B-306 INSURANCE COMMISSION VARIABLE LIFE INSURANCE CONTRACTS DIRECTION: Choose the correct answer Indicate you answer marking the appropriate parenthesis on the snawer sheet See x 1. Variable tife insurance policy owners may make withdrawals in terms of sig “tags mmc sn reg cnt § Fisederepetay amour oy imigh reduction ofthe ie cover sum assured of the of life 2 owe ‘the following statement abcut the flexibility features of variable / partial withdrawal ind the: * singel srt woe ac Soc aa art te Pa b, iife te henic Foleyholders can lake loans against n variebie fife policies up e have Al paltiching from one fund to another H ee ae: 6: decreasing their a I= ior regular premiums variable Be sekcise 3 Theinvesiment returns unger vaziable life insurance policy. AB not guarentesd tl, Are linked to the performance of the investment hind management by the fife. Mw. Fluchiate according to the risk snd fail of market prices 4 Which of the following statements are TRUE? : Palaver Ne on le exermind by te tr pce i Sccuruisted Giviones eae ay cneagiine cash valve plus any roa ompany 0 {o,mmaintain & separate account for vericble be fand i L tend Wh Cand ti Taree tit poco =8 &. Which of the following statements is FALSE? . Rebating is to inducement to purchase & policy B. Tasting tn specinc Lorn of Mleroprasetaner= cay woommmaar se Reset som f Meeting a. ich to another Loa a ‘3, Which of the following statements about variable life policies are TRUE? LS ‘Offer price is used to determine the number of units to be cancelled to the account i. The between the bid and offer price Is used to cover the Jnanagement cost of w, "he ply vu clot ses one rcs uns located nts a |, Mand fil b. fand 1 c land it dé. Wendt tl, PW ee als ene eer epg rot “ Equities © Varlabte life policies a Fixed income 6 What are the disadvantages of investing in common shares? \. Dividends are paid not more than fixed rates Il. investors are exposed to market and specific risks Il. Shares can become worthless if company becomes insolvent - aare = Anes String em enna pee tenn acai of : Ferment i comoany Dawe Sree eect are ' = a descr inception of the: wheress varabie poles ttdie an te hen ‘ ‘The benefits and risks variable tn ore life and endowment policies directly accrue a. and i ela Bel Meee diene10. Which hot ee liewiag phony bend por fwisting is FALSE? : jes once dana eco ara gn ng a a. a, neers ton agen oeng s rosposs spec ncucornentoprcase 11. Mr, duan dela Py Lo noimenth He is 32 ‘and has’? ir. duan Cruz is Saas tak male! age years old aed be kind of policy would you eed him to bay? 12. Whet are the benefits avaitable when investing in variable life- funds? 4 ae hice anbiniennane somes premium folays, ed singe [rela kapecye aoel cherie a evel of ban cnc flere speller can nove exces toa pol ot usted a bend It oA ene a Wandin 6 Rank the following in terns of their liquidity, rom the least liquid ua the mest liquid: 1. Shon Term Securtion HL Property iM, Cash. 'v Eouives awn ft a ak Wm . dome la A UNIT TRUST is . 8. Established by a trust deed which enables a trustee to hold the pool of BUR A Fite er eit coe ae to, off it inne tae lave to dispose off its assets i large ¢. One whereby investor buys units in the trust itself and not shares in the company d An der the SECURITY AND a COMMISSION {GC} which uscelly treats ine unde ange oF equities5. Under variable life insurance policies t —- There is no guaranteed minimum sum assured for the purpose of declaring . There is not guaranteed minimum sum assured as a level of life insurance LL eee N. For cisee oF edie. cn oni fhe sais Bon Ue sarietle, 1s furl ieee, 416. The benefits of investing in variable life funds include : 1 Policy owners have access to pooled or diversified portfolios of investment invesiment and insurance protection " Policy owners can access to variable Hfe funds by ‘nwaxtnent with proven track . Wy. owners can buy @ life insurance policy only with a high initial a, 1 ttandd IV b Lilend IV c. 1 and dll d fi, Wand tv * 17 Which al the folowing BEST deecnves te potcy benefiin variable ite polices? b Rae acta eis rice ot eo iii ey bat are directly the investment dh ee eee TR Why ss tamparam ier the customer must understand tha bales perpen in ful? ‘2. Because the inmurer does not guarantor: any retrn | Bacause ine impact of changes m iivasiment condition On wanisbie lla policy bame soialy by ths Because te the wrong reeuenendstans 4 Beeauas me plocyhorels expect higher thar 19, ° Which of the following statements about rebating are TRUET ; Rebating i under the Insurance Code it bets Soa Ener DRG ie enn & otictol Indicetrientan Fanon will enhance the ssles performance and uphold the prestige of an34. Wht would be the wahdrewal value afer @ year? 20, Which one of the following statements is FALSE? B. Vi life offer aes with id Variable life insurance policies eal ery ba linked to the investment performance aopaE SG Soret 8 funds yearly and any vreomer gets in sarees canara Investment mia wih Denefis that become F at a future date % assets of the portfolio 1. Which of the about to under variable life 2 i e ett Option to top-up: a, Policy owners additional units of the rable life fund and these ‘nits wil be elocatad to new wetehes eae a * ogee apa wnat omer gait Me la ul « Totopup a "ihe policy owner pays futher Siege aes uns up dP to their ies at time, Bau Owners are normally allowed ‘top-up policies at any a ‘The characteristics of 2 variable ife insurance policy include = L its withcrawel value and protaction banefits are determined by the Investinant Performance of the undertying assets heme. Sem gee ena eck noe hen by te ie with ‘& months ‘companies prior to any change. AM ths ave bs ners the aiue f uns atten 1 to palo: sions cael atthe bid prine ee any cy ¢ Mande @ Llane iv a Which ofthe folowing statemnents about single premium varisble ie policies are TRUE? \. ‘There is no fbced tem in -singie premiven varfable Ife policy anc! therefore, thay are a. Tr t id ace allowed in these plans ti, -Pabeyhedders Hoes watyiig the level cover & | land i b. Mand itl © landil & dland ill 24. Investing in bonds offers the following edvantagss EXCEPT : ers orton Ine Drinciel and guaranteed steady stream of Income i heme emporey Pepe who he nea eas a ea ©. Rollows the investor 9 chance for capital praservations . @) Bt enebles the invasiors an opportunity for capital appreciation Oullook is.‘WhIGn of The following sumiemanis about ewestnen ubjecive is FALSE? 25. Which of me fomowing statements about variable lite palcies are TRUE? i ‘The withdrawal value le ros Ni The wokatilty of the aiuens ‘On the investment strategy of the fund ti The variate fet policyholder has direct convo! over th Iwabimant desclsians of in 26. Single premium variable life insurance policy a. Must be issued with a minimum death benefit Must be issued 3 maximum windowed vabue «, Hesng « Has no withdrawal value Feb of the following statements about characteristics of variable life policies sre peer ee policies paneealy have ‘to equity investment than with participating and i, The: 1 gosis are generally met by implicit charges, which vary with Ww : ang SApSRSER are toe by 8 variety of explicit ae eo Blend ti © lend pt a Vane tH #8, Which of the following statements about benefits in variable life fund is FALSE? a he fund provides © highly diversiiad porfalio, thus, lowering tha tisk of 7b. The fund ensures definite high yield for an investor since it is managed professionals who are well-versed in the management of risks of WD Veaitot eaencs tres’ Seite laenda steasioucion Nader investment d. ‘enables smail investor te participates in of diversified poftfotia in which hasan sah ier uivcahnerd caphal ait o hace eeesael by 29. The flexibility benefit of investing invariable life funds inctude Ie Frecneiiars can easily change the lovel of sum assured and switch their 4. Policy owners can easily take premium holidays and add single a Petia ei-keounnice:woiketsl hues a wnigls piccken ttevigh wetin'nieot ‘Structure which cater separately for investment and insurance protection fr Policy owners can easily change the level af their premium payment tiene Vihand iv 1 and ry a 6 S qd™, fundamental differences beeen tedtional participating life Insurance policies Taree Be eter eee atone periootn \ Viable ie incurance policies ore les velo otler more chlcasin tems ate of investment H ‘elements of Variable life insurance policies is made known ee aseestantnninbasnoome bas Nes Soe teiete Sou llr the pokeisal rb ber retums veces as pte roar sea smoothing out marker fluctuation . Sum Ze a. 1,117 and lv Bl, Hl and Iv cL Mend itt a1, and v a Me ‘the purpose = pene ny Fer the purse Sea ee eer c For the purpose d Porta pape fine brine hin enagers 3% The following statement about surender value under traditional participating fife insurance products is TRUE? a - 8 Cash value is paid when a yearly renewable term insurance policy is &. When 6 parti insurance policy is surrendered the surrender value is The of surrender value is. higher than the amount under non * ene airmen a. inthe aoe of Rricinging pois cash surrender value includes the surrender vive of bead we mon ene te FB it of the totiowing statements about risk of invasting In variable lif funds is a Policy owners who ave risk averse should buy variable Me Insurance a fregenn! neice yich ae fly veto unite of egy ee ee me Don OMNIS Who can tolerate the: © Gea ganja eat mer Winn way ci ener Palicy owners averse should purchase ie inevewnce and guaranteed cash and maturity a 34, What would be the withdrawal value aftera year Offer Price Ps Bid-Offer " a 25.4 1 & mn 00 Be pat &Which of the following sustaments about essen! objective is FALSE? “Admin for Top-up = 2.000 Sup grsured Is 190% of ingle premium or the value of the units, whichever Is ASSUMPTIONS: 1._Changss and fees are dechuciad silat Ge eingle creermum has beer investi! inte te Ace 2, The growth rate of the uri price and the bid-ofe apraad in mainbaiad f 8% and aS ‘mapactively. gqee oFeP 3 g s 35. The protection costs under 9 variable life Insurance policy Sizepcananee initial x, BS pre wes Sree acer ents a Ww. ‘with age of a i ' z i : Be S chlversifieg portolio provices greater security to an investor having to seen cn cape ehisinaa theo fine in tock ee ae eg on involve purchasing different types of stocks and SEES ag Sette cater sng ct 37. What are the sdvantages of investing in preferred shares? & Has the ny asseis during dissolution tw. They tenaft of i a. 1. Mend In b land Ii © land tit d. Wand i) iL life ts, the cm Sg ly mee fo a nerenee poke allocations to policy overs ATE not linked to the ffe.con investment periomance pF Bot heve ge he een good investment fife ire ret towel 24 DREIOFTAGTIOE oF Doe We coer on OY dependent on the 2 1 ona1lLand hv Mand Iv ep B. The objective of satisfying customers need profitably can be achieved by an agent 1 The or teabies i Oe: % eee jectives are Ww. spordinated th markt arate near ia the chenorere a. Land b. Nand tt c I, Wand Iv d i. Iiand Iv 49. Which of the following statements is rue about CASH? res tah ie ee Amount depends on the size of the cash flow requirement a evement ln cash increase when there is a bull run in te stock market d, Investment in cash decreases #hen interest rele rise 4 Under 2 regutar premium variable whole fife Insurance plan u _ eRe goed halkdaye, subject ta the life company's sdministrative Soe tation ie the main objective of the pian with investment as Withdrawals efter the payment of a few years premium are usually vominat Nw. A single premiummcontribution is made to the which uses the premium to purchase units in hurecont ution i made tide ceria loved of fe Cover and Iv S lmeaa hy = and Iv a 1 Mend | 42. Which of the investment objective is FALSE Baur yet ney a Sopot, ‘to produce high and Beene Fea en oa RNA Te Pe sent in conmmosiies hea no reyeiar eam 43. Which of the foltowing ‘is/are the main characteristic{s} of variable life policies? L The policies can be used for Investment, as 3 source of reguler -sevings and protection The wiiGirawvel Senos velues and protection benefits are determined by = Ti. The net. cash values SED orci sre cash values shown ‘inthe. mo ant op eb omc indebtedness = neWhich of the following statements abou invasiment cbjective is FALSE? oot d. fand i 44, Risk can be classified into two particulars categories in relation to investment. They includes : The figk of not loging some or all of a person s initial investment ft ig tek of rated ‘on the investment not matching up to the i The Fisk of rate of retum on the im matchi to the westment ing up L ‘The risk of lading Somme ot ell of a person's initiet investment @ land ill & lend e Mend IV a. Wand lv 45. The duties of the trustee of unit trust do not include: 2. Manoping the portfolio ol investment and administering ‘the buying ‘8nd selling of snares in unit trust itself b. Ensuring that the fund manager adhere to the provision of the trusts a ‘Holding Potted ener behalf of the investors 46, Policy fee payable by variable fe insurance policy owner isto cover _ . The handling charges by professional investment agers b ‘The price for each nit ough unser a ee eae a. Mortality costs of the variable life insurance d, Tha saitinietne eonannee ae Sua! POH aT. ‘The selling price under a Wpriable fifa insurance policy is: The price at which units the ‘are back try the life b Fhe ce atch uns under polcy ave afer eas Rete company ¢ Also known gs the big price dA fhed amount throughout » 48. In tisk-retum profile of cash funds, bonds funds balanced fund: inaged funds and equity funds, a risk- return graph will show that = i H retu comes with lower risk i lifer rtu comes with higher risk AE end ihe graph are the funds The rektively aekrisst aero ie ecu ‘ottom end of the graph @ |. Wend Jil b. Il, Wand tv cL land Iv d. lll and IW49. Diversification in investment involves , Putting all the funds under mai nt into one category of Investment b Speelag te ross essen yn putting the fund into several categories investment c. Reducing the risks of investment by putting one fund under management into several cal of investment qd. the risks of investment by putting all one's eggs in one basket 50. Variable life funds can be invested in eny financial instruments including cash funds, bond wg i property funds specialized funds and diversified funds. a pee leg i pais pipe ccee unit prices will oni on heel in shares aace ‘and during market recession, such assets ere Us the last to depreciate ¢. Invest in share of stocks which are inherently of lower risk in nature and the prices of stocks are stable Invest in shares of stocks and investor who buy such assets usually aims for capital appreciation.