NILO 4

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

Investing in bonds offers the following advantages EXCEPT

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

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

• .It allows the investor a chance for capital preservation

• It enables the investor an opportunity for capital appreciation

The following statement about surrender value under traditional participating life insurance products are TRUE?

• Cash value is paid when yearly renewable term insurance policy is surrendered

• When a participating insurance policy is surrendered, the surrender value is calculated by multiplying the bid price with the number of units

• The amount of surrender value is usually higher than the amount under non – participating policies and it varies with the age of the assured, being lower at older ages

• In the case of participating policies, the net cash surrender value includes the surrender value of the paid – up addition up to the date of surrender

Which of the following statements about twisting is FALSE?

• Twisting is a special form of misrepresentation

• It refers to an agents including a policyholder to discontinue policy with another company without disclosing the disadvantage of doing so

• It includes misleading or incomplete comparison of policies

• It refers to an agent offering a prospect a special inducement to purchase a policy

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

• Because the insurer does not guarantee any return

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

• Because the agent may give the wrong recommendations

• Because the policyholder expects higher returns

Which of the following statements is 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 value plus any accumulated dividends less any outstanding loans due at the time of the surrender
III. The life company needs to maintain a separate account for variable life policies distinct from the general account

• I & II

• I, II & III

• I & III

• II & III

Mr. Juan dela Cruz is currently earning Php 30,000.00 per month. He is 35 years old and he has a reasonable amount of savings. He has a moderate level of risk tolerance. What kind of policy would you recommend for him to buy?

• Participating Endowment

• Variable life policies

• Participating whole life

• Annuities

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

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

• a. I, III & IV

• II, III, IV

• I, II, III

• I, II & IV

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