VUL MOCK EXAM 2

Variable life insurance policy owners may make withdrawals in terms of____

• Number of units or fixed monetary amount through cancellation of units

• Number of units or fixed monetary amount through reduction of the life cover sum assured

• Fixed monetary amount only through reduction of the life cover sum assured

• Number of units through cancellation of units

Which one of the following statements about the flexibility features of variable life policies is FALSE?

• Policy holders may request for a partial withdrawal of the policy and the withdrawal amount will be met by cashing the at bid price

• Policy holders can take loans against their variable life policies up to the entire withdrawal value of their policies

• Policy holders have the flexibility of switching from one fund to another provided it satisfies the company’s switching criteria.

• Policy holders have the flexibility of increasing or decreasing their premiums for regular premiums variable life policies.

The investment 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 the life company

IV. Fluctuate according to the rise and fall of market prices

• I, II and III

• I, II and IV

• I, III and IV

• II, III and IV

Which 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 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 life policies distinct from the general account.

• I and II

• I, II, and III

• I and III

• II and III

Which of the following statement is FALSE?

• Rebating is to offer a prospect a special inducement to purchase a policy

• Twisting is a specific form of misrepresentation

• Misrepresentation is a specific form of twisting.

• Switching is a facility allowing policy holders to switch to another variable life fund 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 account.

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 based on the bid price of units allocated into the policy

• I, II and III

• I and II

• I and III

• II and III

What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?

• Equities

• Warrants

• Variable life policies

• Fixed income securities

What are the disadvantages of 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, II

• I, III

• II,III

• 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 premium 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 and endowment policies directly accrue to the policy holders.

• I and II

• I, II and III

• I and III

• II and III

Which of the following statements about twisting is FALSE?

• Twisting is a special form of misrepresentation

• It refers to an agent including a policy holder to discontinue policy with another company without disclosing the disadvantage of doing so

• It includes misleading or incomplete comparison of policies

• It refers to an agent offering a prospect a special inducement to purchase a policy