WorksheetsVariable Part 1
Total questions: 10
Worksheet time: 5mins
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 be met
by cashing the units at the bid price.
Policyholders can take loans against their variable life up to the entire withdrawal value of their policies
Policyholders have the flexibility of switching from one fund to another provided it satisfies the
company’s switching criteria
Policyholders have the flexibility of increasing or decreasing their premiums for regular premium
variable 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, II and IV
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 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
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
I & III
I, II & 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 policy
whereas 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
II & III
I & III
I, II & III
I & II
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
