IC VUL MOCK EXAM - Questions with Verified Answers Variable life insurance policy owners may make withdrawals in terms of ___________ a. Number of unit
... [Show More] or fixed monetary amount through cancellation of units b. Number of unit or fixed monetary amount of the life cover sum assured c. Fixed monetary amount only through reduction of the life cover sum assured d. Number of units through cancellation of units Which one of the following statements about the flexibility features of variable life policies is FALSE? a. Policy holders may request for a partial withdrawal of the policy and the withdrawal of the policy and the withdrawal of the policy and the withdrawal amount will be met by cashing the units and bid price. b. Policy holders can take loans against their variable life policy up to the entire withdrawal value of their policies. c. Policy holders have the flexibility of switching from one fund to another provided it satisfies the company's switching criteria. d. Policy holders have the flexibility of increasing or decreasing their premiums for regular premiums variable life policies. The returns under variable life insurance policy. ___ I. Are not guaranteed II. Are assured III. Are linked to the performance of the investment fund management by the life company IV. Fluctuate according to the rise and fall of market prices a. I, II and III b. I, II and IV c. I, III and IV d. II, III and IV Which of the following statements are TRUE? I. The policy value of variable life policies is determined by the offer 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 lifer policies distinct from the general account. a. I, and II b. I, II and III c. I, and II d. II and III Which of the following statements is FALSE? a. Rebating to offer a prospect a special inducement to purchase a policy b. Twisting is a specific form of misrepresentation c. Misrepresentation is a specific form of twisting d. Switching is a facility allowing policy holders to switch to another variable life funds offered by company. 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 amount 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 base on the bid price of units allocated into the policy. a. I, II and III b. I and II c. I and III d. II and III What is the most suitable investment instrument for an investor who is interested for an investor who is interested in protecting his principal and receiving a steady stream of income? a. Equities b. Warrants c. Variable life policies d. Fixed income securities What are the disadvantages of investing in common shares? I. Dividends are paid not more than fixed rate II. Investors are exposed to market and specific rates III. Shares can become worthless if company becomes insolvent a. I, II b. I, III c. II, III d. I, II and III Which of the following statements about the differences between variable life insurance policies and endowment policies are FALSE? I. The policy values of variable life and endowment policies directly affect, the performance of the fund of the life insurance 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 endowment policies directly accrue to the policy holders a. I and II b. I, II and III c. I and III d. II and III Which of the following statements about twisting is FALSE? a. Twisting is a special form of misrepresentation b. It refers to an agent inducing a policy holder to discontinue policy with another company without disclosing the disadvantage of doing so c. It includes misleading or incomplete comparison policies d. It refers to an agent offering a prospect a special inducement to purchase a policy Mr. Juan dela Cruz is currently earning P30,000/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 for him to buy? a. Participating endowment b. Variable life policies c. Participating whole life d. Annuities What are the benefits available when investing in variable life funds? I. The variable life funds offer policy holders an access to a pooled or diversified portfolios II. The variable life policy holder can vary his premium payments, take premium holidays, add single premium top-ups and change the level of the sum assured easily III. The variable life policy holder can have access to a pool of qualified and trained professional fund managers a. I, and II b. I and III c. I, II and III d. II and III Rank the following in terms of their liquidity, from the least liquid to the most liquid: I. Short term securities II. Property III. Cash IV. Equities
a. IV, II, III, I b. III, I, IV, II c. II, I, IV, III d. II, IV, I, III A unit trust is ______________________ a. Established by a trust dead which enables trustees to hold the pool of money and assets in trust on behalf of the investor b. A closed-end fund and does not have to dispose of its assets if a large number of investors sell their shares c. One whereby investors buys units the trust itself and not shares in the company d. An organization registered under the Securities and Exchange Commision (SEC) which usually invests in a wide range of equities and other investments. Under variable life insurance polities ______________I. There is no guaranteed minimum sum assured for the purpose of declaring dividends II. There is no guaranteed minimum sum assured as a level of life insurance protection III. Each of the policy owner's premiums will be used to purchase units the number of which is dependent of the selling price of each unit IV. Purchase of units can be only be made from the variable life fund itself, which will then create new units and add the investment monies of the value of the fund. a. I and IV b. II and IV c. III and IV d. II and III The benefits of investing variable funds include ____________________ 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. a. I, II and IV b. I, III and IV c. I, II and III d. I, III and IV Which of the following BEST describes the policy benefits of variable life policies? a. The policy benefits are payable only on death of disability. b. The policy benefits will depend on the long-term performance of the life company c. The policy benefits are directly linked to the investment performance of the underlying assets. d. The policy benefits are guaranteed. Why is it important that the costumer must understand the sales proposal in full? a. Because the insurer does not guarantee any return. b. Because the impact of changes in investment or condition on variable life policy borne safely by the costumer. c. Because the agent may give the wrong recommendations. d. Because the policy holders expect higher returns. Which of the following statements about rebating the 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. a. I and II b. I and III c. II and III Which one of the following statements is FALSE? a. Variable life insurance policies offer investors policies with values and indirectly linked to the investment performance of the life company. b. Life company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policy holders as cash dividends. c. Both whole life and endowment policies can be used as investment mediums with benefits that become payable at a future date. d. The investment element of variable life policies varies according to underlying assets of portfolio. Which of the following statements about option to top-up under variable life insurance product is FALSE? a. Policy owners may buy additional units of the variable life fund and these units will be allocated to new variable life insurance policies. b. Further premiums at time of top-up will be used is full, after deducting charges as top-ups to purchase additional units of the variable life funds. c. To top-up policy , the policy owner pays further single premium at the time of top-up d. Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount. [Show Less]