IC EXA REVIEW

The investment returns under variable life insurance policy _______________

I. Are not guaranteed

II. Are assured

III. Are linked to the performance of the investment fund managed by the life company

IV. Fluctuate according to the rise and fall of market prices.

• I, II and III

• I, II, IV

• I, III, IV

• II, III, IV

Which of the following statements are TRUE?

I. The policy value life policies is determined by the other price at the time of valuation

II. The policy value of endowment policies is the cash value plus any accumulated dividends

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

• I and II

• I, II and III

• I and III

• II and III

Variable life insurance policy owners may make withdrawals in terms of ___________________

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

• Number of units or fixed monetary amount through reduction of the ife cover sum assured

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

• Number of units through cancellation of units

Which of the following statements about the flexibility of variable 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 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 premium variable life policies

Which of the following statements about the difference between variable life policies and endowment policies are FALSE?

I. The policy values of variable life and endowment policies directly reflect the performance of the fund of the life company

II. The premiums and benefits of the endowment policies are described at inception of the policy whereas variable life policies are flexible as they are account driven.

III. The benefits and risks of variable life and endowment policies directly accrue to the policyholders.

• I and II

• I, II and III

• I and III

• II and III

What are the disadvantages of investing in common shares?

I. Dividends are paid not more that fixed rates

II. Investors are exposed to market and specific risks

III. Share can become worthless if company becomes insolvent

• I, II

• I, III

• II, III

• I, II and III

What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?

• Equities

• Warrants

• Variable Life Policies

• Fixed Income Securities

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

I. Offer price is used to determine the number of units to be credited to the account

II. The margin between the bid and offer price is used to cover the management cost of the policy

III. The policy value is calculated based on the bid price of units allocated into the policy.

• All of the above

• I and II

• I and III

• II and III