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1. 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 of fixed monetary through reduction of the life cover sum assured

• Number of units through cancellation of units

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

9. 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 the are account driven

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

• I & II

• I, II & III

• I & III

• II & III

10. Which of the following statements about twisting is FALSE?

• Twisting is a special form of misrepresentation

• It refers to an agents including a policyholder to discontinue policy with another company without

  disclosing the disadvantage of doing soThis material is solely for the information, use and private circulation of Pru Life UK and may not be published,

  circulated, reproduced or distributed in whole or in part to any other person without the company’s prior written

  consent

• It includes misleading or incomplete comparison of policies

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

2. Which of the following statements about flexibility features of variable life policies is false?

• Policyholders may request for a partial withdrawal of the policy and the withdrawal amount will be met

  by cashing the units at the bid price.

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

• Policyholders have the flexibility of switching from one fund to another provided it satisfies the

  company’s switching criteria

• Policyholders have the flexibility of increasing or decreasing their premiums for regular premium

  variable life policies

3. 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, II and IV

• I, III and IV

• II, III and IV

4. 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, II & III

• I & III

• II & III

5. Which of the following statements is FALSE?

• Switching is a facility allowing the policyholders to switch to another variable life funds offered by the

  company

• Twisting is a specific form of misrepresentation

• Misrepresentation is a specific form of twisting

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

6. 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 managements cost of the policy

III. The policy value is calculated based on the bid price of units allocated into the policy

• a. I, II & III

• b. I & II

• c. I & III

• d. II & III

7. 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

8. 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

• I & III

• II & III

• I, II & III