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Insurance Exam: Variable Life Policies

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Questions and Answers

Variable life insurance policy owners may make withdrawals in terms of:

Fixed monetary amount only through reduction of the life cover sum assured.

Number of units fixed monthly through reduction of the life cover sum assured.

Number of units through cancellation of units only.

Number of units or fixed monetary amount through cancellation of units. (correct)

Which of the following statements about flexibility features of variable life policies is FALSE?

Policyholders have the flexibility of switching from one fund to another provided it satisfies the company's switching criteria.

Policyholders may request for a partial withdrawal of the policy.

Policyholders have the flexibility of increasing or decreasing their premiums for regular premium variable life policies.

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

The investment returns under variable life insurance policy:

Are not guaranteed. (correct)

Fluctuate according to a fixed rate.

Are guaranteed.

Are not linked to the performance of the investment fund managed by the life insurance company.

Which of the following statements is TRUE?

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. Signup and view all the answers

Which of the following statements is FALSE?

Misrepresentation is a specific form of twisting. Signup and view all the answers

Which factor does NOT influence the investment returns under a variable life insurance policy?

Fixed interest rates set by the insurer. Signup and view all the answers

Study Notes

Variable Life Insurance Policy Features

Policy owners can make withdrawals in terms of either a fixed monetary amount or by cancelling units.
Policyholders can take loans against their variable life policies, but not up to the entire withdrawal value.

Flexibility Features of Variable Life Policies

Policyholders cannot take loans against their variable life policies up to the entire withdrawal value.

Investment Returns Under Variable Life Insurance Policy

Investment returns are not guaranteed.
Returns are linked to the performance of the investment fund managed by the life insurance company.
Returns fluctuate according to the rise and fall of market prices.

Policy Value and Accounting

The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at the time of surrender.
Life insurance companies need to maintain a separate account for variable life policies, distinct from the general account.