1) Which of the following statements about single premium premium variable life policies policies are are true? I. II. III. III.
There There is is no xed xed term term in in a single single pre premiu mium m variab variable le life life polic policy y and ther therefo efore re they are technically whole life policies Topups opups or or single single premi premium um in!ec in!ectio tions ns are are allowe allowed d in these these plan plans s "olic "olicyho yholde lders rs have have the the #exib #exibili ility ty of of varyin varying g the the level level cover cover.. a. b. c. d.
I $ III II $ III I $ II I% II% $ III III
&) 'ariable life life funds can can be invested invested in any nancial instruments instruments including cash funds% bond funds% e(uity funds% specialied funds and diversied funds. * (uity funds++++++++++++++. a. Invest in in shares of of stoc,s stoc,s which are are inherently inherently of lower lower ris, ris, in nature nature and the prices of stoc, are stable. b. Invest in shares shares of stoc,s stoc,s and during mar,et mar,et recessi recession% on% such assets assets are usually lost to depreciation. depreciation. c. Invest in in shares of of stoc,s stoc,s and the magnitude magnitude of of the change change in unit prices prices will only depend on the (uantity of the e(uities held. d. Invest in in shares of of stoc,s stoc,s and investors investors who buy buy such assets assets usually usually aims for capital appreciation. appreciation. -. The administrat administrative ive fee% insurance insurance charge% charge% fund management management fee and the li,e li,e are under a variable life insurance policy are++++++++++++. a. ot ot sub! sub!ec ectt to rev revie iew w b. /sua /suall lly y gua guara rant ntee eed d c. 0lways 0lways upfro upfront nt charg charges es d. ub!ect ub!ect to change change by the life life company company after after written written notice notice is given. given. 2. Which of the the follow following ing stateme statements nts is false? false? a. 'ariable ariable life polici policies es can be used for investmen investment% t% regular regular savings savings and protection. b. The principle principles s of variable variable life polici policies es vary but all operate operate on the same same features. c. 'ariable ariable life polici policies es can be classied classied as single single premium premium insurance insurance plans plans or regular premium insurance plans. d. The withdrawa withdrawall value and protect protection ion benets benets are determin determined ed by the investment performance of the underlying assets. 3. Which of the following following statement statements s about the di4erence di4erence between between variable variable life policies and endowment policies are false? I. The pol policy icy valu values es of varia variable ble life life and and endow endowmen mentt polici policies es dire directl ctly y re#ect re#ect the performance of the fund of the life company. II. The premi premiums ums and and bene benets ts of of the endow endowment ment polici policies es are are desc describ ribed ed at at inception of the policy whereas variable life policies are #exible as they are account driven. III. III. The bene benets ts and and ris,s ris,s of vari variabl able e life life and and endowm endowment ent pol polici icies es dire directl ctly y accrue to the policyholders. a. II $ III b. I $ I I c. I $ III d. I%II I%II%$ %$ III III 5. Investing Investing in bonds o4ers o4ers the followin following g advantages advantages *67*"T *67*"T88 a) It allows allows the investors investors a chance chance for capital capital prese preservatio rvation. n. b) It enables enables the investors investors an opportunit opportunity y for capital capital apprecia appreciation. tion. c) It is a place of temporar temporary y refuge when when the investor investor foresees foresees that the mar,e mar,ett outloo, is uncertain d) It o4ers protecti protection on to the principals principals and guaranteed guaranteed steady steady stream of income. income. 9. "olicy owners of variable life life insurance policies policies are are relieved of the daytoday administration of their investments. 0ll that are re(uired of them include+++++++++++.
I.
*ngaging independent professional fund managers personally to manage the complicated transactions. II. 7onstructing their own diversied portfolios and passing them on the life companies. III. :eeping trac, of their investment through the unit statements provided regularly by the life companies. I'. :eeping trac, of unit price published in nancial and business sections of ma!or newspaper. a. II $ III b. II% III% $ I' c. I $ II d. III% $ I' ;. With the traditional participating life insurance products% the allocations to policy owners in the forms of dividends+++++ I. 0re not directly lin,ed to the companyo not have the highs and lows of investment return as in good investment years of life companies. I'. 0re not xed at the inception of the policy% but are greatly dependent on the investment performance of the life company. a. I% II $ III b. I% III $ I' c. I% II% I' d. II% III% $ I' . Which of the following information is @T re(uired to be disclosed to the policyholders of the variable life policies? a. The basis and fre(uency for valuing the assets. b. umber and value of units held at the beginning of the period8 bought and sold during the period and held at the end of the period. c. The net withdrawal value as of the statement date. d. The premiums received and the charges levied during the period. 1A.What is the most suitable investment vehicle for an investor who is interested in protecting his principal and receiving s steady stream of income? a. Ban, deposits b. Cixed income securities c. 'ariable life policies d. *(uities 11.Which of the following is not a charge for regular premium variable policies? a. Dortality charge b. "olicy fee c. Withdrawal charge d. Initial charge 1&.>iversication in investment involves ++++++ a. Eeducing the ris,s of investment by putting all one
1-.The fundamental di4erences between traditional participating life insurance policies and variable life insurance policies include+++++++. I. 'ariable life insurance policies are less li,ely to o4er more choice in terms of the type of investment funds. II. The investment element of variable life insurance policies is made ,nown to the policy owner at the outset and is invested in a separately identiable fund which made up units of investment. III. 'ariable life insurance policies o4er the potential for higher returns.
I'.
Traditional participating policies aim to produce a steady return by smoothing out mar,et #uctuation. a. I% III% $ I' b. II% III% $ I' c. I% II% $ III d. I% II% $ I' 12.ingle premium variable life insurance policy a. Dust be issued with a minimum death benet b. Dust be issued with a maximum withdrawal value c. =as no death benets d. =as no withdrawal value 13.Which of the following statements about benets in variable life fund is C0F*? a. The fund provides a highly diversied portfolio thus lowering the ris, of investment b. The fund ensures denite high yield for an investor since it is managed by professionals who are wellversed in the management of ris,s of investment portfolios. c. The fund relieves the investor from the hassle of administering hisGher investment. d. The fund relieves the investor to participate in a pool of diversied portfolio which heGshe with low capital is unli,ely to have acceded to. 15.The #exibility of investing in variable life funds include ++++++. I. "olicy owners can easily change the level of sum assured and switch their investment between funds. II. "olicy owners can easily ta,e premium holidays and add single premium topups. III. 'ariable life insurance products have a simple product design with a clear structure which caters separately for investment and insuran ce protection. I'. "olicy owners can easily change the level of their premium payment. a. I% II%III% $ I' b. I% II% $ III c. I%II% $ I' d. I% III% $ I' 19.The benet of investing in variable life funds include++++++. I. "olicy owners have access to pooled or diversied portfolio of investment. II. "olicy owners can easily change the level of the premium payment as the product design of variable life insurance policies have clear structures which cater separately for investment and insurance protection. III. "olicy owners can gain access to variable life funds managed by professional investment managers with proven trac, records. I'. "olicy owners can buy a variable life insurance policy only with a high initial investment. a. I% II% $ I' b. I% III $ I' c. I% II $ III d. II% III% $ I'
1;.Which of the following statements about variable life policies are TE/*? 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 policyholder has a direct control over the investment decisions of the variable life fund. a. I% II% $ III b. I%$ II c. I% II% $ III d. II $ III 1.Investing in bonds o4ers the following advantages *67*"T.
a. It o4ers protection to the principal and guaranteed steady stream of income. b. It is a place of temporary refuge when investor foresees that the mar,et outloo, is uncertain c. It allows the investor a chance for capital preservation. d. It enables the investor an opportunity for capital appreciation. &A.Which of the following statements about characteristics of variable life policies are TE/*? I. 'ariable life policies generally have a longer exposure to e(uity 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. 7ommissions and company expenses are met by a variety of explicit charges% some of which are variable. a. I% II% $ III b. I% II c. II $ III d. I% $ III &1.The switching facility under variable life insurance policies is very useful ++++++. a. Cor the purpose of prot planning by the life policies. b. Cor the assets planning by the trustee. c. Cor the purpose of sales planning by the fund manager. d. Cor the purpose of nancial planning by the policy owners. &&. The characteristics of a variable life insurance policy include +++++++++. I. Its withdrawal value and protection benets are determined by the investment performance of the underlying assets. II. Its protection costs are generally met by the implicit charges III. Its commissions and company expenses are met by variety of explicit charges normally 5 months notice given by the life companies prior to any changes I'. Its withdrawal value is normally the value of units allocated to the policy owner calculated at the bid price. a. I% II% $ III b. II% III% $ I' c. I% II% $ I' d. I%III% $ I' &-.Which of the following statements about option to topup under variable life insurance products is C0F*? a. "olicy owners may buy additional units of the variable life fund and these units will be allocated to new variable life insurance policies. b. Curther premiums at the time of topup will be used in full% after deducting charges for topups% to purchase additional unit of the variable life funds. c. To topup policy% the policy owner pays further single premium at the time of topup d. "olicy owners are normally allowed to topup their policies at any time% sub!ect to a minimum amount.
&2.Which of the following statements about investments ob!ective are C0F*? a. "eople invest money in xed deposits to produce high and guaranteed returns. b. "eople invest money to enhance a comfortable standard of living. c. "eople invest money to provide funds for higher education for their children. d. Investment in commodities has no regular income. &3.The selling price under a variable life insurance policy isH a. The price at which units under the policy are brought bac, by the life company b. The price at which units under the life policy are o4ered for sale by the life company.
c. 0lso ,nown as the bid price d. 0 xed amount throughout the life of the policy. &5.The ob!ective of satisfying customers needs protably can be achieved by an agent through+++++++++. I. The giving of freebies to the customers. II. *xtensive investment training by the company. III. The use of sales plan% where sales goals% strategies and ob!ectives are coordinated with mar,et analysis% segmentation% and targeting. I'. The giving of monetary assistance and discount to the customers. a. I% $ III b. II% $ III c. I%II%$ I' d. II% III% $ I' &9.Which of the following B*T describes the policy benets of variable life policies? a. The policy benets are payable only on death or disability. b. The policy benets will depend on the longterm performance of the life company. c. The policy benets are directly lin,ed to the investment performance of the underlying assets. d. The policy benets are guaranteed. &;.Which of the following statements are C0F*? a. 'ariable life insurance policies o4er investors policies with values indirectly lin,ed to the investment performance of the life company. b. Fife company will carry out a valuation of its funds yearly and any surplus may be allocated to participating policyholders as cash dividends. c. Both whole life and endowment policies can be used as an investment media with benets that become payable at a future date. d. The investment element of variable life policies varies according to underlying assets of the portfolio. &.Which of the following statements about rebating are TE/*? I. Eebating is prohibited under the Insurance 7ode. II. Eebating deals with o4ering the prospect a special inducement to purchase policy. III. Eebating will enhance the sales performance and uphold the prestige of an agent. a. I $ II b. I $ III c. II $ III d. 0ll of the above -A.Why is it important that the customer must understand the sales proposal in full? a. Because the insurer does not guarantee any return. b. Because the impact of changes in investment condition in variable life policy is borne solely by the customer. c. Because the agent may give wrong recommendation. d. Because the policyholders expects higher returns.
-1.Ean, the following in terms of their li(uidity% from least li(uid to the most li(uidH I. hort term securities II. "roperty III. 7ash I'. *(uities a. I'% II%III%I b. III% I%I'% II c. II% I% I'%III d. II% I'% I% III -&.0 /nit Trust is ++++++8 a. *stablished by a trust deed which enables a trustee to hold the pool money and assets in trust on behalf of the investor. b. 0 closeend fund and does not have to dispose o4 its assets if large
c. @ne whereby investor buys units in the trust itself and not shares in the company d. 0n organiation registered under ecurities $ *xchange 7ommission *7) which usually invest in a wide range of e(uities and other investment. --.In ris,return prole of cash funds% funds balanced funds% managed funds and e(uity funds% a ris,return graph will show that+++++++. I. =igher return normally comes with lower ris,. II. =igher return normally comes with higher ris,. III. 0t the top end of the graph are the e(uity funds I'. The relatively ris,less cash funds sit at the bottom end of the graph. a. I%II $ III b. II% III% $ I' c. I% II% $ I' d. I% III% $ I' -2./nder variable life insurance policies ++++++++++++H 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 level of life insurance protection III. *ach of the policy owner
-9.Eis, can be classied into two particular categories in relation to investment. They includeH I. The ris, of not losing some or all of a person
d. III $ I' -;.The disadvantages of securities includeH I. The coupon rate is xed and cannot respond to in#ation. II. Investors are exposed to mar,et and specic ris,s. III. Cluctuations in bond prices may lead to capital losses. a. II $ III b. I $ II c. I%II% $ III d. I% $ III -./nder the dual pricing method of single premium policies++++++++++ a. The policyholders buys the units at the company buying price and sells the units at the company selling price b. The policyholder buys the units at the o4er price and sells the unit at a bid price. c. There is only one price (uoted whether the policyholder is buying or selling his units d. The bid price is always higher than the o4er price. 2A.Which of the following is @T a type of xed income securities? a. Doney mar,et instruments b. Jovernment bonds c. "referred shares d. one of the above. 21.Which one of the following statements about diversication in portfolio management is C0F*? a. >iversication can completely eliminate the ris, of investing in stoc,s in portfolio b. >iversication helps to spread the portfolio ris, by investing in di4erent categories of investment in a portfolio c. >iversication can involve purchasing di4erent types of stoc,s and investing in stoc,s of di4erent countries d. 0 diversied portfolio provides greater security to an investor having to sacrice the return for the portfolio 2&.If the current o4er priceK " &.3A and the Bido4er spreadK2L% calculate for the bid price. a. " &.2A b. " &.3A c. " &.5A d. " &.9A 2-.Term insurance++++++++ a. "rovides for the payment of the sum insured when the life insured survives a specic period b. "rovides for the protection for a specic period% the policy ceases and no return of premium is given c. Is the most complex and expensive of all insurance policies d. "rovides for surrender or cash values on early termination of the insurance. 22."eople generally invest their money to provide+++++++++++ I. 0n improvement in their nancial position II. 0 less comfortable standard of living III. Income in retirement I'. Cunds for paying necessary expenses and taxes when the person dies a. I% II% $ III b. I%III% $ I' c. I%II% I' d. II% III% $ I' 23.Which of the following investment options entitles the holder ownership and has a share of prots in the form of dividends appreciation? a. 7ash b. Bonds c. Cutures d. @rdinary shares 25.Which of the following statements about the features of Eegular "remium 'ariable Fife policies are TE/*? I. Topups are usually allowed
II. III.
The level of cover can be varied "remium holodays are usually allowed a. I $ II b. I $ III c. II $ III d. I% II% $ III
29.Which of the following isGare the main characteristicGs of 'ariable Fife Insurance "olicies? I. The policies can be used for investments% as a source of regular savings and protection. II. The withdrawal and protection benet 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% includes interest. a. I only b. Ii only c. I $ II d. I% II% $ III 2;.What isGare the disadvantageGs of investing in cash and deposits? I. The safest type of investment II. They provide the lowest return III. There is reinvestment ris, a. I only b. II only c. II $ III d. I% II $ III 2.Which of the following funds compromise a higher proportion of e(uity and lower proportion of xed income instruments? a. Bond funds b. 7ash funds c. Danaged funds d. Dixed funds 3A.Which of the following statements is C0F*? a. Eebating is to o4er a prospect a special inducement to purchase a policy b. Twisting is a specic form of misrepresentation c. Disrepresentation is a specic form of twisting d. witching is a facility allowing policyholders to switch to another variable life funds o4ered by the company
