VUL MOCK EXAM 2

1. Variables life insurance policy owners may make b. I,II and IV d. II, III and IV
withdrawals in terms of_________________
4. Which of the following statement are TRUE?
a. Number of units or fixed monetary amount
through cancellation of units I. The policy value of variables life policies is determined by the offer
b. Number of units or fixed monetary amount price at the time of valuation
through reduction of the life cover sum assured II. The policy value of endowment policies is the cash value plus any
c. Fixed monetary amount only through reduction accumulated dividends less any outstanding loans due at time of
of the life cover sum assured surrender
d. Number of units through cancellation of units. III. The company needs to maintain a separate account for variables
life policies distinct from the general account.
2. Which of the following statement about the
flexibility features of variables life policies is a. I, and II c. I and III
FALSE? b. I,II and II d. II and III

a. Policyholders may request for a partial

5. Which of the following statement is FALSE?
withdrawal of the policy and the withdrawal
amount will be met by cashing the units at bid a. Rebating is to offer a prospect a special inducement to purchase a
price. policy
b. Policyholders can take loans against their b. Twisting a specific form of misrepresentation
variable life policies up to the entire withdrawal c. Misrepresentation is specific form of twisting
value of their policies d. Switching is facility allowing policyholders to switch to another variables
c. Policyholders have the flexibility of switching life funds offered by company.
from one fund to another provided it satisfies
the company’s switching criteria 6. Which of the following statement about variables are TRUE?
d. Policyholders have the flexibility of increasing
or decreasing their premium for regular I. Offer price is used to determined the numbers of units to be
premiums variables life policies cancelled to the account
II. The margin between the bid and offer price is used to cover the
3. The investment returns under variables life management cost of the policy
insurance policy _______________________ III. The policy value is calculated based on the bid price of units
allocated into the policy
I. Are not guaranteed
II. Are assured a. I,II and III c. I and III
III. Are linked to the performance of the fund b. I and II d. II and III
management by the life company
IV. Fluctuate according to the rise and fall of 7. What is the most suitable investment instrument for an investor who is
the market prices interested in protecting his principal and receiving a steady stream of
income?
a. I,II and III c. I,II and
IV a. Equities c. Variables life policies
b. Warrants d. Fixed income securities
 VUL MOCK EXAM 2
8. What are the disadvantages of investing in b. It refers to an agent inducing a policyholder to discontinue policy with
common shares ? another company without disclosing the advantages of doing so
c. It includes misleading or incomplete comparison of policies
I. Dividends are paid not more than fixed d. It refers to an agent offering a prospect a special inducement to
rates. purchase a policy.
II. Investors are exposed to market and
specific risks 11. Mr. Juan Dela Cruz is currently earning ps. 30,000/month. He is 35 years
III. Shares can become worthless if company old and has a reasonable amount of savings. He has a moderate level for
becomes insolvent risks tolerance. What kind of policy would you recommended for him to
buy?
a. I, II c. II, III
b. I, III d. I, II a. Participating endowment c. Participating whole
and III life
b. Variables life policy d. Annuities

12. What are the benefits available when investing in variables life fund?

I. The variables life funds offers policyholders an access to a

polled or diversified portfolios
9. Which of the following statement about the II. The variables life policyholder can vary his premium payments,
differences between variables life policies and take premium holidays add single premium top-ups and change
endowment policies are FALSE? the level of sum assured easily.
III. The variables life policy holder can have access to spool of
I. The policy values of variables life and
qualified and trained professional fund managers.
endowment policies directly reflect the
performance of the fund of the life a. I and II c. I, II and III
company. b. I and III d. II and III
II. The premiums and benefits of the
endowment policies are described at 13. Rank the following in terms of their liquidity, from the least liquid to the
inception of the policy whereas variable most liquid:
life policies are account driven
III. The benefits and risks variables and
I. Short term securities III. Cash
endowment policies directly accrue to the
II. Property IV. Equities
policyholders
a. IV, II, III,I c. II, I, IV, III
a. I and II c. I and b. III,I,IV,II d. II,IV,I III
III
b. I, II and III d. II and 14. A UNIT TRUST is ___________________________:
III
10. Which of the following statement about twisting is a. Established by trust deed which enables to trustees to hold the pool of
FALSE? money and assets in trust on behalf of the investor

a. Twisting is special form of misrepresentation

 VUL MOCK EXAM 2
b. A close-end fund and does not have to dispose II. Policy owners can easily change the level of the premium
off its asserts if large number of investors sell payments as the product design of variables life insurance
their shares protection
c. One whereby investors buys units in the trust III. Policy owners can gain access to variables life funds managed by
and not shares in the company professional investment managers with proven track records.
d. An organization registered under the IV. Policy owners can buy a variables life insurance policy only with
SECURITY AND EXCHANGE COMMISSION the high initial investment.
(SEC) which usually invest in wide range of
equities and other investment. a. I, II and IV c. I, II, and III
b. I, III and IV d. II, III and IV

15. Under variables life insurance 17. Which of the following BEST describes the policy benefits variables life
policies__________________________ policies.

I. There is no guaranteed minimum sum a. The policy benefits are payables only on death or disability
b. The policy benefits will depend depend on the long-term performance
assured for the purpose of declaring
of the life company
dividends
c. The policy benefits are directly linked to the investment performance of
II. There is not guaranteed minimum sum
the underlying assets.\
assured for as a level of life insurance
d. The policy benefits are guaranteed
protection
III. Each of the policy owners premium will be 18. Why is it important that the customer must understand the sales proposal
used to purchase units the number of in
which is dependent on the selling price of
each unit. a. Because the insurer does not guarantee any return
IV. Purchase of units can only be made from b. Because the impact of changes in investment condition on variables
the variables life fund itself, which will life policy borne solely by the customers
then create new units and add the c. Because the agent may give the wrong recommendations.
investment monies to the value of the d. Because the policyholders expect higher returns
fund.
19. Which of the following statement about rebating are ?
a. I and IV
I. Rebating is prohibited under the Insurance Code
c. III and Iv
II. Rebating ideals with offering the prospect a special inducement to
b. II and IV
purchase a policy.
d. II and III
III. Rebating will enhance the sales performance and uphold the prestige
of an agent
16. The benefits of investing in variables life fund
a. I and II c. II and III
include______________________
b. I and III
I. Policy owners have access to pooled of
20. Which one of the following statement is FALSE?
investment
 VUL MOCK EXAM 2
a. Variables life insurance policies offer investors with normally 6 months notice given by the life companies prior to
policies with the values and indirectly linked to the any change
investment performance IV. Its withdrawal value is normally the value of units allocated to the
to the life company. policy owner calculated at the bid price
b. Life company will carry out a valuation of its
funds and any surplus may be allocated to a. I,II and III c. I, II and IV
b. II, III and IV d. I, III and IV
participating policyholders as cash dividends
c. Both whole life and Endowment policies can be
23. Which of the following statement about single premium variables life
used as an investment media with benefits that
policies are TRUE?
become payable at a future date
d. The investment element of variables life policies I. There is no fixed term in a single premium variables life policy and
varies according to underlying assets of portfolio therefore, they are technically whole life insurance
II. Top ups single premium injections are allowed in these plans
21. Which of the following statement about option to III. Policyholders have the flexibility of varying the level cover
top up under variables life insurance products is
FALSE? a. I,II and III c. I and II
b. II and III d. I and III
a. Policy owners may buy additional units of the
variables life fund and these units will be allocated 24. Investing a bonds offer the following advantages EXCEPT
to new variables life insurance policies
b. Further premiums at time of top up will be used a. It offers protection to the principal and guaranteed steady stream
in full, after deducting charges for top ups, to of income
purchase additional of the variables life fund. b. It is place of temporary refuge when the investor foresees that the
c. To top up a policy, the policy owner pays further market outlook is uncertain
single premium at the time of top up c. It allows the investors a chance for capital preservations
d. Policy owners are normally allowed to top up d. It enables the investors an opportunity for capital appreciation
their policies at any time, subject to a minimum
25. Which of the following statement about variables life policies are TRUE?
amount
I. The withdrawal value is not guaranteed
II. The volatility of the returns depends on the investment strategy of
the fund
III. The variables life policyholders has direct control over the
22. The characteristic of a variables life insurance
investment decisions of the variables life fund
policy include________________________
a. I, II and III c. I and III
I. Its withdrawal value and protection
b. I and II d. II and III
benefits are determined by the investment
performance of the underlying assets 26. Single premium variables life insurance policy:
II. Its protection cost are generally met by
implicit charges. a. Must be issued with a minimum death benefits
III. Its commission and company expenses b. Must be issued with maximum withdrawal value
are met by a variety of implicit charges c. Has no death benefit
 VUL MOCK EXAM 2
d. Has no withdrawal value
I. Policy owner can easily change the level of sum assured and
27. Which of the following statement about benefits in switch their investment between funds
variable life fund is FALSE? II. Policy owner can easily take premium holidays and add single
premium to top-ups
I. Variables life policies generally have a III. Variables life insurance products have a simple product design
larger exposure to equity investment than with the clear structure which cater separately for investment and
with participating and other traditional insurance protection
policies IV. Policy owner can easily change the level of their premium
II. The protection cost are generally met by a payment
variety implicit charges, which vary with
age and level of cover a. All of the above c. I, II and IV
III. Commissions and company expenses are b. I, II and III d. I, III and IV
met by a variety of explicit charges, some
of which are variables

a. I, II and III c. II
and III
b. I and II d. I
and III

28. Which of the following statement about

characteristics of variables life policies are TRUE?

a. The funds provides a highly diversified

portfolio, thus, lowering the risk of
investment
b. The fund ensures definite high yield an
investor since it is managed by
professional who are well- versed in the
management of risks of investment
portfolios
c. The fund relieves investors from the
hassle of administering his/her
investment
d. The funds enables small investors to
participate in a pool of diversified portfolio
in which he/she with low investment
capital, is likely to have acceded to

29. The flexibility benefits of investing in variables life

fund include_________________________: