VARIABLE

Variable life insurance policy owners may make withdrawals in terms of ___________.

Which of the following statements about flexibility features of variable life policies is false?

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

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

Which of the following statements is FALSE?

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

What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?

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

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

Which of the following statements about twisting is FALSE?

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?

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 single premium 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 fund managers

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

A unit trust is ____________________

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 on the 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 and add investment monies to the value of the fund

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 with proven track records IV. Policy owners can buy a variable life insurance policy only with a high initial investment

Which of the following BEST describes the policy benefits of variable life policies?

Why is it important that the customer must understand the sales proposal in full?

Which of the following statements about rebating are TRUE? I. Rebating is prohibited under the Insurance Code II. Rebating deals with offering the prospect a special inducement to purchase a policy III. Rebating will enhance the sales performance and uphold the prestige of an agent.

Which one of the following statements is FALSE?

Which of the following statements about option top – up under variable life insurance is false?

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

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

Investing in bonds offer the following EXCEPT

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 The variable life policyholder has direct control over the investment decisions of the variable life fund

Single premium variable life insurance policy:

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

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

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

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

The switching facility under variable life insurance policies is a very useful _____

The following statement about surrender value under traditional participating life insurance products are TRUE?

Which one of the following statements about risks of investing in variable life funds is TRUE?

What should be the withdrawal values after a year? Offer Price = Php. 16.00 Bid-Offer Spread = 4.5% Number of units bought = 25,000 Policy Fee = 1,800 Admin and Mortality Charge = 8,750 Top-up Fee = 700 Admin for Top-up = 2000 Sum assured is 190% of single premium or the value of units, whichever is higher. ASSUMPTIONS: 1. Charges and fees are deducted after the single premium has been invested into the account. 2. The growth rate of the unit price and bid-offer spread is maintained at 8% and 4.5% respectively.

The protection cost under a variable life insurance policy ___________________. I. Are met by flat initial charges for regular premium plans This material is solely for the information, use and private circulation of Pru Life UK and may not be published, circulated, reproduced or distributed in whole or in part to any other person without the company’s prior written consent. Page 8 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

Which of the following statements about diversification in portfolio management is FALSE?

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

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.

The objective of satisfying customers need profitably can be achieved by and agent through I. The giving of freebies to the customers II. Extensive investment training by the company III. The use of sales plan, where sales goals, strategies, and objectives are coordinated with the market analysis, segmentation and training IV. The giving of monetary assistance and discount to the customers

Which of the statements is true about CASH?

Under a regular premium variable whole life plan _______________________ I. Premium top-ups and holidays, subject to the company’s administrative rules are usually allowed II. Life protection is the main objective of the plan with investment as the nominal purpose III. Withdrawals after the payment of a few years premium are usually allowed IV. A single premium contribution is made to the policy which uses the premium to purchase units in a variable life fund to provide a certain level of life cover

Which of the following statements about investment objectives is false?

Which of the following is / are the main characteristic (s) of variable life policies? I. The policies can be used for investment, as a source of regular savings and protection II. The withdrawal values and protection benefits are determined by the investment III. The net cash values of the policies are the gross cash values shown in the policy that includes dividends up to the date of surrender less and indebtedness including interest

Risk can be classified into two particular categories in relation to investment. They include________: I. The risk of not losing some or all of the person’s initial investment II. The risk of rate of return on the investment not matching up to the individual’s expectation III. The risk of rate of return on the investment matching up to the individual’s expectation IV. The risk of losing some or all of a person’s initial investment

The duties of the trustee of unit trust do not include:

Policy fee payable by variable life insurance policy owner is to cover__________________

The selling price under a variable life insurance policy is:

Diversification in investment involves___________________:

Variable life funds can be invested in any financial instruments including cash funds, bond funds, equity funds, property funds, specialized funds, and diversified funds. Equity funds______:

Which of the following statements describe the differences between variable life products and participating products? I. Variable life products allow policyholders to vary the premium payments unlike participating products. II. Variable life products can take the form of whole life or endowment policies with This material is solely for the information, use and private circulation of Pru Life UK and may not be published, circulated, reproduced or distributed in whole or in part to any other person without the company’s prior written consent. Page 11 Participating products. III. Variable life products allow policyholders to pay future single premiums from time to time to add more units to his account unlike participating products.

Assuming no movement in the prices and charges / fees are deducted after the single premium has been Invested into the account, how much will the policyholder lose if he surrenders the policy now? Bid price = Ps. 13.00 Bid-offer spread = 4% Single premium = Ps. 450,000 Policy fee = Ps. 1,800 Admin and Mortality charge = 3% Sum assured is 200% of single premium or the value of the units, whichever is higher

Which of the following statements BEST describes “variable life” policies?

Which of the following factors contribute to the specific risk of an investment: I. Rate of corporate taxes II. Fraud by senior management III. Financial leverage of the company

Investing in bonds offers the following advantages EXCEPT

Rank the following investment instruments in terms of their level of risks, from the least risky to the most risky. I. Cash and deposit II. derivatives III. A well diversified investment portfolio of a company IV. Stock options

In risk-return profile of cash funds, bond funds, balanced funds, managed funds and equity funds, a risk-return graph will show that _____________ I. Higher return normally comes with lower risk II. Higher return normally comes with higher risk III. At the top end of the graph are the equity funds IV. The relatively risk-less cash funds sit at the bottom end of the graph

Which of the following statements are 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 surrender. III. The life company needs to maintain a separate account for variable life policies distinct From the general account.

Which of the following information is NOT required to be disclosed to policyholders of variable life policies?