Life Insurance Reviewer - Variable Part 3 | Take the Quiz

A detailed illustration depicting an array of investment funds, highlighting the concept of variable life insurance, with a blend of financial graphics like graphs and charts in a professional style.

Variable Life Insurance Quiz

Test your knowledge on variable life insurance with our comprehensive quiz designed for both beginners and seasoned professionals. This quiz consists of 10 multiple-choice questions that cover various aspects of variable life policies, from their characteristics to the intricacies of top-up options.

Answer the questions to see how well you understand this essential financial product. Whether you are preparing for a certification or just want to increase your knowledge, this quiz is for you!

10 Questions2 MinutesCreated by InvestingFlame347

The characteristics of a variable life insurance policy 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 implicit 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 and III

II, III and IV

I, II and IV

I, III and IV

Which of the following statements about option to top-up under variable life insurance products 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 top-up will be used in full, after deducting charges for top-ups, to purchase additional units of the variable life funds.

To top-up a policy, the policy owner pays further single premium at the time of top-up

Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount

Which one of the following statements is FALSE?

Variable life insurance policies offer investors plans with values that are indirectly linked to the investment performance of the life company

A life insurance company will carry out a evaluation of its funds yearly and any surplus may be allocated to participating policyholders 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 portfolio

Which of the following statements about benefits in variable life fund is FALSE?

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 preservations

It enables the investors an opportunity for capital appreciation

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 and III

I and II

I and III

II and III

Investing in bonds offer 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 preservations

It enables the investors an opportunity for capital appreciation

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

Which of the following statements about characteristics of variable life policies are TRUE?

I. Variable life policies generally have a larger 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. Commissions and company expenses are met by a variety of explicit charges, some of which are variable

I, II and III

I and II

II and III

I and III

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

Cash value is paid when a 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 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

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 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 and IV

II, III and IV

I, II and III

I, II and IV

Life Insurance Reviewer - Variable Part 3

Variable Life Insurance Quiz

More Quizzes