問題一覧
1
Which of the following statements about Variable Life policies are TRUE?
(i) Offer price is used to determine the numbers of units to be cancelled from the account.
(ii) The margin between the bid and offer price is used to cover the management cost of the policy.
(iii) The policy value is calculated based on the bid price of units allocated into the policy.
ii and iii
2
A single premium Variable Life insurance policy...
must be issued with a minimum death benefit
3
With traditional participating life insurance products, the allocations to policyowners in the form of dividends ______
(i) Are not directly linked to the life insurance company's investment performance
(ii) Have already been smoothened by the life insurance company
(iii) Do not have the highs and lows of investment returns as in good investment years of the life insurance company
(iv) Are not fixed at the inception of the policy, but are greatly dependent on the investment performance of the life insurance company
ii,iii and iv
4
What are the disadvantages of investing in common shares?
(i) Dividends are paid not more than fixed rates.
(ii) Investors are exposed to market and specific risks.
(iii) Shares can become worthless if the company becomes insolvent.
ii, iii
5
Which of the following statements about surrender value under traditional participating life insurance products is TRUE?
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.
6
Which of the following statements about the risk of investing in Variable Life funds is TRUE?
Policyowners who invest in Variable Life funds with high equity investment face greater risk but can expect to achieve higher return than the Traditional Life insurance product over the long term.
7
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 are made known to the policyowner 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.
ii, iii and iv
8
A UNIT TRUST is _______
established by a trust deed which enables a trustee to hold the pool of money and assets in trust on behalf of the investor
9
The policy fee payable by a Variable Life insurance policyowner is to cover ______
The administrative expenses of setting up the Variable Life insurance policy
10
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 performance of the underlying assets.
(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 any indebtedness including interest.
i and ii
11
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
ii, i, iv, iii
12
The selling price under a Variable Life insurance policy is:
The price at which units under the policy are offered for the sale by the life insurance company
13
Investing in bonds offer the following advantages EXCEPT:
It enables the investors an opportunity for capital appreciation.
14
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 insurance company needs to maintain a separate account for Variable Life policies distinct from the general account.
ii and iii
15
Which of the following statements about twisting is FALSE?
It refers to an agent offering a prospect a special inducement to purchase a policy.
16
The protection costs under a Variable Life insurance policy _______
(i) Are met by flat initial charges for regular premium plans
(ii) Are generally covered by the cancellation of units in the fund
(iii) Are generally met by explicit charges stipulated openly in the policy terms
(iv) Vary with age of policyowner and level of cover
i, ii and iv
17
What would be the withdrawal value after a year?
Offer Price = P16.00
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 = 2,000
Sum assured is 190% of single premium or the value of the 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 the bid-offer spread is maintained at 8% and 4.5% respectively.
Ps. 401,107.58
18
Mr. Juan dela Cruz is currently earning P30,000/month. He is 35 years old and 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?
Variable Life policies
19
The benefits of investing in Variable Life funds include ________
(i) Policyowners have access to pooled or diversified portfolios of the investment.
(ii) Policyowners can easily change the level of the premium payments as the product design of Variable Life insurance policies have clear structures which cater separately for investment and insurance protection.
(iii) Policyowners can gain access to Variable Life funds managed by professional investment managers with proven track records.
(iv) Policyowners can buy a Variable Life insurance policy only with a high initial investment.
i, ii, and iii
20
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.
i and ii
21
Which of the following statements is FALSE?
Misrepresentation is a specific form of twisting.
22
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 policyowner'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 the investment monies to the value of the fund
iii and iv
23
Which one of the following statements about the flexibility features of Variable Life policies is FALSE?
Policyowners can take loans against their Variable Life policies up to the entire withdrawal value of their policies.
24
Which of the following statements about benefits in Variable Life fund is FALSE?
The fund ensures definite high yield for an investor since it is managed by professionals who are well-versed in the management of risks of investment portfolios.
25
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 single premium injections are allowed in these plans.
(iii) Policyowners have the flexibility of varying the level cover.
ii and iii
26
Variable Life insurance policyowners may make withdrawals in terms of _____
The number of units or fixed monetary amount through the cancellation of units
27
Risk can be classified into two particular categories in relation to investment. They include _____
(i) the risk of not losing some or all of a 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
ii and iv
28
Under a regular premium variable Whole Life insurance plan ______
(i) Premium top-ups and holidays, subject to the life insurance company's administrative rules are usually allowed
(ii) Life protection is the main objective of the plan with investment as a 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 and to provide a certain level of life cover
i,ii and iii
29
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 insurance companies prior to any change.
(iv) Its withdrawal value is normally the value of units allocated to the policyowner calculated at the bid price.
i, ii, and iv
30
In the 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 equity funds.
(iv) The relatively risk-less cash funds sit at the bottom end of the graph.
ii,iii and iv
31
Which of the following statements about the differences between Variable Life policies and Endowment policies are FALSE?
(i) The policy values of Variable Life and Endowment policies directly reflect the performance of the fund of the life insurance company.
(ii) The premiums and benefits of the Endowment policies are described at inception of the policy whereas Variable Life policies are flexible as they are account driven.
(iii) The benefits and risks of Variable Life and Endowment policies directly accrue to the policyowners.
i and iii
32
The duties of the trustees of a unit trust do not include:
Managing the portfolio of investment and administering the buying and selling of shares in the unit trust itself
33
The investment returns under a Variable Life insurance policy:
(i) are not guaranteed
(ii) are assured
(iii) are linked to the performance of the investment fund management by the life insurance company
(iv) fluctuate according to the rise and fall of the market prices
i,iii and iv
34
Diversification in investment involves _______
reducing the risks of investment by putting one fund under management into several categories of investment
35
Which of the following statements is true about CASH?
The amount invested in cash depends on the size of the cash flow requirement.
36
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 dissolution
(iii) They enjoy the benefits of capital appreciation
i,ii and iii
37
What are the benefits available when investing in Variable Life funds?
(i) The Variable Life funds offer policyowners an access to a pooled or diversified portfolio.
(ii) The Variable Life policyowner can vary his premium payments, take premium holidays, add single premium top-ups and change the level of sum assured easily.
(iii) The Variable Life policyowner can have access to a pool of qualified and trained professional fund managers.
i,ii and iii
38
Which one of the following statements about diversification in portfolio management is FALSE?
Diversification can completely eliminate the risk of investing in stocks in a portfolio.
39
Which of the following statements about the option to top-up under Variable Life insurance products is FALSE?
Policyowners may buy additional units of the Variable Life fund and these units will be allocated to new Variable Life insurance policies.
40
The objective of satisfying customers' need of profitably can be achieved by an 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 market analysis, segmentation and targeting
(iv) the giving of monetary assistance and discount to customers
ii and iii
41
Which one of the following statements is FALSE?
Variable Life insurance policies offer investors policies with values and are indirectly linked to the investment performance of the life insurance company.
42
What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?
Fixed Income Securities
43
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 policyowner has direct control over the investment decisions of the Variable Life fund.
i and ii
44
Which of the following statements about investment objective is FALSE?
People invest money in fixed deposits to produce high and guaranteed returns.
45
Which of the following statements about the characteristics of Variable Life policies are TRUE?
(i) Variable Life policies generally have a larger exposure to equity investments 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 and ii
46
The switching facility under Variable Life insurance policies is very useful ______
For the purpose of financial planning by the policyowners
47
Why is it important that the customer understand the sales proposal in full?
Because the impact of changes in an investment condition on a Variable Life policy is borne solely by the customer
48
The flexibility benefits of investing in Variable Life funds include _______
(i) The policyowner can easily change the level of sum assured and switch their investment between funds.
(ii) Policyowners can easily take premium holidays and add single premium to top-ups
(iii) Variable Life insurance products have a simple product design with a clear structure, which cater separately for investment and insurance protection.
(iv) Policyowners can easily change the level of their premium payment.
i, ii, and iv
49
Which of the following BEST describes the policy benefits of Variable Life policies?
The policy benefits are directly linked to the investment performance of the underlying assets.
50
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 _______:
Invest in shares of stocks and an investor who buys such assets usually aims for capital appreciation
51
Which statement regarding the risk of investment in Variable Life is TRUE?
Policyowners 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.
52
These statements are true EXCEPT:
Cash yield potential is always high.
53
With traditional participating life insurance products, the allocations to policyowners of dividends...
(I) are not directly linked to the investments of the life insurance company
(II) are smoothened
(III) do not have the highs and lows of investment returns in good times
(IV) are not fixed
II and IV
54
Which of the following funds is comprised of a higher proportion of equity and a lower proportion of fixed-income instruments?
Managed Funds
55
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, it is technically Whole Life insurance.
(II) Top-ups or single premium injections are allowed.
(III) Policyowners have the flexibility of varying the life coverage.
II and III
56
Which of the following statements are FALSE?
(I) The policyowners may request a partial withdrawal of the policy and the amount will be met by cashing the units at the offer price
(II) The structure of charges and the investment content of a Variable Life policy are specified in the policy document and the policy statement
(III) Some Variable Life policies grant loans to policyowners which is limited to a percentage of the cash value
(IV) Commissions and office expenses are met by a variety of implicit charges, some of which are variable
I and III only
57
What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?
Fixed Income Securities
58
Which of the following are fixed income securities?
(i) Corporate Stocks
(ii) Government Bonds
(iii) Preferred Shares
(iv) Properties
i, ii and iii only
59
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.
i and ii
60
Which of the following are the main characteristics of Variable Life insurance policies:
(I) The policies can be used for investments, as a source of regular savings and protection
(II) The withdrawal and protection benefit are determined by the investment performance of the underlying assets
(III) The net withdrawal values of the policies are the gross withdrawal values shown in the policy which includes cash dividends up to the date of surrender, less all indebtedness and includes interests
I and II only
61
If the current offer price = P2.50 and the bid-offer spread = 4%, what is the bid price?
P2.40
62
The benefits of investing in Variable Life fund include:
(I) Policyowners have access to a pooled and diversified portfolio of investment
(II) The policyowner 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
(III) Policyowners can gain access to Variable Life funds managed by professional investment managers
(IV) The policyowner is relieved of the day to day administration of his investment
All of the above
63
The amount of risk a person can take depends on:
(i) Age
(ii) Investment objective
(iii) Financial conditions
(iv) Personality
all of the above
64
For Variable Life policies, the definition of selling price is:
The price at which units under the policy is offered for sale by the life insurance company.
65
Which statement best describes Variable Life?
Flexible premium with returns that will vary
66
The flexibility benefits of investing in Variable Life funds include:
(I) Policyowners can easily change the level of sum insured and switch their investments between funds
(II) Policyowners can easily take premium holidays and add single premium top-ups
(III) Variable Life insurance products have simple product design with a clear structure which caters separately for investment and insurance protection
(IV) Policyowners can easily change the level of their premium payment
I, II, and IV
67
Which of the following statements about investment returns under a Variable Life insurance policy is NOT TRUE?
It is assured.
68
Offer Price = P16
Bid-Offer Spread = 4.5%
Units = 25,000
Policy fee = P1,800
Admin and Mortality Charges = P8,750
Top-up fee 700
Admin Top-up P2,000
Presuming all charges are deducted by cancelling units and that the bid price increases by 8%, what is the withdrawal value after a year?
401,107.58
69
The difference between the offer price and the bid price is?
bid-offer spread
70
Which of the following information is NOT required to be disclosed to policyowners of Variable Life policies?
The basis and frequency for valuing the assets
71
In a Unit Trust Investment, the duties of a Trustee include all of these EXCEPT:
Selects and manages the investments of the Trust
72
Which of the following are some of the flexibility features of Variable Life insurance policies?
(I) Partial Withdrawal
(II)Variation in sum assured
(III)Guaranteed withdrawal values
I and II only
73
Which of the following information must NOT be conveyed to the client in the sale of Variable Life insurance policies?
Guaranteed interest rate
74
All of these are mandatory provisions in a Variable Life contract EXCEPT:
None of the above
75
Which statements are FALSE regarding the difference between Endowment policies and Variable Life policies?
(I) The benefits and risks of Endowment and Variable Life policies directly accrue to the policyowners.
(II) The premiums and benefits of the Endowment policies are stated at its inception while those of Variable Life policies are flexible as they are account driven.
(III) Their policy values directly reflect the performance of the fund of the life insurance company.
I and III
76
Which of the following statements are FALSE?
(i) The bid-offer spread is used to provide a death benefit for the Variable Life insurance policy
(ii) The bid-price is always higher than the offer price
(iii) The bid-offer spread is usually about 5%
(iv) There are two types of death benefits under the Variable Life insurance product. They may offer either/or both types depending on its product design and on the discretion of the policyowner
i and ii
77
The statements below are true about the top-up option of a Variable Life insurance product EXCEPT:
Policyowners may buy additional units of Variable Life fund and these units will be allocated to new Variable Life insurance policies.
78
Which is NOT a characteristic of a Variable Life policy?
It is used solely for investment purposes
79
What is the "Net Amount at Risk"?
The excess between the minimum death benefit and the value of the policyowner's separate variable account
80
Term insurance _______________
provides protection for a specific period and has no savings element
81
What would be the withdrawal value after a year?
Offer Price = P16.00
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 = 2,000
Sum assured is 190% of single premium or the value of the units, whichever is higher.
ASSUMPTIONS:
1. Charges and fees are deducted after the single premium has been invested intoe the account.
2. The growth rate of the unit price and the bid-offer spread is maintained at 8% and 4.5% respectively.
Ps. 401,107.58
82
Which statement about cash is FALSE?
Investment in cash increases when there is a bull run in the stock market.
83
Factors to consider in buying Properties:
(I) Quality of land
(II) The location of land
(III) The value of building on land
(IV) The investment
(V) Place of work
I, II and III only
84
Which of the following statements are FALSE?
(i) Higher capital gain is normally associated with lower risk
(ii) One way to lower risk in investment is to diversify
(iii) One method of measuring risk is to determine the average return and its standard deviation from future data
(iv) Diversification can be achieved by investing in different countries and/or types of assets
(v) An investor can always choose an investment that is risk free
i, iii and v only
85
Which one of the following statements is NOT TRUE about the benefits of investing in a Variable Life insurance policy?
The fund ensures definite high yield for an investor since it is managed by professionals who are well-versed in the management of risk of the investment portfolio.
86
If a policyowner fails to pay premium on time and there are no withdrawal values in the account, the policy will:
Terminate immediately on the day premium is due
87
What are the basic types of real estate investment?
(i) Rural Property
(ii) Domestic Property
(iii) Agricultural Property
(iv) Commercial/Industrial Property
(v) Foreign Property
ii, iii and iv only
88
Your client is a 35 year-old male, earning P35,000 a month, has enough savings, and with a moderate risk tolerance. What product would you recommend?
Variable Life
89
What are the ADVANTAGES of investing in preferred shares?
(i) It has priority on company assets during dissolution
(ii) It has a benefit of capital appreciation
(iii) The shareholder has the right to a fixed dividend
i, ii, and iii
90
The disadvantage of fixed income securities includes:
(i) The coupon rate is fixed and cannot respond to inflation
(ii) The investors are exposed to market specific risks
(iii) Fluctuations in bond prices may lead to capital losses
i and ii only
91
Which of the following investment options entitles the holder ownership and share of profits in the form of dividends appreciation?
ordinary shares
92
If a policyowner returns the Variable Life insurance contract within the cooling-off period, he will receive:
A refund equal to the market value of the units plus initial charges
93
Which of the following statements about investment objectives is FALSE?
People invest money in equities to produce high and guaranteed income
94
The investment returns under Variable Life insurance policy
(i) Are not guaranteed
(ii) Are insured
(iii) Are linked to the performance of the investment fund managed by the life office
(iv) Fluctuate according to the rise and fall of market prices
i, iii and iv
95
What are the disadvantages of investing in cash and deposits?
(i) It is the safest type of investment
(ii) They provide the lowest return
(iii) There is reinvestment risk
ii and iii only
96
To the policyowners, administration benefits under Variable Life include:
Keeping track of their investment through the statements provided regularly by the insurance company
97
Which of the following are types of corporate stocks?
(i) Debenture Stocks
(ii) Government Stocks
(iii) Loan Stocks
(iv) Money Market Instruments
(v) Convertible Stocks
i, iii and v only
98
Which of the following statements about the feature of Regular Premium Variable Life Policy are TRUE?
(I) Top-ups are usually allowed
(II) The level of cover can be varied
(III) Premium holidays are usually allowed
I, II and III
99
Which of the following statements describes the difference between Variable Life products and traditional participating life products?
(I) Variable Life products allow policyowners to pay top-up premiums from time to time to buy more units for his account unlike traditional participating life policies.
(II) Variable Life products allow policyowners to take premium holiday unlike traditional participating life products.
(III) Variable Life products can take the form of Whole Life or Endowment policies unlike traditional participating life products.
I and II
100
People generally invest their money to provide:
(I) An improvement in their financial position
(II) A less comfortable standard of living
(III) Retirement income
(IV) Funds for paying necessary expenses and taxes when the person dies
I, III and IV
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30問 • 2年前問題一覧
1
Which of the following statements about Variable Life policies are TRUE?
(i) Offer price is used to determine the numbers of units to be cancelled from the account.
(ii) The margin between the bid and offer price is used to cover the management cost of the policy.
(iii) The policy value is calculated based on the bid price of units allocated into the policy.
ii and iii
2
A single premium Variable Life insurance policy...
must be issued with a minimum death benefit
3
With traditional participating life insurance products, the allocations to policyowners in the form of dividends ______
(i) Are not directly linked to the life insurance company's investment performance
(ii) Have already been smoothened by the life insurance company
(iii) Do not have the highs and lows of investment returns as in good investment years of the life insurance company
(iv) Are not fixed at the inception of the policy, but are greatly dependent on the investment performance of the life insurance company
ii,iii and iv
4
What are the disadvantages of investing in common shares?
(i) Dividends are paid not more than fixed rates.
(ii) Investors are exposed to market and specific risks.
(iii) Shares can become worthless if the company becomes insolvent.
ii, iii
5
Which of the following statements about surrender value under traditional participating life insurance products is TRUE?
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.
6
Which of the following statements about the risk of investing in Variable Life funds is TRUE?
Policyowners who invest in Variable Life funds with high equity investment face greater risk but can expect to achieve higher return than the Traditional Life insurance product over the long term.
7
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 are made known to the policyowner 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.
ii, iii and iv
8
A UNIT TRUST is _______
established by a trust deed which enables a trustee to hold the pool of money and assets in trust on behalf of the investor
9
The policy fee payable by a Variable Life insurance policyowner is to cover ______
The administrative expenses of setting up the Variable Life insurance policy
10
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 performance of the underlying assets.
(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 any indebtedness including interest.
i and ii
11
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
ii, i, iv, iii
12
The selling price under a Variable Life insurance policy is:
The price at which units under the policy are offered for the sale by the life insurance company
13
Investing in bonds offer the following advantages EXCEPT:
It enables the investors an opportunity for capital appreciation.
14
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 insurance company needs to maintain a separate account for Variable Life policies distinct from the general account.
ii and iii
15
Which of the following statements about twisting is FALSE?
It refers to an agent offering a prospect a special inducement to purchase a policy.
16
The protection costs under a Variable Life insurance policy _______
(i) Are met by flat initial charges for regular premium plans
(ii) Are generally covered by the cancellation of units in the fund
(iii) Are generally met by explicit charges stipulated openly in the policy terms
(iv) Vary with age of policyowner and level of cover
i, ii and iv
17
What would be the withdrawal value after a year?
Offer Price = P16.00
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 = 2,000
Sum assured is 190% of single premium or the value of the 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 the bid-offer spread is maintained at 8% and 4.5% respectively.
Ps. 401,107.58
18
Mr. Juan dela Cruz is currently earning P30,000/month. He is 35 years old and 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?
Variable Life policies
19
The benefits of investing in Variable Life funds include ________
(i) Policyowners have access to pooled or diversified portfolios of the investment.
(ii) Policyowners can easily change the level of the premium payments as the product design of Variable Life insurance policies have clear structures which cater separately for investment and insurance protection.
(iii) Policyowners can gain access to Variable Life funds managed by professional investment managers with proven track records.
(iv) Policyowners can buy a Variable Life insurance policy only with a high initial investment.
i, ii, and iii
20
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.
i and ii
21
Which of the following statements is FALSE?
Misrepresentation is a specific form of twisting.
22
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 policyowner'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 the investment monies to the value of the fund
iii and iv
23
Which one of the following statements about the flexibility features of Variable Life policies is FALSE?
Policyowners can take loans against their Variable Life policies up to the entire withdrawal value of their policies.
24
Which of the following statements about benefits in Variable Life fund is FALSE?
The fund ensures definite high yield for an investor since it is managed by professionals who are well-versed in the management of risks of investment portfolios.
25
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 single premium injections are allowed in these plans.
(iii) Policyowners have the flexibility of varying the level cover.
ii and iii
26
Variable Life insurance policyowners may make withdrawals in terms of _____
The number of units or fixed monetary amount through the cancellation of units
27
Risk can be classified into two particular categories in relation to investment. They include _____
(i) the risk of not losing some or all of a 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
ii and iv
28
Under a regular premium variable Whole Life insurance plan ______
(i) Premium top-ups and holidays, subject to the life insurance company's administrative rules are usually allowed
(ii) Life protection is the main objective of the plan with investment as a 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 and to provide a certain level of life cover
i,ii and iii
29
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 insurance companies prior to any change.
(iv) Its withdrawal value is normally the value of units allocated to the policyowner calculated at the bid price.
i, ii, and iv
30
In the 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 equity funds.
(iv) The relatively risk-less cash funds sit at the bottom end of the graph.
ii,iii and iv
31
Which of the following statements about the differences between Variable Life policies and Endowment policies are FALSE?
(i) The policy values of Variable Life and Endowment policies directly reflect the performance of the fund of the life insurance company.
(ii) The premiums and benefits of the Endowment policies are described at inception of the policy whereas Variable Life policies are flexible as they are account driven.
(iii) The benefits and risks of Variable Life and Endowment policies directly accrue to the policyowners.
i and iii
32
The duties of the trustees of a unit trust do not include:
Managing the portfolio of investment and administering the buying and selling of shares in the unit trust itself
33
The investment returns under a Variable Life insurance policy:
(i) are not guaranteed
(ii) are assured
(iii) are linked to the performance of the investment fund management by the life insurance company
(iv) fluctuate according to the rise and fall of the market prices
i,iii and iv
34
Diversification in investment involves _______
reducing the risks of investment by putting one fund under management into several categories of investment
35
Which of the following statements is true about CASH?
The amount invested in cash depends on the size of the cash flow requirement.
36
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 dissolution
(iii) They enjoy the benefits of capital appreciation
i,ii and iii
37
What are the benefits available when investing in Variable Life funds?
(i) The Variable Life funds offer policyowners an access to a pooled or diversified portfolio.
(ii) The Variable Life policyowner can vary his premium payments, take premium holidays, add single premium top-ups and change the level of sum assured easily.
(iii) The Variable Life policyowner can have access to a pool of qualified and trained professional fund managers.
i,ii and iii
38
Which one of the following statements about diversification in portfolio management is FALSE?
Diversification can completely eliminate the risk of investing in stocks in a portfolio.
39
Which of the following statements about the option to top-up under Variable Life insurance products is FALSE?
Policyowners may buy additional units of the Variable Life fund and these units will be allocated to new Variable Life insurance policies.
40
The objective of satisfying customers' need of profitably can be achieved by an 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 market analysis, segmentation and targeting
(iv) the giving of monetary assistance and discount to customers
ii and iii
41
Which one of the following statements is FALSE?
Variable Life insurance policies offer investors policies with values and are indirectly linked to the investment performance of the life insurance company.
42
What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?
Fixed Income Securities
43
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 policyowner has direct control over the investment decisions of the Variable Life fund.
i and ii
44
Which of the following statements about investment objective is FALSE?
People invest money in fixed deposits to produce high and guaranteed returns.
45
Which of the following statements about the characteristics of Variable Life policies are TRUE?
(i) Variable Life policies generally have a larger exposure to equity investments 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 and ii
46
The switching facility under Variable Life insurance policies is very useful ______
For the purpose of financial planning by the policyowners
47
Why is it important that the customer understand the sales proposal in full?
Because the impact of changes in an investment condition on a Variable Life policy is borne solely by the customer
48
The flexibility benefits of investing in Variable Life funds include _______
(i) The policyowner can easily change the level of sum assured and switch their investment between funds.
(ii) Policyowners can easily take premium holidays and add single premium to top-ups
(iii) Variable Life insurance products have a simple product design with a clear structure, which cater separately for investment and insurance protection.
(iv) Policyowners can easily change the level of their premium payment.
i, ii, and iv
49
Which of the following BEST describes the policy benefits of Variable Life policies?
The policy benefits are directly linked to the investment performance of the underlying assets.
50
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 _______:
Invest in shares of stocks and an investor who buys such assets usually aims for capital appreciation
51
Which statement regarding the risk of investment in Variable Life is TRUE?
Policyowners 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.
52
These statements are true EXCEPT:
Cash yield potential is always high.
53
With traditional participating life insurance products, the allocations to policyowners of dividends...
(I) are not directly linked to the investments of the life insurance company
(II) are smoothened
(III) do not have the highs and lows of investment returns in good times
(IV) are not fixed
II and IV
54
Which of the following funds is comprised of a higher proportion of equity and a lower proportion of fixed-income instruments?
Managed Funds
55
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, it is technically Whole Life insurance.
(II) Top-ups or single premium injections are allowed.
(III) Policyowners have the flexibility of varying the life coverage.
II and III
56
Which of the following statements are FALSE?
(I) The policyowners may request a partial withdrawal of the policy and the amount will be met by cashing the units at the offer price
(II) The structure of charges and the investment content of a Variable Life policy are specified in the policy document and the policy statement
(III) Some Variable Life policies grant loans to policyowners which is limited to a percentage of the cash value
(IV) Commissions and office expenses are met by a variety of implicit charges, some of which are variable
I and III only
57
What is the most suitable investment instrument for an investor who is interested in protecting his principal and receiving a steady stream of income?
Fixed Income Securities
58
Which of the following are fixed income securities?
(i) Corporate Stocks
(ii) Government Bonds
(iii) Preferred Shares
(iv) Properties
i, ii and iii only
59
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.
i and ii
60
Which of the following are the main characteristics of Variable Life insurance policies:
(I) The policies can be used for investments, as a source of regular savings and protection
(II) The withdrawal and protection benefit are determined by the investment performance of the underlying assets
(III) The net withdrawal values of the policies are the gross withdrawal values shown in the policy which includes cash dividends up to the date of surrender, less all indebtedness and includes interests
I and II only
61
If the current offer price = P2.50 and the bid-offer spread = 4%, what is the bid price?
P2.40
62
The benefits of investing in Variable Life fund include:
(I) Policyowners have access to a pooled and diversified portfolio of investment
(II) The policyowner 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
(III) Policyowners can gain access to Variable Life funds managed by professional investment managers
(IV) The policyowner is relieved of the day to day administration of his investment
All of the above
63
The amount of risk a person can take depends on:
(i) Age
(ii) Investment objective
(iii) Financial conditions
(iv) Personality
all of the above
64
For Variable Life policies, the definition of selling price is:
The price at which units under the policy is offered for sale by the life insurance company.
65
Which statement best describes Variable Life?
Flexible premium with returns that will vary
66
The flexibility benefits of investing in Variable Life funds include:
(I) Policyowners can easily change the level of sum insured and switch their investments between funds
(II) Policyowners can easily take premium holidays and add single premium top-ups
(III) Variable Life insurance products have simple product design with a clear structure which caters separately for investment and insurance protection
(IV) Policyowners can easily change the level of their premium payment
I, II, and IV
67
Which of the following statements about investment returns under a Variable Life insurance policy is NOT TRUE?
It is assured.
68
Offer Price = P16
Bid-Offer Spread = 4.5%
Units = 25,000
Policy fee = P1,800
Admin and Mortality Charges = P8,750
Top-up fee 700
Admin Top-up P2,000
Presuming all charges are deducted by cancelling units and that the bid price increases by 8%, what is the withdrawal value after a year?
401,107.58
69
The difference between the offer price and the bid price is?
bid-offer spread
70
Which of the following information is NOT required to be disclosed to policyowners of Variable Life policies?
The basis and frequency for valuing the assets
71
In a Unit Trust Investment, the duties of a Trustee include all of these EXCEPT:
Selects and manages the investments of the Trust
72
Which of the following are some of the flexibility features of Variable Life insurance policies?
(I) Partial Withdrawal
(II)Variation in sum assured
(III)Guaranteed withdrawal values
I and II only
73
Which of the following information must NOT be conveyed to the client in the sale of Variable Life insurance policies?
Guaranteed interest rate
74
All of these are mandatory provisions in a Variable Life contract EXCEPT:
None of the above
75
Which statements are FALSE regarding the difference between Endowment policies and Variable Life policies?
(I) The benefits and risks of Endowment and Variable Life policies directly accrue to the policyowners.
(II) The premiums and benefits of the Endowment policies are stated at its inception while those of Variable Life policies are flexible as they are account driven.
(III) Their policy values directly reflect the performance of the fund of the life insurance company.
I and III
76
Which of the following statements are FALSE?
(i) The bid-offer spread is used to provide a death benefit for the Variable Life insurance policy
(ii) The bid-price is always higher than the offer price
(iii) The bid-offer spread is usually about 5%
(iv) There are two types of death benefits under the Variable Life insurance product. They may offer either/or both types depending on its product design and on the discretion of the policyowner
i and ii
77
The statements below are true about the top-up option of a Variable Life insurance product EXCEPT:
Policyowners may buy additional units of Variable Life fund and these units will be allocated to new Variable Life insurance policies.
78
Which is NOT a characteristic of a Variable Life policy?
It is used solely for investment purposes
79
What is the "Net Amount at Risk"?
The excess between the minimum death benefit and the value of the policyowner's separate variable account
80
Term insurance _______________
provides protection for a specific period and has no savings element
81
What would be the withdrawal value after a year?
Offer Price = P16.00
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 = 2,000
Sum assured is 190% of single premium or the value of the units, whichever is higher.
ASSUMPTIONS:
1. Charges and fees are deducted after the single premium has been invested intoe the account.
2. The growth rate of the unit price and the bid-offer spread is maintained at 8% and 4.5% respectively.
Ps. 401,107.58
82
Which statement about cash is FALSE?
Investment in cash increases when there is a bull run in the stock market.
83
Factors to consider in buying Properties:
(I) Quality of land
(II) The location of land
(III) The value of building on land
(IV) The investment
(V) Place of work
I, II and III only
84
Which of the following statements are FALSE?
(i) Higher capital gain is normally associated with lower risk
(ii) One way to lower risk in investment is to diversify
(iii) One method of measuring risk is to determine the average return and its standard deviation from future data
(iv) Diversification can be achieved by investing in different countries and/or types of assets
(v) An investor can always choose an investment that is risk free
i, iii and v only
85
Which one of the following statements is NOT TRUE about the benefits of investing in a Variable Life insurance policy?
The fund ensures definite high yield for an investor since it is managed by professionals who are well-versed in the management of risk of the investment portfolio.
86
If a policyowner fails to pay premium on time and there are no withdrawal values in the account, the policy will:
Terminate immediately on the day premium is due
87
What are the basic types of real estate investment?
(i) Rural Property
(ii) Domestic Property
(iii) Agricultural Property
(iv) Commercial/Industrial Property
(v) Foreign Property
ii, iii and iv only
88
Your client is a 35 year-old male, earning P35,000 a month, has enough savings, and with a moderate risk tolerance. What product would you recommend?
Variable Life
89
What are the ADVANTAGES of investing in preferred shares?
(i) It has priority on company assets during dissolution
(ii) It has a benefit of capital appreciation
(iii) The shareholder has the right to a fixed dividend
i, ii, and iii
90
The disadvantage of fixed income securities includes:
(i) The coupon rate is fixed and cannot respond to inflation
(ii) The investors are exposed to market specific risks
(iii) Fluctuations in bond prices may lead to capital losses
i and ii only
91
Which of the following investment options entitles the holder ownership and share of profits in the form of dividends appreciation?
ordinary shares
92
If a policyowner returns the Variable Life insurance contract within the cooling-off period, he will receive:
A refund equal to the market value of the units plus initial charges
93
Which of the following statements about investment objectives is FALSE?
People invest money in equities to produce high and guaranteed income
94
The investment returns under Variable Life insurance policy
(i) Are not guaranteed
(ii) Are insured
(iii) Are linked to the performance of the investment fund managed by the life office
(iv) Fluctuate according to the rise and fall of market prices
i, iii and iv
95
What are the disadvantages of investing in cash and deposits?
(i) It is the safest type of investment
(ii) They provide the lowest return
(iii) There is reinvestment risk
ii and iii only
96
To the policyowners, administration benefits under Variable Life include:
Keeping track of their investment through the statements provided regularly by the insurance company
97
Which of the following are types of corporate stocks?
(i) Debenture Stocks
(ii) Government Stocks
(iii) Loan Stocks
(iv) Money Market Instruments
(v) Convertible Stocks
i, iii and v only
98
Which of the following statements about the feature of Regular Premium Variable Life Policy are TRUE?
(I) Top-ups are usually allowed
(II) The level of cover can be varied
(III) Premium holidays are usually allowed
I, II and III
99
Which of the following statements describes the difference between Variable Life products and traditional participating life products?
(I) Variable Life products allow policyowners to pay top-up premiums from time to time to buy more units for his account unlike traditional participating life policies.
(II) Variable Life products allow policyowners to take premium holiday unlike traditional participating life products.
(III) Variable Life products can take the form of Whole Life or Endowment policies unlike traditional participating life products.
I and II
100
People generally invest their money to provide:
(I) An improvement in their financial position
(II) A less comfortable standard of living
(III) Retirement income
(IV) Funds for paying necessary expenses and taxes when the person dies
I, III and IV