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VUL Review > VUL 1-12 > Flashcards

VUL 1-12 Flashcards

1
Q
  1. Variable life insurance policyowners may make withdrawals in term of
    a. Fixed monetary amount only through reduction of the life cover sum assured.
    b. Number of units or fixed monetary amount through cancellation of units
    c. Number of units through cancellation of unit.
    d. Number of units or fixed monetary amount through reduction of the live cover sum assured.
A

c. Number of units through cancellation of unit.

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2
Q
  1. Which of the following statements about flexibility features of variable life policies is false?
    a. Policy holders have the flexibility of increasing or decreasing their premium for regular premium variable life policies.
    b. Policy holders may request for a partial withdrawal of the policy and the withdrawal amount will be met by cashing the units at bit price.
    c. Policy holders can take loans against their variable life up to the entire withdrawal value of their policies.
    d. Policy holders have the flexibility of switching from one fund to another provided it satisfies the company’s switching criteria.
A

c. Policy holders can take loans against their variable life up to the entire withdrawal value of their policies.

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3
Q
  1. The investment returns under variable life insurance policy

a. are not guaranteed
b. Are assured
c. Are linked to the performance of the investment fund managed by the life company.
d. Fluctuate according to the rise and fall of market prices.

A

a. are not guaranteed
c. Are linked to the performance of the investment fund managed by the life company.

d. Fluctuate according to the rise and fall of market prices.

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4
Q
  1. Which of the following statement are TRUE?

a. The life company needs to maintain a separate account for variable life policies distinct from the general account
b. The policy value of variable life policies is determined by the offer price at the time of valuation.
c. The policy value of endowment policies is the cash plus any accumulated dividends less any outstanding loans due at time of surrender.

A

a. The life company needs to maintain a separate account for variable life policies distinct from the general account
c. The policy value of endowment policies is the cash plus any accumulated dividends less any outstanding loans due at time of surrender.

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5
Q
  1. Which of the following statements is FALSE?

a. Twisting is a specific form of misrepresentation
b. Misrepresentation is a specific form of twisting
c. None of the above
d. Rebating is to offer a prospect a special inducement to purchase a policy

A

b. Misrepresentation is a specific form of twisting

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6
Q
  1. Which of the following statement about the variable life policies are TRUE?

a. The margin between the bid and offer price is used to cover the management cost of the policy
b. Offer price is used to determined the number of units to be credited to the account.
c. The policy value is calculated based on the bid price of units allocated into the policy

A

a. The margin between the bid and offer price is used to cover the management cost of the policy
c. The policy value is calculated based on the bid price of units allocated into the policy

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7
Q
  1. What is the most suitable investment instrument for an investor who is interested in protecting his principle and receiving a steady stream of income?

a. Fixed Income Securities
b. Variable life policies
c. Warrants
d. Equities

A

a. Fixed Income Securities

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8
Q
  1. What are the disadvantages of investing in common shares?
    a. Investors are exposed to market and specific risks
    b. Shares can become worthless if company become insolvent
    c. Dividends are paid not more than fixed rates.
A

b. Shares can become worthless if company become insolvent

c. Dividends are paid not more than fixed rates.

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9
Q
  1. Which of the following statements about the difference between variable life policies and endowment policies are FALSE?
    a. The policy values of variable life and endowment policies directly reflect the performance of the fund of the life company
    b. The premiums and benefits of the endowment policies are described at inception of the policy whereas variable life are flexible as they are corrupt driven
    c. The benefits and risk of variable life endowment policies directly accrue to the policyholders
A

a. The policy values of variable life and endowment policies directly reflect the performance of the fund of the life company
b. The premiums and benefits of the endowment policies are described at inception of the policy whereas variable life are flexible as they are corrupt driven

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10
Q
  1. Which of the following statement about twisting is FALSE?
    a. Twisting is a special form of misrepresentation
    b. If refers to an agent including a policyholder to discontinue policy with another company without disclosing the disadvantages of doing so
    c. It refers to an agent offering a prospect a special inducement to purchase a policy
    d. It includes misleading or incomplete comparison of policies
A

c. It refers to an agent offering a prospect a special inducement to purchase a policy

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11
Q
  1. Mr. Juan dela Crus is currently earning Php30,000.00 per month. He is 35 years old and has reasonable amount of savings. He has a moderate level of risk tolerance. What kind of policy would you recommend for him to buy?

a. Participating Whole Life
b. Variable Life Policies
c. Participating Endowment
d. Annuities

A

a. Participating Whole Life

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12
Q
  1. What are the benefits available when investing in variable life funds?
    a. The variable life policyholder can vary his premium payments, take premium holiday, add single premium top-ups and change the level of sum assured easily
    b. The variable life policyholder can have access to a pool of qualified and trained professional fund managers.
    c. The variable life funds offer policyholders an access to a pooled or diversified portfolios.
A

a. The variable life policyholder can vary his premium payments, take premium holiday, add single premium top-ups and change the level of sum assured easily
c. The variable life funds offer policyholders an access to a pooled or diversified portfolios.

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13
Q 
13. 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. IV, II, III, I
b. II, IV, I, III
c. III, I, IV,
d. II, I, IV, III

A

d. II, I, IV, III

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14
Q
  1. A unit trust is
    a. An organization registered under the SECURITY EXCHANGE COMMISSION (SEC) which usually invests in a wide range of equities and other investment.
    b. A close-end fund and does not have to dispose off if large number of investors sell their shares
    c. One whereby investors buys units in the trust itself and not shares in the company
    d. Established by a trust deed which enables a trustee to hold the pool of money and assets in trust on behalf of the investor
A

d. Established by a trust deed which enables a trustee to hold the pool of money and assets in trust on behalf of the investor

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15
Q
  1. Under variable life insurance policies
    a. Purchase units can only be made from the variable life fund itself, which will then create new units and add the investment monies to the value of the fund
    b. There is no guaranteed minimum sum assured for the purpose of declaring dividends
    c. There is no guaranteed minimum sum assured as a level of life insurance protection
    d. Each of the equity owner’s premium will be used to purchase units the number of which is dependent on the selling price of each unit
A

a. Purchase units can only be made from the variable life fund itself, which will then create new units and add the investment monies to the value of the fund
d. Each of the equity owner’s premium will be used to purchase units the number of which is dependent on the selling price of each unit

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16
Q
  1. The benefits of investing in variable life funds include
    a. Policy owners can buy a variable life insurance policy when only with a high initial investment
    b. Policy owners have access to pooled or diversified portfolios of investment
    c. Policyowners can easily change the level of premium payments as the product design of variable life insurance policies have clear structures which cater separately for investment and insurance protection
    d. Policyowners can gain access to variable life funds managed by professional investment managers with proven track of records
A

b. Policy owners have access to pooled or diversified portfolios of investment
c. Policyowners can easily change the level of premium payments as the product design of variable life insurance policies have clear structures which cater separately for investment and insurance protection
d. Policyowners can gain access to variable life funds managed by professional investment managers with proven track of records

17
Q
  1. Which of the following BEST describes the policy benefits of variable life policies?

a. The policy benefits are payable only on death or disability;
b. The policy benefits will depend on the long-term performance of the life company;
c. The policy benefits are directly linked to the investment performance of the underlying assets;
d. The policy benefits are guaranteed

A

c. The policy benefits are directed linked to the investment performance of the underlying assets

18
Q
  1. Why is it important that the customer must understand the sales proposal in full?
    a. Because the agent may give the wrong recommendations
    b. Because the policyholder expects higher returns
    c. Because the impact of changes in investment condition on available life policy born solely by the customer
    d. Because the insurer does not guarantee any return
A

c. Because the impact of changes in investment condition on available life policy born solely by the customer

19
Q
  1. Which of the following statements about rebating are TRUE?
    a. Rebating deals with offering the prospect a special inducement to purchase a policy
    b. Rebating is prohibited under the Insurance Code
    c. Rebating will enhance the sales performance and uphold the prestige of an agent
A

a. Rebating deals with offering the prospect a special inducement to purchase a policy
b. Rebating is prohibited under the Insurance Code

20
Q
  1. Which of the following statements is FALSE?
    a. Variable life insurance policies offer investors policies with values and indirectly linked to the investment performance of the life company
    b. The investment element of variable life policies varies according to underlying assets of the portfolio
    c. Life company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policyholder as cash dividends
    d. Both Whole Life and Endowment policies can be used as an investment media with benefits that become payable at a future date
A

a. Variable life insurance policies offer investors policies with values and indirectly linked to the investment performance of the life company

VUL Review (4 decks)

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