IC Offsite (Face-to-face) Variable Life Licensing Exam

Which of the following statements about the difference between variable life policies and endowment policies are true? I. The policy values of variable life policies directly reflect the performance of the fund of the life company I. The premiums and benefits of the endowment policies are described at the inception of the policy whereas variable life plans are flexible as they are account driven II. The benefits and risks of variable life and endowment policies directly accrue to the policyholders

• I & II

• I, II & III

• I & III

• II & III

What are the advantages of investing in preferred shares? I. It gives shareholders the right to a fixed dividend II. Has the priority over the company III. Assets during a dissolution IV. They enjoy the benefit of capital appreciation

• I, II, & III

• I & II

• I & III

• II & III

The selling price under a variable life insurance policy is:

• The price at which units under the policy are bought back by the life insurance 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 the life of the policy

Under a regular premium variable whole life plan I. Premium top-ups and holidays, subject to the company's administrative rules are usually allowed II. Life protection is the main objective of the plan with investment as the nominal purpose III. Withdrawals after the payment of a few years' premium are usually allowed IV. A single premium contribution is made to the policy which uses the premium to purchase units in a variable life fund to provide a certain level of life cover

• II, III & IV

• I, III & IV

• I, II, & IV

• I, II, & 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 are 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

• I, III & IV

• II, III, IV

• I, II, III

• I, II & IV

The objective of satisfying customers need profitably can be achieved by an agent through: I. The giving of freebies to the customers II. Extensive investment training by the company III. The use of a sales plan, where sales goals, strategies, and objectives are coordinated with the market analysis, segmentation and training IV. The giving of monetary assistance and discount to the customers

• I, & III

• II, & III

• II, & IV

• II, III, & IV

Under variable life insurance policies: I. There is no guaranteed minimum sum assured for the purpose of declaring dividends II. There is no guaranteed minimum sum assured as a level of life insurance protection III. Each of the policy owner's premium will be used to purchase units, the number of which is dependent on the selling price of each unit IV. Purchase of units can only be made from the variable life fund itself, which will then create new units and add investment monies to the value of the fund

• I & IV

• II & IV

• III & IV

• II & III

Which of the following statements about surrender value under traditional participating life insurance products is 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

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

Diversification in investment involves

• Putting all the funds under management into one category of investment

• Spreading the risk of investment by not putting the fund into several categories of investment

• Reducing the risks of investment by putting one fund under management into several categories of investment

• Reducing the risks of investment by putting all one's eggs in one basket