Sun Life VUL Reviewer Flashcards Preview

Sun Life TRAD and VUL Reviewer > Sun Life VUL Reviewer > Flashcards

Flashcards in Sun Life VUL Reviewer Deck (49)
Loading flashcards...
1

Which of the following statements about option to top-up under variable life insurance products is
TRUE?

I. Policy owners may buy additional units of the variable life fund and these units will be
allocated to new variable life insurance policies.
II. Further premiums at time of top-up will be used in full, after deducting charges for top-ups,
to purchase additional units of the variable life funds.
III. To top-up a policy, the policy owner pays further single premium at the time of top-up
IV. Policy owners are normally allowed to top-up their policies at any time, subject to a
minimum amount

a. II, III and IV

II. Further premiums at time of top-up will be used in full, after deducting charges for top-ups,
to purchase additional units of the variable life funds.
III. To top-up a policy, the policy owner pays further single premium at the time of top-up
IV. Policy owners are normally allowed to top-up their policies at any time, subject to a
minimum amount

2

What are the disadvantages when investing in common shares?

I. Dividends are paid not more than fixed rates
II. Investors are exposed to market and specific risks
III. Shares can become worthless if company becomes insolvent

c. II, III

II. Investors are exposed to market and specific risks
III. Shares can become worthless if company becomes insolvent

3

Which one of the following statements about the 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 bid price
b. Policyholders can take loans against their variable life policies up to the entire withdrawal value
of their policies
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
premiums variable life policies

b. Policyholders can take loans against their variable life policies up to the entire withdrawal value
of their policies

4

What is the most suitable investment instrument for someone who is interested in protecting his
principal while receiving a steady stream of income?

a. Equities
b. Warrants
c. Variable Life Policies
d. Fixed Income Securities

d. Fixed Income Securities

5

A UNIT TRUST is __________________________.

a. Established by a trust deed which enable a trustee to hold the pool of money and assets in trust
on behalf of the investor
b. A close-end fund and does not have to dispose of its assets if a large number of investors sell
their shares
c. One whereby an investor buys units in the trust itself and not shares in the company
d. An organization registered under the SECURITIES AND EXCHANGE COMMISSION (SEC) which
usually invests in a wide range of equities and other investments

a. Established by a trust deed which enable a trustee to hold the pool of money and assets in trust

6

Characteristics of a variable life insurance policy 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 implicit charges with normally 6
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 and III c. I, II and IV
b. II, III and IV d. I, III and IV

c. I, II and IV

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
IV. Its withdrawal value is normally the value of units allocated to the policy owner calculated at the
bid price

7

Which of the following statements are FALSE?

I. The policy value of variable life policies is determined by the offer price at the time of valuation
II. The policy value of endowment policies is the cash value plus any accumulated dividends less
any outstanding loans due at time of surrender
III. The life company needs to maintain a separate account for variable life policies distinct from the
general account.

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

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

8

Variable life insurance policy owners may withdraw in terms of __________________

a. Number of units or fixed monetary amount through cancellation of units
b. Number of units or fixed monetary amount through reduction of the life cover sum assured
c. Fixed monetary amount only through reduction of the life cover sum assured
d. Number of units through cancellation of units

a. Number of units or fixed monetary amount through cancellation of units

9

An investor in variable life funds gets to enjoy these benefits:

I. Policy owners have access to pooled or diversified portfolios of investment
II. Policy owners can easily change the level of the premium payments as the product design of
variable life insurance policies have clear structures which cater separately for investment and
insurance protection
III. Policy owners can gain access to variable life funds managed by professional investment
managers with proven track records
IV. Policy owners can buy a variable life insurance policy only with a high initial investment

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

c. I, II and III

I. Policy owners have access to pooled or diversified portfolios of investment
II. Policy owners can easily change the level of the premium payments as the product design of
variable life insurance policies have clear structures which cater separately for investment and
insurance protection
III. Policy owners can gain access to variable life funds managed by professional investment
managers with proven track records

10

Which of the following about rebating is FALSE?

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

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

d. III

III. Rebating will enhance the sales performance and uphold the prestige of an agent

11

Which one of the following statements is FALSE?

a. Variable life insurance policies offer investors plans with values that are indirectly linked to the
investment performance of the life company
b. A life insurance 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 portfolio

a. Variable life insurance policies offer investors plans with values that are indirectly linked to the investment performance of the life company

12

Which of the following statements about single premium variable life policies are TRUE?

I. There is no fixed term in a single premium variable life policy and therefore, they are technically
whole life insurance
II. Top-up single premium injections are allowed in these plans
III. Policyholders have the flexibility of varying the level cover

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

b. II and III

II. Top-up single premium injections are allowed in these plans
III. Policyholders have the flexibility of varying the level cover

13

Which of the following statements about variable life policies are TRUE?

I. The cash withdrawal value is not guaranteed
II. The volatility of the returns depends on the investment strategy of the fund
III. The variable life policyholder has direct control over the investment decisions of the variable life
fund

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

b. I and II

I. The cash withdrawal value is not guaranteed
II. The volatility of the returns depends on the investment strategy of the fund

14

Which of the following statements about variable life policies are TRUE?

I. Variable life policies generally have a larger exposure to equity investment than with
participating and other traditional policies
II. The protection costs are generally met by implicit charges, which vary with age and level of
cover
III. Commissions and company expenses are met by a variety of explicit charges, some of which are
variable

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

b. I and II

I. Variable life policies generally have a larger exposure to equity investment than with
participating and other traditional policies
II. The protection costs are generally met by implicit charges, which vary with age and level of
cover

15

The facility to do switching under a variable life insurance policy is a very useful _________________

a. For the purpose of profit planning by the life policies
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

d. For the purpose of financial planning by the policy owners

16

The flexibility of investing in variable life funds includes these benefits:

I. Policy owner can easily change the level of sum assured and switch their investment between
funds
II. Policy owners can easily take premium holidays and add single premium to top-ups
III. Variable life insurance products have a simple product design with a clear structure which cater
separately for investment and insurance protection
IV. Policy owners can easily change the level of their premium payment

a. All of the above c. I, II and IV
b. I, II and III d. I, III and IV

c. I, II and IV

I. Policy owner can easily change the level of sum assured and switch their investment between
funds
II. Policy owners can easily take premium holidays and add single premium to top-ups
IV. Policy owners can easily change the level of their premium payment

17

Which of the following statements about risks of investing in variable life funds is TRUE?

a. Policy owners who are risk averse should buy variable 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
c. Policy owners who invest in variable life funds with high equity investment face greater risk but
can expect to achieve higher return than the traditional life insurance product over the long
term
d. Policy owner who are risk averse should not purchase life insurance policies with high protection
and guaranteed cash and maturity values

c. Policy owners who invest in variable life funds with high equity investment face greater risk but
can expect to achieve higher return than the traditional life insurance product over the long
term

18

What would be the withdrawal value after a year?

Offer Price = Ps 16.00
Bid-offer spread = 4.5%
Number of Units bought = 25,000
Policy Fee = 1,800
Admin and Mortality charge = 8,750
Top-up Fee = 700
Admin for Top-up = 2,000

Sum assured is 190% of single premium or the value of the units, whichever is higher.

ASSUMPTIONS:
1. Charges and Fees are deducted after the single premium has been invested into the account
2. The growth rate of the unit price and the bid-offer spread is maintained at 8% and 4.5% respectively

a. Ps 432,000.00 c. Ps. 401, 107.58
b. Ps. 420, 069.02 d. Ps. 412, 500.00

c. Ps. 401, 107.58

19

Which one of the following statements about an investor diversifying his portfolio is FALSE?

a. A diversified portfolio provides greater security to an investor having to sacrifice the return for
the portfolio
b. A diversified portfolio can completely eliminate the risk of investing in stocks in a portfolio
c. A diversified portfolio can involve purchasing different types of stocks and investing in stocks of
different countries

b. A diversified portfolio can completely eliminate the risk of investing in stocks in a portfolio

20

In traditional life insurance products, the allocations to policy owners in the form of dividends
__________________

I. Are not directly linked to the life company’s investment performance
II. Have already been smoothened by the life company
III. Do not have the highs and lows of investment returns as in good investment years of the life
company
IV. Are not fixed at the inception of the policy, but are greatly dependent on the investment
performance of the life company

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

d. II, III and IV

II. Have already been smoothened by the life company
III. Do not have the highs and lows of investment returns as in good investment years of the life
company
IV. Are not fixed at the inception of the policy, but are greatly dependent on the investment
performance of the life company

21

Which of the following statements is true about cash?

a. It has high yield potential
b. Amount invested in cash depends on the 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

b. Amount invested in cash depends on the size of the cash flow requirement

22

Which of the following are main characteristics of variable life policies?

I. The policies can be used for investment, as a source of regular savings and protection
II. The withdrawal values and protection benefits are determined by the investment performance
of the underlying assets
III. 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 any indebtedness including interest

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

d. I and II

I. The policies can be used for investment, as a source of regular savings and protection
II. The withdrawal values and protection benefits are determined by the investment performance
of the underlying assets

23

Which of the following duties of the trustees are FALSE?

a. 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 trusts deeds
c. Acting generally to protect the unit-holders
d. Holding the pool of money and assets in trust in behalf of the investors

a. Managing the portfolio of investment and administering the buying and selling of shares in the
unit trust itself

24

The policy fee payable by a variable life insurance policy owner is to cover _________________

a. The handling charges by professional investment managers
b. The price for each unit bought under the variable life insurance policy
c. The mortality costs of the variable life insurance policy
d. The administrative expenses of setting up the variable life insurance policy

d. The administrative expenses of setting up the variable life insurance policy

25

In risk–return profile of bond funds, cash funds, managed funds, balanced funds and equity funds, a
risk-return graph will show that __________________

I. Higher return normally comes with lower risk
II. Higher return normally comes with higher risk
III. At the top end of the graph are the equity funds
IV. The relatively risk-less cash funds sit at the bottom end of the graph

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

b. II, III and IV

II. Higher return normally comes with higher risk
III. At the top end of the graph are the equity funds
IV. The relatively risk-less cash funds sit at the bottom end of the graph

26

Variable life funds can be invested in any financial instruments including bond funds, property funds,
specialized funds and equity 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 assets are usually the last to
depreciate
c. Invest in share of stocks which are inherently of lower risk in nature and the prices of stocks are
stable
d. Invest in shares of stocks and investor who buys such assets usually aims for capital appreciation

d. Invest in shares of stocks and investor who buys such assets usually aims for capital appreciation

27

The investment returns under variable life insurance ________________

I. Are not guaranteed
II. Are assured
III. Are linked to the performance of the investment fund managed by the life company
IV. Fluctuate according to the rise and fall of the market prices

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

c. I, III and IV

I. Are not guaranteed
III. Are linked to the performance of the investment fund managed by the life company
IV. Fluctuate according to the rise and fall of the market prices

28

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
c. Misrepresentation is a specific form of twisting
d. Switching is a facility allowing policyholders to switch to another variable life funds offered by
company

c. Misrepresentation is a specific form of twisting

29

Which of the following statements about the differences between variable life policies and
endowment policies are FALSE?

I. The policy values of variable life and endowment policies directly reflect the performance of the
fund of the life company
II. The premiums and benefits of the endowment policies are described at inception of the policy
whereas variable life policies are flexible as they are account-driven
III. The benefits and risks variable life and endowment policies directly accrue to the policyholders

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

c. I and III

I. The policy values of variable life and endowment policies directly reflect the performance of the
fund of the life company
III. The benefits and risks variable life and endowment policies directly accrue to the policyholders

30

Which of the following statements about variable life policies are TRUE?

I. Offer price is used to determine the numbers of units to be cancelled to the account
II. The margin between the bid and offer price is used to cover the management cost of the policy
III. The policy value is calculated based on the bid price of units allocated into the policy

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

d. II and III

II. The margin between the bid and offer price is used to cover the management cost of the policy
III. The policy value is calculated based on the bid price of units allocated into the policy

31

Mr. Cruz is currently earning Ps. 30,000/month. He is 35 years old and has a reasonable amount of
savings. He has a moderate level for risk tolerance. What kind of policy would you recommend him to
buy?

a. Participating endowment c. Participating whole life
b. Variable life policies d. Annuities

b. Variable life policies

32

Which of the following statements about twisting are TRUE?

I. Twisting is a special form of misrepresentation
II. It refers to an agent inducing a policyholder to discontinue policy with another company without
disclosing the disadvantage of doing so
III. It includes misleading or incomplete comparison of policies
IV. It refers to an agent offering a prospect a special inducement to purchase a policy

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

d. I, II and III

I. Twisting is a special form of misrepresentation
II. It refers to an agent inducing a policyholder to discontinue policy with another company without
disclosing the disadvantage of doing so
III. It includes misleading or incomplete comparison of policies

33

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

I. Short Term Securities
II. Property
III. Cash
IV. Equities

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

d. II, IV, I, III

II. Property
IV. Equities
I. Short Term Securities
IV. Equities

34

Which of the following best describes the 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
c. The policy benefits are directly linked to the investment performance of the underlying assets
d. The policy benefits are guaranteed

c. The policy benefits are directly linked to the investment performance of the underlying assets

35

Investing in bonds offer the following advantages with the exception of ______________

a. Offering protection to the principal and guaranteed steady stream of income
b. Being a place of temporary refuge when the investor foresees that the market outlook is
uncertain
c. Allowing the investor a chance for capital preservations
d. Enabling the investors an opportunity for capital appreciation

d. Enabling the investors an opportunity for capital appreciation

36

Which of the following statements about benefits in a variable life fund is FALSE?

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

b. The fund ensures definite high yield for the investor since it is managed by professionals who
are well-versed in the management of risks of investment portfolios

37

The differences between traditional participating life insurance and variable life insurance 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 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 and IV c. I, II and III
b. II, III and IV d. I, II and IV

b. II, III and IV

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 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

38

Advantages of investing in preferred shares are:

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

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

a. I, II and III

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

39

In a regular premium, variable whole life insurance plan:

I. Premium top-ups and holidays, subject to the life company’s administrative rules are usually
allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose
III. Withdrawals after the payment of a few years premium are usually allowed
IV. A single premium contribution is made to the policy which uses the premium to purchase units
in variable life fund and to provide certain level of life cover

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

d. I, II and III

I. Premium top-ups and holidays, subject to the life company’s administrative rules are usually
allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose
III. Withdrawals after the payment of a few years premium are usually allowed

40

There are two particular risk categories in relation to investment. They include __________

I. The risk of not losing some or all of a person’s initial investment
II. The risk of rate of return on the investment not matching up to the individual’s expectation
III. The risk of rate of return on the investment matching up to the individual’s expectation
IV. The risk of losing some or all of a person’s initial investment

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

d. II and IV

II. The risk of rate of return on the investment not matching up to the individual’s expectation
IV. The risk of losing some or all of a person’s initial investment

41

When investing in variable life funds, what are the benefits available?

I. The variable life funds offer policyholders an access to pooled or diversified portfolios
II. The variable life policyholder can vary his premium payments, take premium holidays, add single
premium top-ups and change the level of sum assured easily
III. The variable life policyholder can have access to a pool of qualified and trained professional
fund managers

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

c. I, II and III

I. The variable life funds offer policyholders an access to pooled or diversified portfolios
II. The variable life policyholder can vary his premium payments, take premium holidays, add single
premium top-ups and change the level of sum assured easily
III. The variable life policyholder can have access to a pool of qualified and trained professional
fund managers

42

In variable life insurance policies ______________

I. There is no guaranteed minimum sum assured for the purposed of declaring dividends
II. There is no guaranteed minimum sum assured as a level of life insurance protection
III. Each of the policy owner’s premium will be used to purchase units, the number of which is
dependent on the selling price for each unit
IV. Purchase of units can only be made from the variable life fund itself, which will then create new
units and add the investment monies to the value of the fund

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

c. III and IV

III. Each of the policy owner’s premium will be used to purchase units, the number of which is
dependent on the selling price for each unit
IV. Purchase of units can only be made from the variable life fund itself, which will then create new
units and add the investment monies to the value of the fund

43

Why is it important that the customer has to understand the sales proposal completely?

a. Because the insurer does not guarantee any return
b. Because the impact of changes in investment condition on variable life policy borne solely by the
customer
c. Because the agent may give the wrong recommendations
d. Because the policyholders expects higher returns

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

44

A single premium variable life insurance policy must be issued with _____________

a. A minimum death benefit
b. A maximum withdrawal value
c. Without death benefit
d. Without withdrawal value

a. A minimum death benefit

45

Which of the following statements about surrender value under traditional participating life
insurance products is TRUE?

a. Cash value is paid when a 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 number of units
c. 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

c. 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

46

Under a variable life insurance policy, the protection costs __________________

I. Are met by a flat initial charges for regular premium loans
II. 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 coverage

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

d. II, III and IV

II. 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 coverage

47

The objective of satisfying the needs of the customers can be achieved by an agent through

I. The giving of freebies to customers
II. Extensive investment training by the company
III. The use of sales plan, where sales goals, strategic and objectives are coordinated with market
analysis, segmentation and targeting
IV. The giving of monetary assistance and discount to the customers

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

b. II and III

II. Extensive investment training by the company
III. The use of sales plan, where sales goals, strategic and objectives are coordinated with market
analysis, segmentation and targeting

48

In investment objectives, which of the statements is FALSE?

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

a. People invest money in fixed deposits to produce high and guaranteed returns

49

Investment diversification involves _________________

a. Putting all the funds under management into one category of investment
b. Spreading the risks of investment by not putting the fund into several categories 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.

c. Reducing the risks of investment by putting one fund under management into several categories
of investment