Std-Ic Vul Simulated Exam (Questionnaire) - Final
Std-Ic Vul Simulated Exam (Questionnaire) - Final
Std-Ic Vul Simulated Exam (Questionnaire) - Final
Direction: Choose the best answer. Write the CAPITAL LETTER of your answer
on the answer sheet provided
1. Which of the following statements describe (s) 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
2. Which one of the following statements about diversification in portfolio management is FALSE?
A. I, II & III
B. I, III & IV
C. I, II & IV
D. II, III & IV
I. age
II. investment objectives
III. financial conditions
IV. personality
A. I & II only
B. II, III & IV only
C. I, II & III only
D. All of the above
6. Which of the following information must not be conveyed to client in sales of Variable Universal Life
insurance policies?
8. Which one of the following statements is not true about the benefits of investing in a Variable Universal
Life 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 have access to with low investment capital.
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 one’s eggs in one basket
C. putting all the funds under management into one category of investment
D. spreading the risks of investment by not putting the fund into several categories investment.
10. Three elements affect the accessibility of the funds. They include __________.
A. I, II & III
B. I, II & IV
C. I, III & IV
D. II, III & IV
11. Which one of the following statements about diversification in portfolio management is FALSE?
12. 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 choice in terms of the
type of investment funds
II. The investment element of Variable Universal Life insurance policies is made known to the
Policyholder at the outset and is invested in a separately identifiable fund which is made up of
units of investment
III. Variable Universal Life insurance policies offer the potential for higher returns
IV. Traditional Participating Life policies aim to produce a steady return by smoothing out
market fluctuation
A. I, II & III
B. I, II & IV
C. I, III & IV
D. II, III & IV
13. The benefits of investing in Variable Universal Life funds include ________
A. I, II & III
B. I, II & IV
C. I, III & IV
D. II, III & IV
I. Policyholders can easily change the level of sum insured and switch their investments between
funds
II. Policyholders can easily take premium holidays and add single premium top-ups
III. Variable life insurance products have a simple product design with a clear structure which
caters separately for investment and insurance protection
IV. Policyholders can easily change the level of their premium payment
A. I, II & III
B. I, II & IV
C. I, III & IV
D. I, II, III & IV
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
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 variable life policies varies according to 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
17. Why is it important that the customer understand the agent’s recommendation in full?
18. 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
I. The level of risk tolerance refers to the tolerance for magnitude and variability of historical
returns or loss.
II. The level of risk tolerance is influenced by a 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
21. Which one of the following statements about investment-linked policies are TRUE?
A. I & II
B. I & III
C. II & III
D. I, II, & III
A. the principles of Variable Universal Life 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 premium insurance plans
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. Pooling or diversification
B. Flexibility
C. Expertise of fund managers
D. All of the above
24. Which one of the following statements about investment objectives is FALSE?
A. The proceeds from a Variable 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.
26. An insurer must provide each Variable Universal Life insurance policy owner with
A. I only
B. II only
C. II & III only
D. I, II & III
28. Which one 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
29. Which of the following statement(s) is/are the advantages of money market instruments?
I. High liquidity
II. Long-term of 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
I. Quality of land
II. The location of Land
III. The value of the buildings on land
IV. The Investment Objective
V. Place of work
I. Intellectual Property
II. Domestic Property
III. Agricultural Property
IV. Commercial/Industrial Property
V. Commodities
A. I, II
B. I, III
C. II, III
D. I, II & III
34. 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
36. 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 assets are usually the last to
depreciate
37. What is the most suitable investment vehicle for an investor who is interested in protecting his principal
and receiving a steady stream of income?
A. I and IV only
B. II and III only
C. II,III and IV only
D. II only
I. The bid-offer spread is used to provide death benefit for the Variable Universal Life
insurance policy.
II. The bid-price is always higher than 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
policyholder.
A. I & II only
B. II & III only
C. II & IV only
D. None of the above
A. Policy fee
B. Administrative and Mortality Charge
C. Investment Management Fee
D. All of the above
41. This is called as the difference between the offer price and bid price:
A. P1.367
B. P1.425
C. P1.408
D. P 1.234
43. Mr. Custodia wishes to invest P20,000 in a single premium Variable Universal Life policy with the
following parameters.
A. 16,150.76
B. 16,666.67
C. 16,122.81
D. none of the above
44. Which of the following statements about single premium Variable Universal Life policies are TRUE?
I. there is no fixed term in a single premium Variable Universal Life 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
45. Which of the following statements about the features of Regular Premium Variable Universal Life policy
are TRUE?
A. I & II only
B. I & III only
C. II & III only
D. I, II & III
46. Which of the following is/are some of the flexibility features of Variable Universal Life 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
47. The offer price under a Variable Universal Life insurance policy is ___________.
48. The switching facility under Variable Universal Life insurance policies is very useful ____________.
A. the Policyholder 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
50. The two purposes of regular premium variable life insurance plan include investment and
A. Regular savings
B. Protection
C. Total and permanent disability
D. Death benefit