FREE RIBO Insurance Laws and Regulations Test 2

Question 1

Variable life insurance policy owners may make a withdrawal in terms of________.

Accepted Answer

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

Answer

Number of units or fixed monetary amount through reduction of the life cover sum assured

Answer

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

Answer

Number of units through cancellation of units

Question 2

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

Accepted Answer

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

Answer

Policy holders may request for a partial withdrawal of the policy and the withdrawal amount will be met by casting the units at bid price.

Answer

Policy holders have the flexibility of switching from one fund to another provided it satisfies the company’s switching of criteria.

Answer

Policy holders have the flexibility of increasing or decreasing their premiums variable life policies.

Question 3

The investment returns under variable life insurance policy_______. Are not guaranteed. Are Assured Are linked to the performance of the investment fund management by the life company. Fluctuate according to the risk and fall of market price

Accepted Answer

I, III and IV

Answer

I, II and III

Answer

I, II and IV

Answer

II, III and IV

Question 4

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

Accepted Answer

II and III

Answer

I and II

Answer

I, II and III

Answer

I and III

Question 5

Which of the following statement is FALSE?

Accepted Answer

Misinterpretation is a specific form of twisting.

Answer

Rebating is to offer a prospect a special inducement to purchase a policy.

Answer

Twisting is a specific form of misinterpretation.

Answer

Switching is a facility allowing policy holders to switch to another variable life funds offered by company.

Question 6

Which of the following statements about variable life policies are TRUE? Offer price is used to determine the number of units to be cancelled to the account. The margin between the bid and offer price is used to cover the management cost of the policy. The policy value is calculated based on the bid price of the units allocated into the policy.

Accepted Answer

I and II

Answer

I, II and III

Answer

I and III

Answer

II and III

Question 7

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

Accepted Answer

Fixed Income securities

Answer

Equity

Answer

Warrants

Answer

Variable life policies

Question 8

What are the disadvantages of investing in common shares? Dividends are paid not more than fixed rates. Investors are exposed to market and specific risks. Shares can become worthless if company becomes insolvent.

Accepted Answer

II, III

Answer

I, II

Answer

I, III

Answer

I, II and III

Question 9

Mr. Juan Dela Cruz is currently earning P30, 000/month. He is 35 years old and has a reasonable amount of savings. He has a moderate level of risk tolerance. What kind of policy would you recommend for him to buy?

Accepted Answer

Variable Life Policies

Answer

Participating Endowment

Answer

Participating Whole Life

Answer

Annuities

Question 10

Under variable life insurance policies______. There is no guaranteed minimum sum assured for the purpose of declaring dividends. There is not guaranteed minimum sum assured as a level of life insurance protection. Each of the policy owner’s premiums will be used to purchase units the number of which is dependents on the selling price of each unit. 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

Accepted Answer

All of the above

Answer

I and IV

Answer

II and IV

Answer

III and IV

Answer

II and III