VUL EXAMINATION 1
Quiz by CELESTE ESCARDA
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52 questions
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- Q1Which of the following statements about option to top-up under variable life insurance products is FALSE?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.Policy owner may buy additional units in the variable life fund and these units will be allocated to new variable life insurance policies.Policyowners are normally allowed to top-up their policies at any time, subject to a minimum amountTo top-up a policy, the policyowner pays further single premium at the time of top-up.30s
- Q2What 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.I and IIII, II and IIIII and IIII and II30s
- Q3Which of the following statements about the flexibility features of variable life policies is FALSE?Policyholders may request for a partial withdrawal of the policy and the withdrawal amount will be met by cashing the units at bid price.Policyholders can take loans against their variable life policies up to the entire withdrawal value of their policies.Policyholders have the flexibility of switching from one fund to another, provided it satisfies the company’s switching criteria.Policyholders have the flexibility of increasing or decreasing their premiums for regular premiums variable life policies30s
- Q4What is the most suitable investment instrument for someone who is interested in protecting his principal, while receiving a steady stream of income?Variable Life PoliciesEquitiesWarrantsFixed Income Securities30s
- Q5A unit trust is ____.Established by a trust deed, which enables a trustee to hold the pool of money and assets in trust on behalf of the investor.One whereby an investor buys units in the trust itself and not shares in the company.A close-end fund, and does not have to dispose of its assets if a large number of investors sell their shares.An organization registered under the Securities and Exchange Commission (SEC) which usually invests in a wide range of equities and other investments.30s
- Q6The following are characteristics of a variable life insurance policy 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 commissions and company expenses are met by a variety of explicit charges, notice of which is given by life companies normally 6 months prior to any change in such charges. IV. Its withdrawal value is normally the value of units allocated to the policyholder calculated at the bid priceII, III and IVI, II and IVI, III and IVI, II and III30s
- Q7Which of the following statements are TRUE? 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 values 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.II and IIII and IIIII, II, and III30s
- Q8Variable life insurance policy owners may withdraw in terms of ____.Number of units through cancellation of units.Number of units or fixed monetary amount through cancellation of units.Fixed monetary amount only through reduction of the life cover sum assured.Number of units or fixed monetary amount though reduction of the life cover sum assured.30s
- Q9An 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.I, II, and IVI, III, and IVII, III, and IVI, II, and III30s
- Q10Which of the following statements about rebating is/are TRUE ? 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.II and IIII and IIII and IIIII30s
- Q11Which of the following statements is FALSE?The investment element of variable life policies varies according to underlying assets of portfolio.A life insurance company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policyholders as cash dividends.Both Whole Life and Endowment policies can be used as an investment media with benefits that become payable at a future date.Variable life insurance policies offer investors plans with values that are indirectly linked to the investment performance of the life company.30s
- Q12Which of the following statements about single premium variable life policy 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.I, II, and IIIII and IIII and IIII and II30s
- Q13Which of the following statements about variable life policies is/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.I and IIII, II, and IIIII and IIII and II30s
- Q14Which of the following statements about variable life policies are TRUE? I. Variable life policies generally have larger exposure to equity investment that 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.I and IIII, II, and IIIII and IIII and II30s
- Q15The facility to do switching under a variable life insurance policy is a very useful ____.For the purpose of financial planning by the policy ownersFor the purpose of assets planning by the trusteeFor the purpose of profit planning by the life policiesFor the purpose of sales planning by the fund managers30s