IC VUL EXAM 3

Which of the following statements about the option to top up under variable life insurance products 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 the time of top-up will be used in full, after deducting charges for top-ups, to purchase additional units of the variable life funds.

• To top-up a policy, the policy owner pays a single premium at the time of top-up.

• Policy owners are normally allowed to top-up their policies at any time, subject amount.

The characteristics of a variable life insurance policy include

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

II. Its protection cost is generally met by implicit charges.

III. Its commission and company expenses are met by a variety of implicit 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 and III

• II, III and IV

• I, II and IV

• I, Ill and IV

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. 1-op ups single premium injections are allowed in these plans.

III. Policy holders have the flexibility of varying the level cover.

• I, II and III

• II and III

• I and II

• I and III

Investing in bonds otter the following advantages EXCEPT

• It offers protection to the principal and guaranteed steady flow of income.

• It is a place of temporary refuge when the investor foresees that the market outlook is uncertain.

• It gives the investor a chance for capital preservation.

• It gives investors an opportunity for capital appreciation.

Which of the following statements about variable life policies is 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 policy holder has direct control over the investment decisions of the variable life fund

• I, II and III

• I and II

• I and III

• II and III

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

Which of the following statements about the characteristics of variable life policies is true?

I. Variable life policies generally have a larger exposure to equity investment than participating and other traditional policies.

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

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

• I, II and III

• I and II

• II and III

• I and III

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 a definite high yield for investors since it is managed by professionals who are well-versed in the management of the risks 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 low investment capital, is likely to have acceded to.

The flexibility benefits of investing in variable life funds include

I. Policy owner 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.

Ill. Variable life insurance products have a simple product design with a clear structure which caters separately for investment and insurance protection.

IV. Policy owners can easily change the level of their premium payment.

• All of the above

• I, II and III

• II and IV

• I, III and IV

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 and IV

• II, III and IV

• I, II and III

• I, II and IV