11-20

11. Mr. Juan dela Cruz is currently earning Php 30,000.00 per month. He is 35 years old and he has a reasonable

amount of savings. He has a moderate level of risk tolerance. What kind of policy would you recommend for

him to buy?

• Participating Endowment

• Variable life policies

• Participating whole life

• Annuities

12. 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

• I & II

• I & III

• I, II & III

• II & III

13. 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

• III, I, IV, II

• II, I, IV, III

• II, IV, I, III

14. A unit trust is ____________________

a. Established by a trust deed which enables a trustee to hold the pool of money and assets in trust in behalf

of the investor

b. A close-end fund and does not have to dispose off if the large number investors sell their shares

c. One whereby the investor buys units in the trust itself and not share in the company

• Established by a trust deed which enables a trustee to hold the pool of money and assets in trust in behalf

  of the investor

• A close-end fund and does not have to dispose off if the large number investors sell their shares

• One whereby the investor buys units in the trust itself and not share in the company

• An organization registered under the SECURITY EXCHANGE COMMISSION (SEC) which usually

  invests in a wide range of equities and other investment

15. 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 premium will be used to purchase units the number of which is dependent on

the selling price of each unit

IV. Purchase 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

• II & IV

• III & IV

• II & III

16. 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, III, & IV

• I, II & III

• II, III & IV

17. Which of the following BEST describes the policy benefits of variable life policies?

• The policy benefits are payable only on death or disability

• The policy benefits will depend on the long – term performance of the life company.

• The policy benefits are directly linked to the investment performance of the underlying assets

• The policy benefits are guaranteed

18. Why is it important that the customer must understand the sales proposal in full?

• Because the insurer does not guarantee any return

• Because the impact of changes in investment condition on variable life policy is borne solely by the

  customer

• Because the agent may give the wrong recommendations

• Because the policyholder expects higher returns

19. 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

• I & III

• II & III

20. Which one of the following statements is FALSE?

• Variable life insurance policies offer investors policies with values and

  indirectly linked to the investment performance of the life company

• Life company will carry out a valuation of its funds yearly and any surplus may be allocated to

  participating policyholder as cash dividends

• Both Whole Life and Endowment policies can be used as an investment media with benefits that

  become payable at a future date

• The investment element of Variable life policies varies according to underlying assets of the

  portfolio