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Review Questions

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Review Test Questions

View: All Questions    Correct Questions    Incorrect Questions    Show Details    (50 results)             1   2   3           
Answer
ID Question Correct
Explanation

Which of the following statements about Variable Life Policies are TRUE?
Offer price is
the selling
price. For any
309536 Incorrect withdrawal
transactions,
we will use
bid price.

   I, II and III
   I and II
   I and III
   II and III

Twisting is
309531 Which of the following statement is FALSE? Incorrect replacement
of a policy.

   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 policy owners to switch to another Variable Life fund offered by the company.

Statement
numeral
Which of the following statements are TRUE? number I is
false since
the policy
value of VUL
policy is
309526 Incorrect determined
by the
current units
of investment
acquired by
the client x
(times) the
bid price.

   I, and II
   I, II and III
   I and III
   II and III

309521 The investment returns under Variable Life insurance policy Incorrect When talking
about
investment
returns in
VUL policies,
insurance

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Answer
ID Question Correct
Explanation
company
can’t give an
assurance of
guaranteed or
exact
percentage of
return since
the
performance
of the the
investment
will never be
stable, not
guaranteed,
and will be
based on the
rise and fall
of market
prices. Any
gains will be
identified by
capital
appreciation.

   I, II and III
   I, II and IV
   I, III and IV
   II, III and IV

Taking loans
up to entire
policy value
for VUL
policies are
not possible
because first,
Policy Loans
are not a
specification
of VUL
policies,
policy loans
are only
309516 Which one of the following statement about the flexibility features of Variable Life Policies is FALSE? Correct allowed for
some
traditional
policies.
Second, if the
client will
have an
entire
withdrawal of
the value of
their policy,
the VUL
policy will
automatically
terminated.

   Policy owners may request for a partial withdrawal of the policy, and the withdrawal amount will be met by cashing the units at bid price.
   Policy owners can take loans against their Variable Life Policies up to the entire withdrawal value of their policies.
   Policy owners have the flexibility of switching from one fund to another provided it satisfies the company’s switching criteria.
   Policy owners have the flexibility of increasing or decreasing their premiums for regular premiums variable life policies.

311322 Which of the following statements describe the difference between Variable Life products and traditional Correct Statements 1
participating life products? and 2 are
correct
because top-
ups and
premium
holidays are
part of the
flexibility
benefit of VUL
policies. A
universal life
insurance

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Answer
ID Question Correct
Explanation
policy gives
the
policyowner a
great deal of
flexibility,
both when he
purchases the
policy and
over the life
of the policy.
When he
purchases the
policy, the
policyowner
decides,
within certain
limits, what
the policy’s
face amount
will be, the
amount of
the death
benefit
payable, and
the amount
of premiums
he will pay
for that
coverage. The
policyowner
can change
these choices
during the life
of the policy,
but the
insurer must
approve
certain types
of changes.

   I
   I and II
   I and III
   I, II, and III

Which of the following statements about rebating are TRUE?

III – this is
false because
rebating is
310885 Correct not allowed
across the
insurance
industry.

   I and II
   I and III
   II and III

The disadvantages of fixed income securities include:

Referring to
FIXED income
310880 Incorrect
securities
such as

   II and III only

   I and II only
   I, II and III
   I and III only

310875 Which of the following statements about investment objectives is FALSE ? Incorrect Should be “
to produce

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Answer
ID Question Correct
Explanation
potentially
high returns”
there is no
such thing as
guaranteed in
VUL and
people invest
to eventually
get
potentially
high returns.

   People invest money to enhance a comfortable standard living.

   People invest money to provide funds for the higher education of their children.
   Investment and commodities produce no regular income.
   People invest money in equities to produce high and guaranteed income.

B – because
in VUL, the
premium is
already
invested on
Day 1 of the
policy.
Therefore the
volatility of
310870 If a policy owner returns the Variable Life insurance contract within the cooling-off period, he will receive : Incorrect the market
cannot be
determined
and will
continue. C –
it also
includes the
initial charges
D – correct
answer is A

   A refund equal to the market value of the units plus initial charges.
   All premiums paid.
   A refund equal to the market value of the units only
   Nothing.

I – Rural
What are the basic types of real estate investments? Property is
not as
valuable as
other
310845 Incorrect properties II
–
acknowledged
are properties
within the
country

   I, II and III only

   II, III and IV only
   I, III and V only
   All of the above

What are the disadvantages of investing in cash and deposits?

The safest
type of
310830 Incorrect investment is
bonds or
treasuries

   I only
   II only
   II and III only
   I, II and III

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Answer
ID Question Correct
Explanation
In VUL
everything
have to be
Which of the following information must NOT be conveyed to the client in the sale of Variable Life insurance policies
310820 Correct disclosed but
?
we do not
guarantee
interest rate

   Guaranteed interest rate

   Time horizon of the product
   Benefits illustrations using 10% as the gross
   Rate of return

Cash is ONLY
a medium of
exchange,
Futures not
Which of the following investment options entitles the holder ownership and share of profits in the form of dividends
310805 Correct relevant not
appreciation ?
discussed,
bond is an
investment
fund

   Cash
   Bonds
   Futures
   Ordinary Shares

Only V- is not
Which of the following are fixed income securities? an
investment
fund and
does not have
an
310800 Incorrect
investment
component.
It is not a
type of Fixed
Income
Security

   I, II, III and IV only

   I and III only
   I, III and V only
   All of the above

The investment returns under Variable Life insurance policy II - Irrelevant

to the
question
because the
310795 Correct insured
means the
person
covered by
insurance

   I, II and III
   I, II and IV
   I, III and IV
   II, III and IV

310770 Which is NOT a characteristic of a Variable Life policy? Incorrect With variable
life policy, it
is referred to
as ACCOUNT
VALUE where
the
performance
of the fund
may start on
Day 1 where
as with Cash

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Answer
ID Question Correct
Explanation
Values, it
starts on the
3rd year. Also
the bid price
is used for
Partial
Withdrawal,
Full
Withdrawal
and
Cancellation
of units for
charges

   It is used solely for investment purposes.

   The commission and office expenses are met by explicit charges.
   It has generally, though not necessarily, more exposure to equity investments.
   Its cash value is usually the value of units allocated to the policy calculated at the prevailing bid price.

Not all
investment
funds are
fully invested
in equity
funds and
there is no
short-term
310750 Which statement regarding the risk of investment in Variable Life is TRUE? Correct fluctuation
nor any
fluctuation in
cash value
and there is
no cash value
in a vul
product, only
account value

   Policy Owners who are risk averse should not purchase a life insurance policy with high protection and guaranteed cash and maturity values.
   Investments in Variable Life funds which are fully invested in units of equity funds are not suitable for Policy Owners who can tolerate the risks of
short term fluctuation in their cash value.

   Policy Owners who invest in Variable Life funds with high equity investment face greater risk but can expect to achieve higher
return than Traditional Life insurance policies with high equity investment.

   Policy Owners who are risk averse should buy Variable Life policies with high equity investment.

This does not

give high
310740 These statements are true EXCEPT Correct
guaranteed
returns

   No regular income may be gained from investing in commodities.

   Investing in fixed deposits gives high guaranteed returns.
   People invest money to enhance a comfortable standard of living.
   People invest money to provide funds for the higher education of their children

From given data below, presuming all charges are deducted by canceling units and that the bid price increases by
8%, what is the withdrawal value after a year?

310725 Incorrect

   432,000.00
   420,069.02
   401,107.58
   412,500.00

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