suitable investment would you recommend?

What is/are the benefit/s of variable life funds?

The fundamental difference between traditional participating life insurance policies and variable life insurance policies include I. Variable life insurance policies are less likely to offer more choices in terms of the type of investment funds. II. The investment element of variable life insurance policies is made known to the policyholder at the outset and is invested in a separate identifiable fund which is made up of units of investment. III. Variable life insurance policies offer the potential for higher returns. IV. Traditional participatin

Which statement is FALSE?

Assuming no movement in the prices and charges are deducted after the single premium has been invested in the account, how much will the policyholder lose if he surrenders the policy now? Bid Price: P13 Bid-Offer Spread: 4% Single Premium: P450,000 Policy Fee: P1,800 Administration and Mortality Cost: 3% Sum assured is 200% of single premium of the value of the units whichever is higher.

Which statement about investment returns under a variable life insurance policy is NOT TRUE?

Which statement is FALSE?

The investment returns under variable life insurance policy I. are not guaranteed. II. are insured. III. are linked to the performance of the investment fund managed by the life office. IV. fluctuate according to the rise and fall of market prices.

Ms. Gandanghari bought a Single Premium Variable Life Policy and obtained 10,000 units in her account with the following parameters: Offer Price= P1.10 Bid-offer-spread= 5% All applicable charges are already deducted from the single premium Assumption: In 10 years, the offer price had consistently increased by 6% annually. If the policy is fully withdrawn 10 years after it was issued, how much will the full withdrawal value be?

Which statement about flexibility features of variable life policies is FALSE?

Which of the following is NOT required to be disclosed to the variable life policyowners?

Over the next 10 years, the bid price is projected to constantly increase by 5% annually. Compute for the offer price after 10 years if the bid price now is P3.50 and the Bid Offer spread is 5%.

An insurer must provide each variable life insurance policy owner with…

_________ is price or premium discrimination against policyholders

Which statement is FALSE?

Which of the following statements about variable life policies are TRUE? I. The withdrawal value is not guaranteed. II. The volatility of returns depends on the investment strategy of the fund. III. The variable life policyholder has a direct control over the investment decisions of the variable life fund.

Which of the following information is not required to be disclosed to the policy owner in the sales process?

Which of the following statements are true? I. The level of risk tolerance refers to the tolerance for magnitude and variability of historical returns or losses. II. The level of risk tolerance is influenced by a person’s age, personality, investment objectives and financial condition. III. Investors need to choose between assets that yield regular income or provide capital gain.

A single premium variable life issued to Mr. Ang has the following details: Single Premium P 100,000 Initial Charge 5% of single premium Mortality Charge 1.6% of the single premium Offer Price P 2.50 Bid-offer spread 4% Compute for the number of units allocated to the policy after all charges are deducted.

Using the detail in question 48, compute for the number of units allocated to the policy when it was issued. Assume that the charges are deducted in the following manner: I. Initial charge is deducted from the single premium II. The remaining amount is used to buy units III. The mortality charge is cancelled from units bought

Using the details and assumptions of question 49, calculate the yield if after 15 years the offer price has increased to 4.35

Which of the following statements about corporate bonds are false? I. Medium or long term debt obligation of the company secured by specific assets. II. The higher the security pledge and the credit worthiness of the company, the higher the rate of return will be. III. Unsecured bonds carry lower rates of interest than secured issues.

The 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 the implicit charges III. Its commissions and company expenses are met by the variety of explicit charges with normally 6 months notice given by the life companies prior to any changes IV. Its withdrawal value is normally the value of units allocated to the policy owner calculated at the bid price

Arrange the order of the following funds – from the lowest risk and return to the highest risk and return: I. Balanced funds II. Equity funds III. Cash funds IV. Bond funds V. Managed funds

Single premium variable life insurance policy…

Which of the following is NOT a benefit of a variable life funds?