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21. Which of the following statements about option top – up under variable life insurance is false?

• Policy owners may buy additional units of the variable life fund and these units will be allocated to new

  variable life insurance policies

• Further premiums at time of the top – up will be used in full, after deducting charges for top – ups, to

  purchase additional units of the variable life funds

• Top – up policy, the policy owner pays further single premium at the time of the top – up

• Policy owners are normally allowed to top – up their policies at any time, subject to a minimum amount

22. The characteristics of a variable life insurance include ________________:

I. Its withdrawal value and protection benefits are determined by the investment performance of the

underlying assets.

II. Its protection costs are generally met by implicit charges

III. Its commission and company expenses are met by a variety of explicit charges with normally 6

months’ notice given by the life companies prior to any change

IV.Its withdrawal value is normally the value of units allocated to the policy owner calculated at the bid

price

• I, II & III

• II, III & IV

• I, II & IV

• I, III & IV

23. 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, they are technically whole life insurance

II. Top – ups or single premium injections are allowed in these plans

III. Policyholders have the flexibility of varying the level cover

• I, II & III

• II & III

• I & II

• I & III

24. Investing in bonds offer the following EXCEPT

• Must be issued with a minimum death benefit

• Must be issued with a maximum withdrawal value

• It allows the investor a chance for capital preservation

• It enables the investor an opportunity for capital appreciation

25. Which of the following statements about variable life policies are TRUE?

I. The withdrawal value is not guaranteed

II. The volatility of the returns depends on the investment strategy of the fund

III. The variable life policyholder has direct control over the investment decisions of the variable life fund

• I, II & III

• I & II

• I & III

• II & III

26. Single premium variable life insurance policy:

• Must be issued with a minimum death benefit

• Must be issued with a maximum withdrawal value

• Has no death benefit

• Has no withdrawal value

27. Which of the following statements about characteristics of variable life policies are TRUE?

I. Variable policies generally have a longer exposure to equity investment than with participating and

other traditional policies

II. The protection costs are generally met by implicit charges, which vary with age and level of cover

III. The commissions and company expenses are met by a variety of explicit charges, some of which

are variable

• I, II III

• I & II

• II & III

• I & III

28. Which of the following statements about benefits in variable life fund is FALSE?

• The fund provides a highly diversified portfolio, thus, lowering the risk of investment

• 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 investment portfolios

• The fund relieves the investor from the hassle of administering his / her investment

• The fund enables small investors to participate in a pool of diversified portfolio in which he / she,

  with a low investment capital, is likely to have acceded to

29. The flexibility benefit of investing in variable life funds include _____________:

I. Policy owners can easily change the level of sum assured and switch their investment between

funds

II. Policy owners can easily take premium holidays and add single premium to Top – ups

III. Variable life insurance policies offer the potential for higher returns

IV. Traditional participating policies aim to produce a steady return by smoothing out market

fluctuation

• All of the above

• I, II & III

• I, II & IV

• I, III & IV

30. The fundamental differences between traditional participating life insurance policies and variable life

insurance policies include _____________.

I. Variable life insurance policies are less likely to offer more choices in terms of the type of

investment funds

II. The investment elements of variable life insurance policies is made known to the policy owner at

the outset and is invested in a separately identifiable fund which is made up of units of investment

III. Variable life insurance policies offer the potential for higher returns

IV. Traditional participating policies aim to produce a steady return by smoothing out market

fluctuation

• I, III & IV

• II, III, IV

• I, II, III

• I, II & IV