VUL

An insurer must provide each investment-linked policy holder with A. an advice of daily investment of funds B. a policy statement and the fund performance report C. the company annual financial reports D. the fund manager entertainment expenses

B

Identify charges that are applicable to a single premium policy A. policy fee B. Administrative and Mortality Charge C. Investment in management fee D. All of the above

D

The offer price under a VUL insurance policy is _______ A. a fixed amount throughout the life of the policy B. also known as the bid price C. the price at which units under the policy are brought back by the company D. the price at which units under the policy are offered for sale by the company

D

Which is/are the benefits of Variable universal life funds? A. pooling or diversification B. Flexibility C. Expertise of fund managers D. All of the above

D

Diversification in investment involves A. reducing the risks of investment by putting the fund under management into several categories of investment B. reducing the risks of investment by putting all ones eggs in one basket C. putting all the funds under management into one category of investment D. spreading risks of investment by not putting the fund into several categories investment.

A

Factors to consider in buying properties: I. Quality of land II. The location of land III. The value of buildings on land IV. The investment objective V. Place of work A. I, II & III only B. II, III &IV only C. I, III & V only D. All of the above

A

What is the most suitable investment vehicle for an investor who is interested interested in protecting his principal and receiving a steady stream of income? A. Fixed income securities B. Equities C. Variable life insurance policies D. cash and deposits

A

Which of the following information must not be conveyed to client in sales of Variable Universal Life insurance policies? A. Guaranteed interest rate B. Time horizon of the product C. The risk involved D. Benefits illustrations using 10% as the gross E. Rate of return

A

Which of the following is NOT a characteristic of a variable Universal Life policy? A. It is used solely for investment purposes B. the commissions and office expenses are met by explicit charges C. Its generally, though not necessarily, more exposure to equity investments. D. its cash value is usually the value of units allocated to the policy calculated at the prevailing bid price

A

Which of the following statements about single premium VUL policies are true? I. There is no fixed term in a single premium VUL policy and therefore, it is technically whole life insurance II. top-ups or single premium injections are allowed in the plans III. policyholders have the flexibility of varying the life coverage A. I & II B. I & III C. II & III D. I, II, & III

A

Which of the following statements is false? A. the principle of variable insurance policies vary but all operate on the same features B. Variable universal life insurance policies can be classified as a single premium insurance plans or regular... C. investment linked policies can be used for investment, regular savings, and protection D. the cash value and protection benefits are determined by the investment performance of the underlying assets

A

Which of the following statements is false? I. The bid-offer spread is used to provide death benefit for the VUL 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 benefit under the variable life insurance product. They may offer either or both types depending on its product design and discretion of the policy holder A. I and II only B. II & III only C. II & IV only D. None of the above

A

Which one of the following statements about diversification in portfolio management is FALSE? A. diversification can complete eliminate the risk of investing in stocks in a portfolio B. diversification helps to spread the portfolio risk by investing in different categories of investment in a portfolio C. diversification can involve purchasing different types of stocks and investing in stocks of different countries. D. a diversified portfolio provides greater security to an investor

A

Which one of the following statements about investment-linked policies are TRUE? I. the cash value is not guaranteed II. the volatility of the returns depends on the investment strategy of the fund III. the variable life insurance policyowners have direct control over the investment decisions of the fund A. I & II B. I& III C. II & III D. I, II, & III

A

An insurer must provide each variable universal life insurance policy owner with A. An advice of daily investment fund B. A policy statement and the fund performance report C. The company's annual financial reports D. the fund manager's entertainment expenses

B

If the current price = P1.50 and the bid-offer spread = 5% calculate for the bid price: A. P1.367 B. P1.425 C. P1.408 D. P1.234

B

Which one of the following information is NOT required to be disclosed to the policy owner in the sales process? A. Disclosure guidelines B. Agent's commission C. Flexibility options D. Risk and products

B

What is/are the advantages of investing in cash and deposits I. The safest type of investment II. They provide the lowest return III. There is reinvestment risk A. I only B. II only C. II & III only D. I, II, III

C

Which of the following statements is/are true? I. The level of risk tolerance refers to the tolerance for the magnitude and variability of historical returns or loss II. The level of risk tolerance is influenced by the person's age, personality, investment objectives, and financial conditions III. Investor needs to choose between assets that yield regular income, or provide capital gain. A. I and II only B. I and III only C. II and III only D. I, II, and III

C

Which one of the following statements is not true about the benefits of investing in VUL insurance policy A. the fund provides a highly diversified portfolio, thus lowering the risk of investment B. The fund relieves the investor from the hassle of administering his/her investment C. the fund ensures definite high yields for an investor since it is managed by professionals who are well-versed in the management of risk of investment portfolios D. The fund enables small investors to participate in a pool of diversified portfolio in which he/she is unlikely to hav4 access to with low investment capital

C

Which of the following is not a type of fixed income securities? A. money market instruments B. Government bonds C. corporate bonds D. none of the above

D

Which of the following statements about the features of Regular premium VUL policy are TRUE? I. Top-ups are usually allowed II. The level of coverage can be varied III. Premium holidays are usually allowed A. I & II only B. I & III only C. II & III only D. I, II & III

D

Which of the following statements is true? A. The proceeds from universal life insurance policy is tax free in the hands of the policy owner B. When the policy is partially surrendered the investor is taxed at his current tax rate C. the death benefit is taxed at the current tax rate

A

Which of the following statements is true? A. amount invested in cash depends on the size of cash flow requirement B. investment in cash decreases when interest rates rise C. investment in cash increases when there is a strong performance in the stock market D. cash has high yield potential

A

This is called as the difference between the offer price and the bid price A. Bid price spread B. offer price spread C. Bid offer spread D. None of the above

C

Under the dual pricing method of single premium policies ___________ A. the policy holder 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 offer price and sells the units at the bid price C. there is only one price quoted whether the policyholder is buying or selling his units D. the bid price is always higher than the offer price

B

What are the basic types of real estate investment? I. Intellectual property II. Domestic property III. Agricultural property IV. Commercial/ Industrial property V. Commodities A. I, II & III only B. II, III, & IV only C. I, III & V only D. All of the above

B

Which of the following characteristics pertaining to common shares is/are true? I. Guaranteed small returns II. The holder of an ordinary share is a part owner of the company III. There is no certainty that the company will make profits and thus no certainty that there will be dividends IV. There is no risk involved in the investment of ordinary shares A. I and IV only B. II and III only C. II, III and IV only D. II only

B

Which of the following statements describe the differences between variable universal life insurance products and traditional participating products I. Traditional participating life policies aim to produce steady return by smoothing out market fluctuations, while Variable Universal Life insurance policies offer the potential for higher returns but at the expense of market volatility and higher risk. II. Variable Universal Life insurance products can take the form of Whole life or endowment policies but traditional participating life policies do not III. The investment element of Variable Universal Life insurance policies is made known on the outset and is invested in a separately identifiable fund, which is made up of units of investment. A. I only B. I & III only C. II & III only D. I, II, & III

B

which one of the following statements about diversification in portfolio management is FALSE? A. Diversification can completely eliminate the risk of investing in stock portfolio B. Diversification helps to spread the portfolio risk by investing in the different categories of investment in a portfolio C. Diversification involves purchasing different types of stocks and investing in stocks of different countries D. A diversified portfolio provides greater security to an investor without having to sacrifice the return for the portfolio

A

People generally invest their money to provide: I. an improvement in their financial position II. a less comfortable standard of living III. income in retirement IV. funds for paying necessary expenses and taxes when the person dies A. I, II, & III B. I, III, & IV C. I, II & IV D. II, III, & IV

B

Term insurance _____ A. provides for payment of the sum insured when the life insured survives a specific period B. provides protection for a specific period, the policy ceases and no return of premiums is given C. is the most complex and expensive of all the life insurance D. provides for surrender or cash values on early termination of the insurance

B

The benefits of investing in variable universal life funds include ___________ I. policyholders have access to a pooled or diversified portfolio of investment II. Policyholders can easily change the level of premium... III. Policyholders cant gain access to VUL funds managed by professional investment managers IV. Policyholders are relieved of the day-to-day administration of his investment

B

The two purposes of regular premium VUL insurance plan include investment and A. Regular savings B. Protection C. Total and permanent disability D. Death benefit

B

Which of the following statements is false? A. company will carry out a valuation of its funds yearly and any surplus may be allocated to traditional participating life policyholder as dividends B. variable life insurance policies offer investors policies with values indirectly linked to the investment performance of the company C. the investment element of the variable life policies varies according to the underlying assets of the portfolio D. Both whole life and endowment policies can be used as an investment media with benefits that become payable at a future date

B

Which one of the following statements about investment objectives is false? A. people invest money to enhance a comfortable standard of living B. people invest money in equities to produce high and guaranteed income C. people invest money to provide funds for higher education for their children

B

Mr. Custodia wishes to invest P20,000 in a single premium variable universal life policy with the following parameters offer price = P1.20 Bid-offer spread = 5% policy fee = P120 Administrative and Mortality charge = 2.5% of single premium A. 16,150.76 B. 16,666.67 C. 16,122.81 D. none of the above

C

The switching facility under VUL insurance policies is very useful _______ A. for the purpose of assets planning by the trustee B. for the purpose of profit planning by the life policies C. for the purpose of financial planning by the policyholders D. for the purpose of sales planning by the fund managers

C

Variable universal life funds can be invested in any financial instruments including cash funds, bond funds, property funds, specialized funds, and diversified funds. Equity funds ____ A. invest in stocks and shares and the magnitude of the change in unit prices will depend on the quantity only of the equities held B. invest in stocks and shares and are inherently of lower risk in nature and the prices of the stocks and shares are stable C. invest in stocks and shares and investor who buy such assets usually aim for capital appreciation D. invest in stocks and shares and during market recession, such as assets are usually the last to depreciate

C

What are the disadvantages in investing in common shares? I. dividends are paid not more than the fixed rate II. investors are exposed to market and specific risks III. shares can become worthless if company becomes insolvent A. I, II B. I, III C. II, III D. I, II, & III

C

Which of the following is/are some of the flexibility features of VUL insurance policies? I. Partial withdrawal II. Variation in sum is assured III. Guaranteed withdrawal values A. II only B. III only C. I & II only D. I, II, III

C

Which of the following statement is/ are FALSE? I. Higher capital gain is normally associated with lower risk II. One way to lower risks 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 acheived by investing in different countries and/or types of assets. V. An investor can always choose an investment that is risk free A. I, II & III B. II, III & IV C. I, III & V D. All of the above

C

Which of the following statements is/are the advantages of money market instruments? I. High liquidity II. Long-term investments III. Low returns IV. Low risks V. No re-investment risk A. I & II only B. II & III only C. I & IV only D. all of the above

C

Why is it important that the customer understands the agent's recommendation in full? A. because the insurer may give the wrong recommendations B. because the insurer does not guarantee any return C. because the impact on change in investment conditions of variable life insurance policy falls wholly on the customer D. because the policyholder expects higher returns

C

The fundamental differences between traditional participating life insurance policies and variable universal life insurance policies include________ I. Variable universal Life insurance policies are less likely to offer more choices in terms of the type of investment II. The investment element of VUL insurance policies is made known to the policy holder at the outset.... III. VUL insurance policirs offer the potential for higher returns IV. Traditional participating life policies aim to produce steady return by smoothing out market fluctiation A. I, II, III B. I, II, IV C. I, III, IV D. II, III, IV

D

The risk profile of a person depends on I. age II. investment objectives III. financial conditions IV. personality A. I & II only B. II, III & IV C. I, II, & III only D. All of the above

D

Three elements affect the accessibility of the funds. They include_____________ I. the age and attitude of the investment towards risk II. the initial cost in setting up or buying into the investment III. the time horizon of needs of the fund IV. the cost or penalty or realizing the investment before its maturity period A. I, II, III B. I, II, IV C. I, III, IV D. II, III, IV

D

Which of the following investment options entitles the holder ownership and has a share of profits in the form of dividends appreciation? A. Cash B. Bonds C. Futures D. Ordinary shares

D

Which of the following investment options has all the advantages of capital appreciation, liquidity and inflation hedge? A. cash B. bond C. money market D. common shares

D