WorksheetsNilo
Total questions: 15
Worksheet time: 12mins
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
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
Which of the statements is true about CASH?
It has a high yield potential
Amount invested in cash depends on size of the cash flow requirement
Investment in cash increase when there is a bull run in the stock market
Investment in cash decrease when interest rates rise
Which of the following statements BEST describes “variable life” policies?
It is a fixed premium policy with returns that will not vary with the underlying value of investments.
It is a fixed premium policy with returns that will vary with the underlying value of investments.
It is a flexible premium policy with returns that will not vary with the underlying value of investments.
It is a flexible premium policy with returns that will vary with the underlying value of investments.
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
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 and III
I & II
I & III
II & III
The protection cost under a variable life insurance policy ___________________.
I. Are met by flat initial charges for regular premium plans
II. Are generally covered by cancellation of units in the fund
III. Are generally met by explicit charges stipulated openly in the policy terms
IV. Vary with age of policy owner and level of cover
I, II, & III
I, II, & IV
I, III & IV
II, III, & IV
Which of the following information is NOT required to be disclosed to policyholders of variable life policies?
The net withdrawal value as of the statement date
The premiums received and charges levied during the period
The basis and frequency for valuing the assets.
Number and value of units held at the beginning of the period; bought and sold during the period; and held at the end of the period.
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
What are the advantages of investing in preferred shares?
I. It gives shareholders the right to a fixed dividend
II. Has the priority over company assets during a dissolution
III. They enjoy benefit of capital appreciation
I, II, & III
I & II
I & III
II & III
Which one of the following statements is FALSE?
Variable life insurance policies offer investors policies with values and indirectly linked to the investment performance of the life company
Life company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policyholder as cash dividends
Both Whole Life and Endowment policies can be used as an investment media with benefits that become payable at a future date
The investment element of Variable life policies varies according to underlying assets of the portfolio
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
With traditional participating life insurance products, the allocations to policy owners in the form of dividends ________________________:
I. Are not directly linked to the company’s investment performance
II. Have already been smoothened by the life company
III. Do not have the highs and lows of investment return as in good investments years of life company
IV. Are not fixed at the inception of the policy, but are greatly dependent on the investment performance of the company
I, II, & III
I, II & IV
I, III & IV
II, III & IV
Which of the following statements about diversification in portfolio management is FALSE?
A diversified portfolio provides greater security to an investor having to sacrifice return for the portfolio.
Diversification can completely eliminate the risk of investing in stocks in a portfolio
Diversification can involve purchasing different types of stocks and investing stocks in different countries
Diversification helps to spread the portfolio risk by investing in different categories of investment in a portfolio
