VARIABLE LIFE LICENSING MOCK EXAM (Set D)

VARIABLE LIFE LICENSING MOCK EXAM (Set D)

Instructions: Please encircle the correct answer.

One. Variable life insurance policy owners may make withdrawals in terms of A or D through cancellation of a. Number of units or fixed monetary amount through cancellation of units units b. Number of units of fixed monetary through reduction of the life cover sum assured c. Fixed monetary amount only through reduction of the life cover sum assured

Number of units through cancellation of units

Two. Which of the following statements about flexibility features of variable life policies is false?

a. Policyholders may request for a partial withdrawal of the policy and the withdrawal amount will be met by cashing the units at the bid price.

Policyholders can take loans against their variable life up to the entire withdrawal value of their policies False letter B kasi no loan tayo c. Policyholders have the flexibility of switching from one fund to another provided it satisfies the company's switching criteria d. Policyholders have the flexibility of increasing or decreasing their premiums for regular premium variable life policies

Three. The investment returns under variable life insurance policy

I. Are not guaranteed

Are assured Are linked to the performance to of the investment fund managed by the life insurance company Fluctuate according to the rise and fall of market prices

IV

Not assured ang investment sa insurance kaya II Lang ang di kasama a. I, II and III

b. I, II and IV

c. I, III and IV

d. II, III and IV

Four. Which of the following statements is TRUE?

I. The policy value of variable life policies is determined by the offer price at the time of valuation The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at the time of the surrender

The life company needs to maintain a separate account for variable life policies distinct from the general account Pag nakita word na offer price yan na agad di kasama kasi di tayo nagooffer ng price a. I & II

b. I, II & III

c. I & III

II & III

Five. Which of the following statements is FALSE?

a. Rebating is to offer a prospect a special inducement to purchase a policy b. Twisting is a specific form of misrepresentation d. Switching is a facility allowing the policyholders to switch to another variable life funds offered by the company Clue word : ung first word ending sa -ing ung tatlo , ung naiba mali Scanned by CamScanner c. Misrepresentation is a specific form of twisting

Ung first word offerprice ang di kasama

Letter C ang tamang sagot ung may word na DIRECTLY parehas sa sentence a. I & II

I, II & III c. I & III

Thirteen. Which of the following statements about twisting is FALSE?

a. Twisting is a special form of misrepresentation b. It refers to an agent including a policyholder to discontinue policy with another company without disclosing the disadvantage of doing so

False letter D kasi ung pagbigay discount rebating c. It includes misleading or incomplete comparison of policies d. It refers to an agent offering a prospect a special inducement to purchase a policy tawag dun

Eleven. Mr. Juan dela Cruz is currently earning Philippine thirty thousand pesos per month. He is thirty-five years old and he 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?

a. Participating Endowment

Participating whole life b. Variable life policies d. Annuities

Twelve. What are the benefits available when investing in variable life funds?

The variable life funds offer policyholders an access to pooled or diversified portfolios

II. The variable life policyholders can vary his premium payments, take premium holidays, add single premium top-ups and change the level of the sum assured easily

III. The variable life policyholder can have access to a pool of qualified and trained professional fund managers. Ill di kasama kasi wala direct a. I & II access ang policyholder sa fund at eastspring investment b. I & III fund manager ni pru c. I, II & III

d. II & III

Thirteen. Rank the following in terms of their liquidity, from the least liquid to the most liquid:

I. Short term securities

Letter D TAMANG SAGOT Properties Equities Short term Cash

II. Property

III. Cash

IV. Equities

PESC

a. IV, II, III, I

b. III, I, IV, II

II, I, IV, III

d II, IV, I, III

Fourteen. A unit trust is Established by trust deed

Seventeen. Which of the following BEST describes the policy benefits of variable life policies?

a. The policy benefits are payable only on death or disability b. The policy benefits will depend on the long-term performance of the life company.

d. The policy benefits are guaranteed

Clue word : Directly linked

Eighteen. Why is it important that the customer must understand the sales proposal in full?

a. Because the insurer does not guarantee any return

Because the impact of changes in investment condition on variable life policy is borne solely by the customer.

Clue word : Borne solely kasi pwede ipersonalized ang policy ng client based sa needs at wants niya c. Because the agent may give the wrong recommendations d. Because the policyholder expects higher returns

Nineteen. 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.

Bawal rebating. Rebating is like discounting

@ I & II

b. I & III

c. II & III

Twenty. Which one of the following statements is FALSE?

Variable life insurance policies offer investors policies with values and indirectly linked to the investment performance of the life company.

False kasi dapat directly b. Life 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 benefits that become payable at a future date d. The investment element of Variable life policies varies according to underlying assets of the portfolio

Twenty-one. Which of the following statements about option top-up under variable life insurance is false?

a. Policy owners may buy additional units of the variable life fund and these units will be allocated to new variable life insurance policies. Not new kung additional units b. Further premiums at time of the top-up will be used in full, after deducting charges for top-ups, to purchase additional units of the variable life funds c. Top-up policy, the policy owner pays further single premium at the time of the top-up d. Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount

Twenty-two. The characteristics of a variable life insurance 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 explicit charges with normally six months notice given by the life companies prior to any change

IV. 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 & IV c. I, II & IV

I, III & IV

Twenty-nine. The flexibility benefit of investing in variable life funds include

II. Policy owners can easily change the level of sum assured and switch their investment between funds

Policy owners can easily take premium holidays and add single premium to Top-ups

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. All of the above b) I, II & III c. I, II & IV

Traditional is not variable d. I, III & IV

Thirty. 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 is made known to the policy owner 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 a. I, III & IV

Six II, III, IV

c. I, II, III

d. I, II & IV

Thirty-one. The switching facility under variable life insurance policies is a very useful a. For the purpose of profit planning by the life policies Clueword :financial planning b. For the purpose of assets planning by the trustee c. For the purpose of sales planning by the fund managers d) For the purpose of financial planning by the policy owners

Thirty-two. The following statement about surrender value under traditional participating life insurance products are TRUE?

a. Cash value is paid when yearly renewable term insurance policy is surrendered b. When a participating insurance policy is surrendered, the surrender value is calculated by multiplying the bid price with the number of units

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 d. In the case of participating policies, the net cash surrender value includes the surrender value of the paid-up addition up to the date of surrender

Thirty-three. Which one of the following statements about risks of investing in variable life funds is TRUE?

a. Policy owners who are risk averse should buy life insurance policies with high equity investment b. Investment in variable life funds which are fully invested in units of equity bonds 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 higher risk but can expect to achieve higher return than the traditional life insurance product over the long term d. Policy owners who are risk averse should not purchase life insurance policies with high protection and guaranteed cash and maturity values

High risk high return on variable insurance/VUL

This material is solely for the information, use and private circulation of Pru Life UK and may not be published, circulated, or win consent.

Twenty-nine. The flexibility benefit of investing in variable life funds include

II. Policy owners can easily change the level of sum assured and switch their investment between funds

Policy owners can easily take premium holidays and add single premium to Top-ups

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 a. All of the above b) I, II & III c. I, II & IV

Traditional is not variable d. I, III & IV

Thirty. 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 is made known to the policy owner 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 a. I, III & IV

Six II, III, IV

c. I, II, III

d. I, II & IV

Thirty-one. The switching facility under variable life insurance policies is a very useful a. For the purpose of profit planning by the life policies Clueword :financial planning b. For the purpose of assets planning by the trustee c. For the purpose of sales planning by the fund managers d) For the purpose of financial planning by the policy owners

Thirty-two. The following statement about surrender value under traditional participating life insurance products are TRUE?

a. Cash value is paid when yearly renewable term insurance policy is surrendered b. When a participating insurance policy is surrendered, the surrender value is calculated by multiplying the bid price with the number of units

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 d. In the case of participating policies, the net cash surrender value includes the surrender value of the paid-up addition up to the date of surrender

Thirty-three. Which one of the following statements about risks of investing in variable life funds is TRUE?

a. Policy owners who are risk averse should buy life insurance policies with high equity investment b. Investment in variable life funds which are fully invested in units of equity bonds 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 higher risk but can expect to achieve higher return than the traditional life insurance product over the long term d. Policy owners who are risk averse should not purchase life insurance policies with high protection and guaranteed cash and maturity values

High risk high return on variable insurance/VUL

This material is solely for the information, use and private circulation of Pru Life UK and may not be published, circulated, or win consent.

Thirty-four. What should be the withdrawal values after a year?

Philippine Pesos sixteen point zero zero

Offer Price equals

Bid-Offer Spread equals

Four point five percent

Twenty-five thousand

Number of units bought equals

Policy Fee

One thousand eight hundred

Admin and Mortality Charge

Seven hundred

Top-up Fee

Two thousand

Admin for Top-up

Sum assured is one hundred ninety percent of single premium or the value of units, whichever is higher.

ASSUMPTIONS:

One. Charges and fees are deducted after the single premium has been invested into the account.

Two. The growth rate of the unit price and bid-offer spread is maintained at eight percent and four point five percent respectively.

Isang may computation lang nasa exam clue four zero one k a. Philippine Pesos four hundred thirty-two thousand point zero zero b. Philippine Pesos four hundred twenty thousand sixty-nine point two zero

The amount of four hundred one thousand one hundred seven point five eight d. Philippine Pesos four hundred twelve thousand five hundred point zero zero

Thirty-five. The protection cost under a variable life insurance policy

I. Are met by flat initial charges for regular premium plans

Eleven. Are generally covered by cancellation of units in the fund

III. Are generally met by explicit charges stipulated openly in the policy terms IV. Vary with age of policy owner and level of cover

Except flat initial charge a. I, II, & III

b. I, II, & IV

c. I, III & IV

Thirty-six. Which of the following statements about diversification in portfolio management is FALSE?

a. A diversified portfolio provides greater security to an investor having to sacrifice return for the portfolio.

Diversification can completely eliminate the risk of investing in stocks in a portfolio.

c. Diversification can involve purchasing different types of stocks and investing stocks in different countries d. Diversification helps to spread the portfolio risk by investing in different categories of investment in a portfolio Cannot eliminate

Thirty-seven. What are the advantages of investing in preferred shares?

I. It gives shareholders the right to a fixed dividend They enjoy benefit of capital appreciation Has the priority over company assets during a dissolution III. One. Two.

Preferred shares all of the above b. One and Two

One and Three d. One and Two

Thirty-eight. With traditional participating life insurance products, the allocations to policy owners in the form of dividends

Are not directly linked to the company's investment performance

Have already been smoothened by the life company

III. Do not have the highs and lows of investment return as in good investments years of life company

IV. Are not fixed at the inception of the policy, but are greatly dependent on the investment performance of the company.

No investment sa traditional a. I, II, & III

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

Thirty-nine. The objective of satisfying customers' need profitably can be achieved by and agent through

One. The giving of freebies to the customers

Two. Extensive investment training by the company

Three. The use of sales plan, where sales goals, strategies, and objectives are coordinated with the market analysis, segmentation and training

Four. The giving of monetary assistance and discount to the customers

Di kasi inaadvise na giving gifts or money para magkaclient a. One, and Three. Two, and Three.

c. Two, and Four.

d. Two, Three, and Four.

Forty. Which of the statements is true about CASH? Depends on cash flow requirement a. It has a high yield potential

Six. Amount invested in cash depends on size of the cash flow requirement c. Investment in cash increases when there is a bull run in the stock market d. Investment in cash decreases when interest rates rise

Forty-one. Under a regular premium variable whole life plan

One. Premium top-ups and holidays, subject to the company's administrative rules are usually allowed

Two. Life protection is the main objective of the plan with investment as the nominal purpose Withdrawals after the payment of a few years' premium are usually allowed

Four. A single premium contribution is made to the policy which uses the premium to purchase units in a variable life fund to provide a certain level of life cover a. Two, Three, and Four. Regular premium and question not single premium b. One, Three, and Four. c. One, Two, and Four. d. One, Two, and Three.

Forty-two. Which of the following statements about investment objectives is false?

People invest money in fixed deposits to produce high and guaranteed returns b. People invest money to enhance a comfortable standard of living c. People invest money to provide funds for higher education for their children d. Investment in commodities has no regular income

Not guaranteed

Forty-three. Which of the following is/are the main characteristic(s) of variable life policies?

The policies can be used for investment, as a source of regular savings and protection

Two. The withdrawal values and protection benefits are determined by the investment

Three. 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 and indebtedness including interest a. Two.

b. One.

c. One, Two, and Three.

One, and Two.

Forty-four. Risk can be classified into two particular categories in relation to investment. They include

One. The risk of not losing some or all of the person's initial investment

Two. The risk of rate of return on the investment not matching up to the individual's expectation

Three. The risk of rate of return on the investment matching up to the individual's expectation

Four. The risk of losing some or all of a person's initial investment a. One and Three.

c. Three and Four. d. One and Four. May fund manager na nagmamanage - eastspring investment.

b. One and Two.

Forty-five. The duties of the trustee of unit trust do not include:

Managing the portfolio of investment and administering the buying and selling of shares in the unit trust itself b. Ensuring that the fund manager adhere to the provision of the trust deeds c. Acting generally to protect the unit-holders d. Holding the pool of money and assets in trust in behalf of the investors

Forty-six. Policy fee payable by variable life insurance policy owner is to cover a. The handling charges by professional investment managers b. The price of each unit bought under the variable life insurance policy c. The mortality costs of the variable life insurance policy

The administrative expenses of setting up the variable life insurance policy

Forty-seven. The selling price under a variable life insurance policy is:

a. The price at which units under the policy are bought back by the life insurance company

The price at which units under the policy are offered for sale by the life company c. Also known as the bid price d. A fixed amount throughout the life of the policy

Forty-eight. Diversification in investment involves a. Putting all the funds under management into one category of investment b. Spreading the risk of investment by not putting the fund into several categories of investment c. Reducing the risks of investment by putting one fund under management into several categories of investment d. Reducing the risks of investment by putting all one's eggs in one basket

Diverse is pagkalat ng investment into more baskets

Forty-nine. 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 a. Invest in shares of stocks and the magnitude of the change in unit prices will only depend on the quantity of the equities held b. Invest in shares of stocks and during market recession, such as assets are usually the last to depreciate c. Invest in shares of stocks which are inherently of lower risk in nature and the prices of stocks are stable

Invest in shares of stocks and investors, who buy such assets usually aim for capital appreciation

Equity-capital appreciation

Fifty. Which of the following statements describe the differences between variable life products and participating products? One. Variable life products allow policyholders to vary the premium payments unlike participating products.

Two. Variable life products can take the form of whole life or endowment policies with

Participating products.

Three. Variable life products allow policyholders to pay future single premiums from time to time to add more units to his account unlike participating products.

Variable and participating b. One products-all of the above c. One and Three a. One, Two, and Three.

d. Two and Three.

Fifty-one. Assuming no movement in the prices and charges/fees are deducted after the single premium has been invested into the account, how much will the policyholder lose if he surrenders the policy now?

Pesos thirteen.00

Bid price

Bid-offer spread equals four percent

Pesos four hundred fifty thousand

Single premium

Pesos one thousand eight hundred

Policy fee

Admin and Mortality charge equals three percent

Sum assured is two hundred percent of single premium or the value of the units, whichever is higher a. Pesos forty-three thousand four hundred point ninety d. Pesos fifteen thousand two hundred ninety-nine point ninety-six

Pesos thirty-three thousand two hundred forty-six point seventy-eight c. Pesos twenty-two thousand five hundred.00

Fifty-two. Which of the following statements best describes "variable life" policies?

a. It is a fixed premium policy with returns that will not vary with the underlying value of investments.

b. It is a fixed premium policy with returns that will vary with the underlying value of investments.

c. It is a flexible premium policy with returns that will not vary with the underlying value of investments.

d. It is a flexible premium policy with returns that will vary with the underlying value of investments.

Flexible that will vary

Fifty-three. Which of the following factors contribute to the specific risk of an investment:

One. Rate of corporate taxes

Two. Fraud by senior management

Three. Financial leverage of the company

Letter B tamang sagot kasi wala risk sa rate ng taxes a. One and Two.

c. One and Three.

d. One, Two, and Three.

Fifty-four. Investing in bonds offers the following advantages except a. It offers protection to the principal and guaranteed steady stream of income b. It is a place of temporary refuge when the investor foresees that the market outlook is uncertain No capital appreciation sa c. It allows the investor a chance for capital preservation bond, sa equity lang

It enables the investor an opportunity for capital appreciation

Fifty-five. Rank the following investment instruments in terms of their level of risks, from the least risky to the most risky.

One. cash and deposit

Two. derivatives

Three. a well diversified investment portfolio of a company

Cash. Stocks. A well Deriva

Four. stock options

CSAD

a One, Four, Three and Two.

b. One, Three, Four and Two.

c. One, Four, Two, and Three.

d. One, Two, Three and Four.

Fifty-six. In risk-return profile of cash funds, bond funds, balanced funds, managed funds and equity funds, a risk-return graph will show that

One. Higher return normally comes with lower risk

Eleven. Higher return normally comes with higher risk

Three. At the top end of the graph are the equity funds

Four. The relatively risk-less cash funds sit at the bottom end of the graph a. One, Two, and Three

Higher return higher risk not lower c. One, Two and Four

Fifty-seven. Which of the following statements are TRUE?

One. The policy value of variable life policies is determined by the offer price at the time of valuation.

Two. The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at the time of surrender.

Three. The life company needs to maintain a separate account for variable life policies distinct from the general account.

a. One and Two

False and offer price b. One, Two, and Three c. One and Three d. Two and Three

Fifty-eight. Which of the following information is NOT required to be disclosed to policyholders of variable life policies?

The net withdrawal value as of the statement date.

b. The premiums received and charges levied during the period c. The basis and frequency for valuing the assets.

d. Number and value of units held at the beginning of the period; bought and sold during the period; and held at the end of the period.

Net withdrawal value ay dinidisclose pag magwiwithdraw or unless iask