VUL MOCK EXAM 2
a. Cash value is paid when a yearly renewal term insurance policy is
surrendered
1. The fundamental differences between traditional b. When a participating insurance policy is surrendered, the surrender
participating life insurance policies and variables value is calculated by multiplying the bid price with number of units
life insurance policies c. The amount of surrender value is usually higher than the amount
include____________________ under non-participating policies and it varies with the age of the
assured, being lower at older ages.
I. Variable life insurance policies are less d. In the case of participating policies, the net cash surrender value of
likely to offer more choices in terms of the the paid-up additional up to the date of surrender
type of investment fund
II. The investment elements of variable life 4. Which of the following statement about risk of investing in variable life
insurance policies is made known to the funds is TRUE?
policy owner at the outset and is invested a. Policy owner who are risk adverse should buy variable life
in a separately identifiable fund which is insurance policies with high equity investment
made up units investment b. Investment in variable life fund which are fully invested in units of
III. Variable life insurance policies offer the equity bonds are not suitable for policy owners who can tolerate
potential for higher returns the risks of short term fluctuation in their cash value
IV. Traditional participating policies aim to c. Policy owner who invest in variable life funds with high equity
produce a steady return by smoothing out investment face greater risk but can expect to achieve higher
market fluctuation return than the traditional life insurance product over the long term
d. Policy owner who are risk averse should not purchase life
a. I, II and IV c. I, II insurance policies with high protection and guaranteed cash and
and III maturity values.
b. II, III and IV d. I, II
and IV 5. What would be the withdrawal value after a year?
2. The switching facility under variable life insurance Offer Price = Ps 16.00
policies is a very useful_____________ Bid offer spread = 4.5%
Number of Units bought = 25,000
a. For the purpose of profit planning by the life Policy fee = 1,800
Admin and Mortality charge = 8,750
policies
Top-up Fee = 700
b. For the purpose of asset planning by the
Admin for Top-up = 2,000
trustee
c. For the purpose of sales planning by the fund Sum assured is 190% of single premium or the value of the units,
managers whichever is higher.
d. For the purpose of financial by the policy
owners ASSUMPTIONS:
1. Charge and Fees are deducted after the single premium has been
3. The following statement about surrender value invested into the account
traditional participating life insurance product is 2. The growth rate of the unit price and the bid offer spread is maintained
TRUE? at 8% and 4.5% respectively.
VUL MOCK EXAM 2
a. Ps. 432,000.00 c. II. Has the priority over company assets during dissolution
Ps. 401,107.58 III. They enjoy benefits of capital appreciation
b. Ps. 420,069.00 d.
Ps. 412,500.00 a. I, II, and III c. I and III
b. I and II d. II and IV
6. The protection cost under a variables life
9. With traditional participating life insurance products, the allocation to policy
insurance policy___________________
owners in the form of dividends________________________
I. Are met by flat initial charges for regular
I. Are not directly linked to the life company’s investment
premiums plans
II. Are generally covered by cancellation of performance
II. Have already been smoothened by the life company
units in the funds
III. Do not have the high and lows of investment returns as in good
III. Are generally met by explicit charges
investment years of life company
stipulated openly in the policy terms
IV. Are not fixed at the inception of the policy, but are greatly
IV. Vary with the age of policy owner and
dependent on the investment performance of the life company
level of cover
a. I,II and III c. I,III and IV
a. I, II and III c. I,
b. I, II and IV d. II, III and IV
III and IV
b. I, II and IV d.
II,III and IV
7. Which of the following statement about
diversification in portfolio management is FALSE?
a. A diversified portfolio provides greater
security to an investor having to sacrifice
the return for the portfolio
b. Diversified can completely eliminate the
risk of investing in stocks in a portfolio
c. Diversified can involve purchasing
different types of sticks and investing in
stocks of different countries
d. Diversified helps to spread helps to
spread the portfolio risk by investing in
stocks of different countries
8. What are the advantages of investing in preferred
shares?
I. It gives shareholders the right to affixed
dividend
