IC reviewer 16-30

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

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

• a.       I, II and IV

• b.       I, III & IV

• c.       I,II, III

• d.        II, III, IV

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

• a.        The policy benefits are payable only on death or disability

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

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

• d.    The policy benefits are guaranteed

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

• a. Because the insurer does not guarantee any return

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

• c. Because the agent may give the wrong recommendations

• d. Because the policyholder expects higher returns

19. 19. Which of the following statements about rebating are TRUE?

20. 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

• a.        I & II

• b. II & III

• c. II & III

a.         

20. 20. Which 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

• b. Life company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policyholder as cash dividends

• c. Both Whole Life and Endowment policies can be used as an investment media with benefits that become payable at a future date

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

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

• a. Policy owners may be additional units of the variable life fund and these units will be allocated to new variable life insurance policies

• b. 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

• c. Top-up policy, the policy owner pays further single premium at the time of the top-up

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

22. 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.       It 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

• a. I, II & III

• b. II, III & IV

• c. I, II & IV

• d. 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 are single premium injections are allowed in these plans

III.      Policyholders have the flexibility of varying the level cover

• a. I, II & III

• b. II & III

• c. I & II

• d. I & III

24. 24. Investing in bonds offer the following EXCEPT

• a. Must be issued with a minimum death benefit

• b. Must be issued with a maximum withdrawal value

• c. It allows the investor a chance for capital preservation

• d. It enables the investor an opportunity for capital appreciation

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

I.          The withdrawal value is not guaranteed

II.        The volatility of the return 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

• a. I, II & III

• b. I & II

• c. I & III

• d. II & III