Question 1

People generally invest their money to provide:
 I.	An improvement in their financial position
II.	A less comfortable standard of living
III.	Retirement income
IV.	Funds of paying necessary expenses and taxes when the person dies

Accepted Answer

I,III and IV

Answer

I,II and IV

Answer

II,III and IV

Answer

I,II and III

Question 2

Which of the following funds is comprised of a higher proportion of equity and a lower proportion of fixed income instruments?

Accepted Answer

Mange funds

Answer

Mixed funds

Answer

Cash funds

Answer

Bonds of funds

Question 3

Which of the following are the main characteristics of variable life insurance policies?

I.	The policies can be used for investments, as a source of regular savings and protector
II.	The withdrawal and protection benefit are determined by the investment performance of the underlying assets.
III.	The net withdrawal values of the policies are the gross withdrawal values shown in the policy which includes cash dividends up to the date of surrender, less all indebtedness and includes interest.

Accepted Answer

I and II only

Answer

I only

Answer

II only

Answer

I, II and III

Question 4

Which of the following statements are FALSE?
 I.	The policy owners may request a partial withdrawal of the policy and the amount will be met by cashing the units at the offer price.
II.	The structure of charges and the investment content of a variable life policy are specified in the policy documents and the policy statements/
III.	Some Variable life policies grant loans to policy owners which is limited to a percentage of the cash value
IV.	Commissions and office expenses are met by a variety of implicit charges, some of which are variable.

Accepted Answer

I and III only

Answer

All of the above

Answer

II and III only

Answer

I and II only

Question 5

Which of the following statements about the feature of regular premium variable life policy are TRUE?
 I.	Top-ups are usually allowed
II.	The level of cover can be varied
III.	Premium holidays are usually allowed

Accepted Answer

I, II and III

Answer

II and III only

Answer

I and III only

Answer

I and II only

Question 6

Which one of the following statements is NOT TRUE about the benefits of investing in variable life insurance policy?

Accepted Answer

The fund ensures definite high yield for and investor since it is managed by professional who are well-versed in the management of risk of the investment portfolio.

Answer

The fund enables small investors to participate in a pool of diversified portfolio in which he/she is unlikely to have access to with low investment capital.

Answer

The fund relieves the investor from the hassles of administering his/her investment

Answer

The fund provides a highly diversified portfolio, thus, lowering the risk of investment

Question 7

Which of the following statements the difference between variable life insurance product and participating products?

I.	Variable life insurance products allow policy owners to change the premium payments but traditional participating life products do not.
II.	Variable life insurance products can take the form of whole life or Endowment policies but Traditional Life policies around
III.	Variable life insurance products allow the policy owner to pay future single premiums from time to add more units to his account but Traditional Life participating products do not.

Accepted Answer

I and II only

Answer

I, II and III

Answer

II and III only

Answer

I only

Question 8

Which of the following are some of the flexibility of variable life insurance policies
 I.	Partial withdrawal
II.	Variation in sum assured
III.	Guaranteed withdrawal values

Accepted Answer

I and II only

Answer

I, II and III

Answer

III only

Answer

I only

Question 9

Which of the following statements about single variable life policies are TRUE?
 I.	There is no fixed in a single premium variable life policy and therefore, it is technically whole life insurance
II.	Top-ups or single premium injections are allowed
III.	Policy owners have the flexibility or varying the life coverage

Accepted Answer

II and III

Answer

I and II

Answer

I, II and III

Answer

I and III

Question 10

The benefits of investing in variable life funds include:
 I.	Policy owners have access to a pooled and diversified portfolio of investment.
II.	The policy owner can easily change the level of premium payments as the product design of variable life insurance policies have clear structures which cater separately for investment and insurance protection.
III.	Policy owner can gain access to variable life funds managed by professional investment managers.
IV.	The policy owner is relieved of the day administration of his investment.

Accepted Answer

All of the above

Answer

I, III and IV

Answer

I, II and III

Answer

I, II and IV

Question 11

The flexibility benefits of investing in variable life funds include:
 I.	Policy owners can easily change the level of sum insured and switch their investments between funds
II.	Policy owners can easily take premium holidays and single premium top-ups
III.	Variable life insurance products have simple product design with a clear structure which caters separately for investment and insurance protection
IV.	Policy owners can easily change the level of their premium payment

Accepted Answer

I, II and IV

Answer

I, III and IV

Answer

I, II and III

Answer

I, II, III and IV

Question 12

Which of the following statements describes the difference between variable life products and traditional participating life product?
 I.	Variable life products allow policy owner to pay top-up premium from time to time to buy more units from his account unlike traditional participating life policies
II.	Variable life products allow policy owners to take premium holiday unlike Traditional participating life products.
III.	Variable life products can take the form of whole life or endowment policies unlike Traditional participating products.

Accepted Answer

I and II

Answer

I and III

Answer

I, II and III

Answer

I

Question 13

Your client is a 35yrs old male, earning P35,000 a month, has savings and with a moderate risk tolerance. What product would you recommend?

Accepted Answer

Variable life

Answer

Terms

Answer

Participating whole life

Answer

Endowment

Question 14

In a Unit Trust Investment, the duties of the trustee include of these EXCEPT:

Accepted Answer

Select and  manages the investment of the Trust

Answer

Protect the interest of unit holders.

Answer

Hold the pool of money and assets in Trust on behalf of the investors

Answer

Ensures that the fund managers adhere to the provisions of the trust deed

Question 15

With traditional participating life insurance products, the allocations to policy owners of the dividends:
 I.	Are not directly linked to the investments of the life company
II.	Are smothered
III.	Do not have the highs and lows of investment returns in good times
IV.	Are not fixed

Accepted Answer

II and IV

Answer

I, II and III

Answer

I, II and IV

Answer

I and II

Question 16

To the policy owners, administration benefits under Variable life include:

Accepted Answer

Keeping track of their investment through the statement provided regularly by the insurance company

Answer

Constructing their own diversified portfolio

Answer

Engaging independent professional fund managers personally to manage the complicated transaction

Answer

Exercising investment expertise by selecting funds that will give higher return

Question 17

Which statement best describes Variable life?

Accepted Answer

Flexible premium with returns that will vary

Answer

Fixed premium with returns that will not vary

Answer

Flexible premium with returns that will no vary

Answer

Fixed premium with returns that will vary

Question 18

Offer price= P16				
administrative and mortality charges =P8,750
Bid-offer Spread= 4.5%				
Top up fee= P700
Units= 25000					
Administrative Top up fee= P2000
Policy fee= 1,800
Presuming all charges are deducted by cancelling units and that the bid price increases by 8%, what is the withdrawal value after a year?

Accepted Answer

401,107.58

Answer

432,000

Answer

412,500

Answer

420,069.02

Question 19

Which statements are FALSE regarding the difference between endowment policies and variable life policies?

I.	The benefits and risks of Endowment and variable life policies directly accrue to the policy owners
II.	The premiums and benefits of the endowment policies are stated at its inception while those of variable life policies are flexible as they are account driven
III.	Their policy values directly reflect the performance of the fund of the life company

Accepted Answer

I and III

Answer

II and III

Answer

I, II and III

Answer

I and II

Question 20

Which statement about cash is TRUE?

Accepted Answer

Amount invested in cash in dependent on the size of the cash flow requirement

Answer

Investment in cash decrease when there is a rise in interest rates.

Answer

Investment in cash increase when there is a bull run in the stock market

Answer

Its yield potential is high

Question 21

Theses statement are true EXCEPT?

Accepted Answer

Investment in fixed deposits gives high guaranteed returns

Answer

No regular income may be gained from investing in commodities

Answer

People invest money to enhance a comfortable standard of living.

Answer

People invest money to provide funds for the higher education of their children

Question 22

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

Accepted Answer

The price at which units under the policy offered for sale by the life company

Answer

The price at which units under the policy are brought back by the life company

Answer

It is a fixed amount throughout the life of the policy

Answer

It is also known as bid price

Question 23

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

Accepted Answer

Policy owners who invest in variable life funds with high equity investment face greater risk but can expect to achieve higher return that traditional life insurance policies with high equity investments.

Answer

Policy owners who are risk averse should buy variable life policies with high equity investment.

Answer

Policy owners who risk averse not purchase a life insurance policy with high protection and guaranteed cash and maturity values.

Answer

Investments in variable life funds which are fully invested in units of equity funds are not suitable for policy owner who can tolerate the risks of short terms fluctuation in their cash value

Question 24

The statement below are true about the top-up option of variable life insurance product EXCEPT?

Accepted Answer

Policy owners may buy additional units of variable life fund and these units will be allocated to a new variable life insurance policies

Answer

Further premiums at the time of top-up will be used in full after deducting charges to purchase additional units of the variable life funds.

Answer

The policy owner pays further single premium to make a top-up

Answer

Normally, policy owners are allowed to make a top-up on their policies at any time subject to a minimum amount.

Question 25

If the current offer price = P2.50 and the bid-offer-spread=4% what is the bid price?

Accepted Answer

P2.40

Answer

P2.70

Answer

P2.50

Answer

P2.60

Question 26

Which of the following statements are FALSE?

I.	The bid-offer spread is used to provide the death benefit for the variable life insurance policy
II.	The bid price is always higher than the offer price
III.	The bid-offer spread is usually about 5%
IV.	There are two types of death benefits under the variable life insurance product, they may offer either/or both types depending on its product design and on the discretion of the policy owner

Accepted Answer

I and II

Answer

II and IV

Answer

II and III

Answer

None of the above

Question 27

Which is NOT a characteristic of a variable life policy?

Accepted Answer

Its cash value is usually the value of units allocated to the policy calculated at the prevailing bid price

Answer

It is use solely for investment purposes

Answer

The commission and offer expenses are met by explicit charges

Answer

It has generally, though not necessarily, more exposure to equity investments.

Question 28

Which of the following statements about investments returns under a variable life insurance policy is NOT TRUE?

Accepted Answer

It is assured

Answer

It is linked to the performance of the investment fund managed by the life company

Answer

It is not guaranteed

Answer

It fluctuates based on the rise and fall of market prices

Question 29

Which statement are FALSE regarding the difference between Endowment policies and Variable life policies?

I.	The benefits and risks of endowment and variable life policies directly accrue to the policy owners.
II.	The premiums and benefits of the Endowment policies are stated its inception while those of variable life policies are flexible as they are account driven
III.	Their policy values directly reflect the performance of the fund of the life company

Accepted Answer

I and III

Answer

II and III

Answer

I and II

Answer

I, II and III

Question 30

What are the ADVANTAGES of investing in preferred shares?

I.	It has priority on company assets during dissolution
II.	It has a benefit of capital appreciation
III.	The shareholder has the right to a fixed dividend

Accepted Answer

I, II and III

Answer

II and III

Answer

I and III

Answer

I and II

Question 31

Which of the following information is NOT required to be disclosed to policy owners of Variable life policies?

Accepted Answer

The basis and frequency for valuing the assets

Answer

The number and value of units held at the beginning of the period, brought and sold during the period, and held at the end of the period

Answer

The premiums received and charges levied during the period

Answer

The net withdrawal as of the statement date

Question 32

The investments 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.	Fluctuated according to the rise and fall of market prices

Accepted Answer

I, III and IV

Answer

I, II and IV

Answer

II, III and IV

Answer

I, II and III

Question 33

Which of the following are fixed income securities?

I.	Corporate stocks
II.	Government bonds
III.	Preferred bonds
IV.	Money market instruments
V.	Properties

Accepted Answer

I, II and IV only

Answer

I, III and V only

Answer

All of the above

Answer

I and III only

Question 34

Which of the following investments options entitles the holder ownership and share of profits in the form of dividends appreciation?

Accepted Answer

Ordinary shares

Answer

Bonds

Answer

Futures

Answer

Cash

Question 35

Which of the following statements are FALSE?

I.	Higher capital gain is normally associated with lower risk
II.	One way to lower risk investment is to diversity
III.	One method of measuring risk is to determine the average return and its standard deviation from future data
IV.	Diversification can be achieved by investing in different countries and/or type of assets
V.	An investor can always choose an investment that is risk free

Accepted Answer

I, III and V only

Answer

II, III and IV only

Answer

I, II and III only

Answer

All of the above

Question 36

The difference between the offer price and bid price is?

Accepted Answer

Bid-offer spread

Answer

Bid price spread

Answer

None of the above

Answer

Offer price spread

Question 37

Which of the following information must NOT be conveyed to the client in the sale of variable life insurance policies?

Accepted Answer

Guaranteed interest care

Answer

Benefits illustration using 10% as the gross

Answer

Time horizon of the product

Answer

Rate of return

Question 38

Term Insurance _____________.

Accepted Answer

Provides protection for a specific period and has no savings element

Answer

Is the most complex and expensive of all life insurance products

Answer

Provide for surrender of cash values on early termination of the insurance

Answer

Provides for payments of the sum insured when the life insured survives a specific period

Question 39

What are the disadvantages of investing in cash and deposit?

I.	It is the safest type of investment
II.	They provide the lowest return income
III.	There is reinvestment risk

Accepted Answer

II and III only

Answer

II only

Answer

I, II and III

Answer

I only

Question 40

Which of the following are types of corporate stocks?

I.	Debenture stocks
II.	Government stocks
III.	Loan stocks
IV.	Convertible stocks

Accepted Answer

I, III and IV only

Answer

All of the above

Answer

I, II and III only

Answer

I, II and IV only

Question 41

What are the basic types of real estate investment?

I.	Rural property
II.	Domestic property
III.	Agricultural property
IV.	Commercial/ industrial property
V.	Foreign property

Accepted Answer

II, III and IV only

Answer

All of the above

Answer

I, III and V only

Answer

I ,II and III only

Question 42

The amount of risk person can take depends on:

I.	Age
II.	Investment objective
III.	Financial conditions
IV.	Personality

Accepted Answer

All of the above

Answer

II, III and IV only

Answer

I and II only

Answer

I, II and III only

Question 43

All of these are mandatory provisions in a variable life policy contract EXCEPT:

Accepted Answer

None of the above

Answer

Incontestability provision

Answer

Misstatement of age or sex provision

Answer

The entire insurance contract provision

Question 44

What is the “Net amount at risk?”

Accepted Answer

The excess between the minimum death benefit and the value of the policy owner’s separate variable account

Answer

The minimum death benefit

Answer

The difference between the minimum death benefit and the sum assured

Answer

The sum insured

Question 45

If a policy owner fails to pay premium on time and there are no withdrawal values in the account, the policy will:

Accepted Answer

Terminate immediately on the day premium is due

Answer

Continue in full a period of grace

Answer

Continue at the same sum assured for the same basic benefits

Answer

Continue at a reduced sum assured

Question 46

If a policy owner’s returns the variable life insurance contract within the cooling off period, he will receive.

Accepted Answer

A return equal to the market value of the units plus initial charges

Answer

A refund equal to the market value of the units only

Answer

All premiums paid

Answer

Nothing

Question 47

Which of the following statements about investments objectives is FALSE?

Accepted Answer

People invest money in equities to produce high and guaranteed income

Answer

People invest money to provide funds for the higher education of their children

Answer

People invest money to enhance a comfortable standard of living

Answer

Investments in commodities produce no regular income

Question 48

The disadvantage of fixed income securities include:

I.	The coupon rate is fixed and cannot respond to inflation
II.	The investors are exposed to market specific risks
III.	Fluctuations in bond prices may leads to capital losses

Accepted Answer

I and II only

Answer

II and III only

Answer

I, II and III

Question 49

Which of the following statements about rebating are TRUE?

I.	Rebating is prohibited under the insurance code
II.	Rebating deals with offering the prospects a special inducement to purchase a policy
III.	Rebating will enhance the sales performance and uphold the prestige of an advisor

Accepted Answer

I and II

Answer

I and III

Answer

II and III

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