VUL Ins

Which of the following statements about option to top-up under variable life insurance products is FALSE?

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

• Policy owner may buy additional units in the variable life fund and these units will be allocated to new variable life insurance policies.

• Further premiums at time of top-up will be used in full, after deducting charges for top-ups, to purchase additional units of the variable life funds.

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

What are the disadvantages when investing in common shares?

I. Dividends are paid not more than fixed rates.

II. Investors are exposed to market and specific risks.

III. Shares can become worthless if company becomes insolvent

• I, and II

• I, and III

• II, and III

• I, III, and III

Which of the following statements about the 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 bid price

• Policyholders can take loans against their variable life policies 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 premiums variable life policies.

What is the most suitable investment instrument for someone who is interested in protecting his principal, while receiving a steady stream of income?

• Equities

• Warrants

• Variable Life Policies

• Fixed Income Securities

A unit trust is ____.

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

• A close-end fund, and does not have to dispose of its assets if a large number of investors sell their shares

• One whereby an investor buys units in the trust itself and not shares in the company.

• An organization registered under the Securities and Exchange Commission (SEC) which usually invests in a wide range of equities and other investments.

The following are characteristics of a variable life insurance policy:

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 commissions and company expenses are met by a variety of explicit charges, notice of which is given by life companies normally 6 months prior to any change in such charges.

IV. Its withdrawal value is normally the value of units allocated to the policyholder calculated at the bid price

• I, II and IV

• II, III and IV

• I, II and III

• I, III and IV

Answer explanation

This has been rephrased in the latest version of the reviewer, based on the ILP source file. The answer in the latest version is includes III as it states “Its commissions and company expenses are met by a variety of explicit charges, notice of which is given by life companies normally 6 months prior to any change in such charges.” as Sir Cary validated. II was reworded “Its protection costs are generally met by the explicit charges.”

Which of the following statements are 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 values plus any accumulated dividends less any outstanding loans due at time of surrender.

III. The life company needs to maintain a separate account for variable life policies distinct from the general account.

• II and III

• I, II, and III

• I and III

• I

Variable life insurance policy owners may withdraw in terms of ____.

• Number of units or fixed monetary amount through cancellation of units.

• Number of units or fixed monetary amount though reduction of the life cover sum assured.

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

• Number of units through cancellation of units.

An investor in variable life funds gets to enjoy these benefits:

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 insurance 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, and IV

• I, III, and IV

• I, II, and III

• II, III, and IV

Which of the following statements about rebating is/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 and II

• I and III

• II and III

• III