VUL/ULP MOCK EXAM - Questions and Answers (Complete Solutions) People generally invest their money to provide: I. An improvement in their financial
... [Show More] position II. A less comfortable standard of living III. Retirement income IV. Funds for paying necessary expenses and taxes when the person dies A. I,II and III B. I, III and IV C. I, II, and IV D. II, III and IV Which of the following funds is comprised of a higher proportion of equity and a lower proportion of fixed-income instruments? A. Bond Funds B. Cash Funds C. Managed Funds D. Mixed Funds 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 protection. 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 interests. A. I only B. II only C. I and II only D. I, II and III Which of the following statements are FALSE? I. The policyowners 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 document and the policy statement. III. Some Variable Life policies grant loans to policyowners 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. A. I and II only B. I and III only C. II and III only D. All of the above 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. A. I and II only B. I and III only C. II and III only D. I, II and III Which one of the following statements is NOT TRUE about the benefits of investing in a Variable Life insurance policy? A. The fund provides a highly diversified portfolio, thus, lowering the risk of investment. B. The fund relieves the investor from the hassles of administering his/her investment. C. The fund ensures definite high yield for an investor since it is managed by professionals who are well-versed in the management of risk of the investment portfolio. D. The fund enables small investors to participate in a pool of diversified portfolios in which he/she is unlikely to have access to with low investment capital. Which of the following statements describes the difference between Variable Life insurance products and traditional participating products? I. Variable Life insurance products allow policyowners 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 cannot. III. Variable Life insurance products allow the policyowners to pay future single premiums from time to time to add more units to his account but Traditional Life participating products do not. A. I only B. I and III only C. II and III only D. I, II and III Which of the following are some of the flexibility features of Variable Life insurance policies? I. Partial Withdrawal II. Variation in sum assured III. Guaranteed withdrawal values A. II only B. III only C. I and II only D. I, II and III 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, it is technically Whole Life insurance. II. Top-ups or single premium injections are allowed. III. Policyowners have the flexibility of varying the life coverage. A. I and II B. I and III C. II and III D. I, II, and III The benefits of investing in Variable Life fund include: I. Policyowners have access to a pooled and diversified portfolio of investment. II. The policyowner 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. Policyowners can gain access to Variable Life funds managed by professional investment managers. IV. The policyowner is relieved of the day to day administration of his investment. A. I, II, and III B. I, II, and IV C. I, III, and IV D. All of the above The flexibility benefits of investing in Variable Life funds include: I. Policyowners can easily change the level of sum insured and switch their investments between funds. II. Policyowners can easily take premium holidays and add 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. Policyowners can easily change the level of their premium payment. A. I, II, and III B. I, II, and IV C. I, III, and IV D. I, II, III, and IV Which of the following statements describes the difference between Variable Life products and traditional participating life products? I. Variable Life products allow policyowners to pay top-up premiums from time to time to buy more units for his account unlike traditional participating life policies. II. Variable Life products allow policyowners 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 life products. A. I B. I and II C. I and III D. I, II, and III Your client is a 35 year-old male, earning P35,000 a month, has savings, and with a moderate risk tolerance. What product would you recommend? A. Participating Whole Life B. Endowment C. Term D. Variable Life In a Unit Trust Investment, the duties of a Trustee include all of these EXCEPT: A. Selects and manages the investments of the Trust. B. Holds the pool of money and assets in trust on behalf of the investors. C. Ensures that the fund managers adhere to the provisions of the trust deed. D. Protects the interests of unit holders. To the policyowners, administration benefits under Variable Life include: A. Engaging independent professional fund managers personally to manage the complicated transaction. B. Constructing their own diversified portfolio. C. Keeping track of their investment through the statements provided regularly by the insurance company. D. Exercising investment expertise by selecting funds that will give higher returns.
Which statement best describes Variable Life? A. Fixed premium with returns that will not vary. B. Fixed premium with returns that will vary. C. Flexible premium with returns that will not vary. D. Flexible premium with returns that will vary. With traditional participating life insurance products, the allocations to policyowners of dividends: I. Are not directly linked to the investments of the life company VUL/ULP LICENSING MANUAL (December 2014) I 39 II. Are smoothened III. Do not have the highs and lows of investment returns in good times IV. Are not fixed A. I and II B. I, II, and III C. I, II, IV D. II and IV Offer Price = P16 Bid-Offer Spread = 4.5% Units = 25,000 Policy fee = P1,800 Administrative and Mortality Charges = P8,750 Top-up Fee = P700 Administrative Top-up Fee = 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? A. 432,000 B. 420,069.02 C. 401,107.58 D. 412,500 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 policyowners. 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. [Show Less]