VUL EXAM PART 3

Which of the following statements about benefits in a 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 the investor since it is managed by professionals who are well-versed in the management of risks of investment portfolios

• The fund relieves investor from the hassle of administering his/her investment

• The fund enable small investor to participate in a pool of diversified portfolio in which he/she with low investment capital, is likely to have acceded to

The differences between traditional participating life insurance and variable life insurance include ___

• Variable life insurance policies are less likely to offer more choices in terms of the type of investment funds

• 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 units of investment

• Variable life insurance policies offer the potential for higher returns

• Traditional participating policies aim to produce a steady return by smoothing out market fluctuation

Advantages of investing in preferred shares are:

• It gives shareholders the right to a fixed dividend

• Has the priority over company assets during dissolution

• They enjoy benefit of capital appreciation

In a regular premium, variable whole life insurance plan:

• Premium top-ups and holidays, subject to the life company’s administrative rules are usually allowed

• Life protection is the main objective of the plan with investment as a nominal purpose

• Withdrawals after the payment of a few years premium are usually allowed

• A single premium contribution is made to the policy which uses the premium to purchase units in variable life fund and to provide certain level of life cover

There are two particular risk categories in relation to investment. They include              

• The risk of not losing some or all of a person’s initial investment

• The risk of rate of return on the investment not matching up to the individual’s expectation

• The risk of rate of return on the investment matching up to the individual’s expectation

• The risk of losing some or all of a person’s initial investment

The selling price under a variable life insurance policy is:

• The price at which units the policy are bought back by the life company

• The price at which units under the policy are offered for sale by the life company

• Also known as the bid price

• A fixed amount throughout

When investing in variable life funds, what are the benefits available?

• The variable life funds offer policyholders an access to pooled or diversified portfolios

• The variable life policyholder can vary his premium payments, take premium holidays, add single premium top-ups and change the level of sum assured easily

• The variable life policyholder can have access to a pool of qualified and trained professional fund managers

In variable life insurance policies _____

• There is no guaranteed minimum sum assured for the purposed of declaring dividends

• There is no guaranteed minimum sum assured as a level of life insurance protection

• Each of the policy owner’s premium will be used to purchase units, the number of which is dependent on the selling price for each unit

• Purchase of units can only be made from the variable life fund itself, which will then create new units and add the investment monies to the value of the fund

Why is it important that the customer has to understand the sales proposal completely?

• Because the insurer does not guarantee any return

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

• Because the agent may give the wrong recommendations

• Because the policyholders expects higher returns

A single premium variable life insurance policy must be issued with             

• A minimum death benefit

• A maximum withdrawal value

• Without death benefit

• Without withdrawal value