VARIABLE

The investment returns under variable life insurance policy __________

I. Are not guaranteed

II. Are assured

III. Are linked to the performance to of the investment fund managed by the life insurance company

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

• I, II and III

• I, III and IV

• I, II and IV

• II, III and IV

Which of the following statements is 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 the time of the surrender

III. The life company needs to maintain a separate account for variable life policies distinct from the general account

• I & II

• I & III

• I, II & III

• II & III

Which of the following statements about variable life policies is TRUE?

I. Offer price is used to determine the number of units to be credited 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 & III

• I & III

• I & II

• II & III

What are the disadvantages of investing in common shares?

I. Dividends are paid more than fixed rates

II. Investors are exposed to market and specific risks

III. Shares can become worthless if company becomes insolvent

• I & II

• II & III

• I & III

• I, II & III

Which of the following statements about the difference between variable life policies and endowment policies are FALSE?

I. The policy values of variable life policies directly reflect the performance of the fund of the life company

II. The premiums and benefits of the endowment policies are described at the inception of the policy whereas variable life are flexible as they are account driven

III. The benefits and risks of variable life and endowment policies directly accrue to the policyholders

• I & II

• I & III

• I, II & III

• II & III

What are the benefits available when investing in variable life funds?

 

I. The variable life funds offer policyholders an access to pooled or diversified portfolios

II. The variable life policyholders 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 policyholder can have access to a pool of qualified and trained professional fund managers

• I & II

• I, II & III

• I & III

• II & 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

• IV, II, III, I

• II, I, IV, III

• III, I, IV, II

• II, IV, I, III

Under variable life insurance policies __________

 

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 on the selling price of each unit

IV. Purchased of units can only be made from the variable life fund itself, which will then create new units and add investment monies to the value of the fund

• I & IV

• III & IV

• II & IV

• II & III

The benefits of investing in variable life 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 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 & IV

• I, II & III

• I, III & IV

• II, III & IV

Which of the following statements about rebating 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

• I & II

• II & III

• I & III