Worksheets21-33
Total questions: 13
Worksheet time: 7mins
21. Which of the following statements about option top – up under variable life insurance is false?
Policy owners may buy additional units of the variable life fund and these units will be allocated to new
variable life insurance policies
Further premiums at time of the top – up will be used in full, after deducting charges for top – ups, to
purchase additional units of the variable life funds
Top – up policy, the policy owner pays further single premium at the time of the top – up
Policy owners are normally allowed to top – up their policies at any time, subject to a minimum amount
22. The characteristics of a variable life insurance include ________________:
I. Its withdrawal value and protection benefits are determined by the investment performance of the
underlying assets.
II. Its protection costs are generally met by implicit charges
III. Its commission and company expenses are met by a variety of explicit charges with normally 6
months’ notice given by the life companies prior to any change
IV.Its withdrawal value is normally the value of units allocated to the policy owner calculated at the bid
price
I, II & III
II, III & IV
I, II & IV
I, III & IV
23. Which of the following statements about single premium variable life policies are TRUE?
I. There is no fixed term in a single premium variable life policy and therefore, they are technically whole life insurance
II. Top – ups or single premium injections are allowed in these plans
III. Policyholders have the flexibility of varying the level cover
I, II & III
II & III
I & II
I & III
24. Investing in bonds offer the following EXCEPT
Must be issued with a minimum death benefit
Must be issued with a maximum withdrawal value
It allows the investor a chance for capital preservation
It enables the investor an opportunity for capital appreciation
25. Which of the following statements about variable life policies are TRUE?
I. The withdrawal value is not guaranteed
II. The volatility of the returns depends on the investment strategy of the fund
III. The variable life policyholder has direct control over the investment decisions of the variable life fund
I, II & III
I & II
I & III
II & III
26. 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
27. 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
28. 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
29. The flexibility benefit of investing in variable life funds include _____________:
I. Policy owners can easily change the level of sum assured and switch their investment between
funds
II. Policy owners can easily take premium holidays and add single premium to Top – ups
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
All of the above
I, II & III
I, II & IV
I, III & IV
30. 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
I, III & IV
II, III, IV
I, II, III
I, II & IV
31. The switching facility under variable life insurance policies is a very useful _____
For the purpose of profit planning by the life policies
For the purpose of assets planning by the trustee
For the purpose of sales planning by the fund managers
For the purpose of financial planning by the policy owners
32. 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
33. Which one of the following statements about risks of investing in variable life funds is TRUE?
Policy owners who are risk averse should buy life insurance policies with high equity investment
Investment in variable life funds which are fully invested in units of equity bonds are not suitable
for policy owners who can tolerate the risks of short term fluctuation in their cash value
Policy owners who invest in variable life funds with high equity investment face higher risk but can
expect to achieve higher return than the traditional life insurance product over the long term
Policy owners who are risk averse should not purchase life insurance policies with high protection
and guaranteed cash and maturity values
