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WorksheetsVARIABLE MOCK TEST PART 1
Total questions: 18
Worksheet time: 41mins
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 of fixed monetary through 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
Which of the following statements about flexibility features of variable life policies is false?
Policyholders may request for a partial withdrawal of the policy and the withdrawal amount will bemet by cashing the units at the bid price.
Policyholders can take loans against their variable life up to the entire withdrawal value of theirpolicies
Policyholders have the flexibility of switching from one fund to another provided it satisfies thecompany’s switching criteria
Policyholders have the flexibility of increasing or decreasing their premiums for regular premiumvariable life policies
The investment returns under variable life insurance policy _______________
I. Are not guaranteed
II. Are assured
III. Are linked to the performance to of the investment fund managed by the life insurance company
IV. Fluctuate according to the rise and fall of market prices
I, II and III
I,IIandIV
I, III and IV
II, III and IV
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 anyoutstanding 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 generalaccount
I&II
I,II&III
I&III
II&III
Which of the following statements is FALSE?
Rebating is to offer a prospect a special inducement to purchase a policy
Twisting is a specific form of misrepresentation
Misrepresentation is a specific form of twisting
Switching is a facility allowing the policyholders to switch to another variable life funds offered by
the company
Which of the following statements about variable life policies is 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 managements cost of the policy
III. The policy value is calculated based on the bid price of units allocated into the policy
I,II&III
I&II
I&III
II&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
What are the disadvantages of investing in common shares?
I. Dividends are paid more than fixed rates
II. Investors are exposed to market and specific risks
III. Shares can become worthless if company becomes insolvent
I&II
I& III
II&III
I,II&III
Which of the following statements about the difference between variable life policies and endowment policies are FALSE?
I. The policy values of variable life policies directly reflect the performance of the fund of the life company
II. The premiums and benefits of the endowment policies are described at the inception of the policywhereas variable life are flexible as the are account driven
III.The benefits and risks of variable life and endowment policies directly accrue to the policyholders
I&II
I,II&III
I&III
II&III
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 disclosingthe 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
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
What are the benefits available when investing in variable life funds?
I. The variable life funds offer policyholders an access to pooled or diversified portfolios
II. The variable life policyholders can vary his premium payments, take premium holidays, add singlepremium top – ups and change the level of the sum assured easily
III. The variable life policyholder can have access to a pool of qualified and trained professional fundmanagers
I&II
I&III
I,II&III
II&III
Rank the following in terms of their liquidity, from the least liquid to the most liquid:
I. Short term securities
II. Property
III. Cash
IV. Equities
IV, II, III, I
III, I, IV, II
II, I, IV, III
II, IV, I, III
A unit trust is ____________________
Established by a trust deed which enables a trustee to hold the pool of money and assets in trust inbehalf of the investor
A close-end fund and does not have to dispose off if the large number investors sell their shares
One whereby the investor buys units in the trust itself and not share in the company
An organization registered under the SECURITY EXCHANGE COMMISSION (SEC) which usuallyinvests in a wide range of equities and other investment
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 onthe 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 andadd investment monies to the value of the fund
I&IV
II&IV
III&IV
II &III
The benefits of investing in variable life funds include ___________________
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 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 withproven track records
IV. Policy owners can buy a variable life insurance policy only with a high initial investment
I,II&IV
I, III, & IV
I,II&III
II, III & IV
Which of the following BEST describes the policy benefits of variable life policies?
The policy benefits are payable only on death or disability
The policy benefits will depend on the long – term performance of the life company.
The policy benefits are directly linked to the investment performance of the underlying assets
The policy benefits are guaranteed
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 thecustomer.
Because the agent may give the wrong recommendations
Because the policyholder expects higher returns
