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Which statement accurately describes variable life policies?
Which statement accurately describes variable life policies?
Which of the following accurately characterizes rebating?
Which of the following accurately characterizes rebating?
Which statement is true regarding costs associated with variable life policies?
Which statement is true regarding costs associated with variable life policies?
What is the most suitable investment for securing principal and steady income?
What is the most suitable investment for securing principal and steady income?
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Which of the following accurately describes the risks associated with common shares?
Which of the following accurately describes the risks associated with common shares?
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When discussing endowment policies, which statement is accurate?
When discussing endowment policies, which statement is accurate?
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Which of the following terms involves misleading representations in insurance?
Which of the following terms involves misleading representations in insurance?
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What is a primary characteristic of switching in insurance policies?
What is a primary characteristic of switching in insurance policies?
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Which statement correctly differentiates variable life policies from endowment policies?
Which statement correctly differentiates variable life policies from endowment policies?
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Which of the following is NOT true about twisting?
Which of the following is NOT true about twisting?
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What type of policy is suitable for Mr. Juan dela Cruz, given his income and risk tolerance?
What type of policy is suitable for Mr. Juan dela Cruz, given his income and risk tolerance?
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Which benefit is associated with investing in variable life funds?
Which benefit is associated with investing in variable life funds?
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What characterizes variable life policies compared to endowment policies regarding benefits?
What characterizes variable life policies compared to endowment policies regarding benefits?
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Which of the following statements is true regarding the financial structures of variable life and endowment policies?
Which of the following statements is true regarding the financial structures of variable life and endowment policies?
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Which of the following correctly describes the risk-return profile of investment funds?
Which of the following correctly describes the risk-return profile of investment funds?
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What is a common misconception about the benefits of variable life funds?
What is a common misconception about the benefits of variable life funds?
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What is the primary risk associated with variable life policies for policyholders?
What is the primary risk associated with variable life policies for policyholders?
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What characterizes the policy value of endowment policies?
What characterizes the policy value of endowment policies?
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Which statement is NOT true regarding the disclosure to policyholders of variable life policies?
Which statement is NOT true regarding the disclosure to policyholders of variable life policies?
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Which of the following types of investments are included in a diversified investment portfolio?
Which of the following types of investments are included in a diversified investment portfolio?
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Which of the following is true about variable life policies?
Which of the following is true about variable life policies?
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Which funds are typically positioned at the bottom end of the risk-return graph?
Which funds are typically positioned at the bottom end of the risk-return graph?
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Which is a characteristic of stock options in a diversified investment portfolio?
Which is a characteristic of stock options in a diversified investment portfolio?
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Which statement best summarizes the risk-return relationship for bond funds?
Which statement best summarizes the risk-return relationship for bond funds?
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What do variable life policies allow policyholders to do with their premium payments?
What do variable life policies allow policyholders to do with their premium payments?
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What is the primary goal of investing in bonds?
What is the primary goal of investing in bonds?
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Which of the following investment instruments is considered the least risky?
Which of the following investment instruments is considered the least risky?
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In a risk-return graph, where are equities typically located?
In a risk-return graph, where are equities typically located?
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What determines the policy value of variable life policies at the time of valuation?
What determines the policy value of variable life policies at the time of valuation?
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Which of the following is NOT required to be disclosed to policyholders?
Which of the following is NOT required to be disclosed to policyholders?
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Which investment is riskier than cash deposits but less risky than an investment portfolio?
Which investment is riskier than cash deposits but less risky than an investment portfolio?
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What is the relationship between risk and return in investments?
What is the relationship between risk and return in investments?
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What is the Offer Price calculated with a Bid Price of Php 13.00 and a Spread of 4%?
What is the Offer Price calculated with a Bid Price of Php 13.00 and a Spread of 4%?
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How many units can be purchased with a Single premium of Php 450,000.00 at an Offer Price of Php 13.54?
How many units can be purchased with a Single premium of Php 450,000.00 at an Offer Price of Php 13.54?
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What is the total charges in units if the Policy Fee is Php 1,800.00 and the Mortality Charge is 3% of Php 450,000?
What is the total charges in units if the Policy Fee is Php 1,800.00 and the Mortality Charge is 3% of Php 450,000?
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What is the result of the calculation for Units Bought less Charges given 33,234.85 units bought and total charges of 1,176.92 units?
What is the result of the calculation for Units Bought less Charges given 33,234.85 units bought and total charges of 1,176.92 units?
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If the units are withdrawn, what is the value calculated if there are 32,057.93 units and the Bid Price is Php 13.00?
If the units are withdrawn, what is the value calculated if there are 32,057.93 units and the Bid Price is Php 13.00?
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What amount would a policyholder lose if they surrender the policy, given a single premium of Php 450,000.00 and a value of units if withdrawn of Php 416,753.09?
What amount would a policyholder lose if they surrender the policy, given a single premium of Php 450,000.00 and a value of units if withdrawn of Php 416,753.09?
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Which of the following correctly describes a characteristic of variable life products?
Which of the following correctly describes a characteristic of variable life products?
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How is the mortality charge calculated based on a percentage of the single premium?
How is the mortality charge calculated based on a percentage of the single premium?
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Study Notes
Variable Life Policies
- Variable life policies allow premium payments to be adjusted.
- Variable life policies can take different forms, including whole life and endowment.
- Variable life policies allow additional contributions to increase investment units.
- Variable life policies need a separate account from the general account.
- Variable life policies' value is determined by the bid price at the time of valuation.
- The policy value is calculated based on the bid price of units allocated into the policy.
- The margin between the bid and offer price covers management costs for the policy.
- Offer price is used to determine the number of units to be credited to the account.
- Variable life policyholders can adjust their premium payments within limits based on their needs and investment goals.
- The policy value of variable life policies directly reflects the performance of the fund of the life company.
- Premium payments on variable life policies are not fixed.
- Variable life policies contain separate accounts with various instruments and investment funds, and returns vary with the underlying value of investments.
- Variable life policies benefit from pooled or diversified portfolios, ease of premium payments, and access to qualified fund professionals.
- Variable life policies offer policyholders flexibility in premium payments with premium holidays, single premium top-ups, and adjustments to the sum assured.
Endowment Policies
- Endowment policies have premiums and benefits described at inception.
- Endowment policy values are calculated as the cash value plus accumulated dividends, less any outstanding loans at the time of surrender.
Rebating
- Rebating refers to offering a special inducement to purchase a policy.
Twisting
- Twisting is a specific form of misrepresentation.
- Twisting involves an agent encouraging a policyholder to discontinue a policy with another company without disclosing the disadvantages of doing so.
- Twisting includes misleading or incomplete comparisons of policies.
Switching
- Switching allows policyholders to switch to other variable life funds offered by the company.
Risk Return Graph
- Cash funds are the least risky.
- Equity funds are the riskiest.
- Stock options are riskier than cash and deposits but less risky than an investment portfolio.
- A well-diversified investment portfolio is riskier than stock options but less risky than derivatives.
- Derivatives are the most risky, with their value dependent on underlying assets, groups of assets, or a benchmark.
- Higher returns typically come with higher risks.
Investing in Common Shares
- Dividends on common shares are not paid at fixed rates.
- Investors are exposed to market and specific risks associated with common shares.
- Common shares can become worthless if the company becomes insolvent.
Investment Instrument Analysis
- Variable life policies are not the most suitable instrument for investors seeking principal protection and steady income.
- Fixed income securities are the most suitable for investors seeking principal protection and steady income.
- Equities, warrants, and variable life policies are associated with higher risks and potential for capital appreciation.
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Description
Explore the key features of variable life policies that offer flexible premium payments and investment options. Understand how these policies are structured, their valuation methods, and how premium adjustments can be made to meet individual needs. This quiz will test your knowledge on the dynamics of variable life insurance.