Variable Licensing Mock Exam (Set D) - Financial Wealth Planners

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In a variable life insurance policy, how can owners make withdrawals?

Number of units through cancellation of units
Number of units or fixed monetary amount through cancellation of units (correct)
Number of units of fixed monetary through reduction of the life cover sum assured
Fixed monetary amount only through reduction of the life cover sum assured

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

Policyholders may request for a partial withdrawal of the policy and the withdrawal amount will be met by cashing the units at the bid price.
Policyholders have the flexibility of switching from one fund to another provided it satisfies the company’s switching criteria
Policyholders can take loans against their variable life up to the entire withdrawal value of their policies (correct)
Policyholders have the flexibility of increasing or decreasing their premiums for regular premium variable life policies

What is true about the investment returns under variable life insurance policy?

Fluctuate according to the rise and fall of market prices
Are not guaranteed
Are assured
Are linked to the performance of the investment fund managed by the life insurance company (correct)

Which of the following is not a flexibility feature of variable life policies?

Policyholders cannot change the beneficiary of the policy (D) Signup and view all the answers

What is required for policyholders to switch from one fund to another in variable life policies?

Fulfilling company’s switching criteria (B) Signup and view all the answers

What happens when policyholders make withdrawals in terms of fixed monetary amount through reduction of the life cover sum assured?

The cash value of the policy decreases (C) Signup and view all the answers

Which of the following statements about the policy value of variable life policies is TRUE?

The policy value of variable life policies is determined by the offer price at the time of valuation (C) Signup and view all the answers

Which of the following statements is FALSE?

Misrepresentation is a specific form of twisting (D) Signup and view all the answers

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

Offer price is used to determine the number of units to be credited to the account (B) Signup and view all the answers

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

Fixed income securities (A) Signup and view all the answers

What are the disadvantages of investing in common shares?

Shares can become worthless if the company becomes insolvent (D) Signup and view all the answers

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

The premiums and benefits of endowment policies are described at the inception of the policy whereas variable life are flexible as they are account driven (D) Signup and view all the answers

Which of the following statements about twisting is FALSE?

Twisting is a facility allowing policyholders to switch to another variable life funds offered by the company (C) Signup and view all the answers

Variable Life Policy Withdrawals

Policyholders can withdraw funds from a variable life policy by either canceling units or taking a fixed monetary amount.

Variable Life Policy Flexibility: False Statement

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

Investment Returns in Variable Life Policies

Investment returns in variable life policies are directly tied to the performance of the investment fund managed by the insurance company.