The benefits of investing in variable life funds include having access to pooled or diversified portfolios of investment, being able to easily change the level of premium payments due to clear product design, and gaining access to variable life funds managed by professional investment managers with proven track records.
The policy value of endowment policies is the cash value plus any accumulated dividends less any outstanding loans due at the time of surrender. The life company needs to maintain a separate account for variable life policies distinct from the general account.
Fixed income securities are the most suitable investment instrument for an investor who wants to protect their principal and receive a steady stream of income. These securities include bonds, certificates of deposit, and treasury bills, which offer a fixed rate of return over a specified period of time. Unlike equity or warrants, which are more volatile and can result in a loss of principal, fixed income securities provide a more stable and predictable income stream. Variable life policies may offer some protection of principal but do not guarantee a steady income, making them less suitable for this particular investor.
Variable life insurance policyholders can withdraw funds by either redeeming a specific number of units or a fixed monetary amount through the cancellation of units. This flexible option allows for adjustments in both the number of units and the withdrawal amount, providing policyholders with greater control over their investment.
The correct answer is I, III and IV. This is because variable life insurance policies do not guarantee investment returns, as stated in option I. The returns are also linked to the performance of the investment fund management by the life company, as mentioned in option III. Additionally, the returns fluctuate according to the risk and fall of market price, which is stated in option IV.
The correct answer is II, III. The first statement is not a disadvantage of investing in common shares, as it is common for dividends to not have fixed rates. However, the second statement is a disadvantage, as investing in common shares exposes investors to market and specific risks. The third statement is also a disadvantage, as shares can indeed become worthless if the company becomes insolvent. Therefore, the correct answer is II, III.
Under variable life insurance policies:
There is no guaranteed minimum sum assured for the purpose of declaring dividends. This statement is true. Variable life insurance policies do not typically have guaranteed minimum sums assured for dividend purposes.
Variable life policies use offer price to determine the number of units to be cancelled to the account and the margin between the bid and offer price is used to cover the management cost of the policy. The policy value is not calculated based on the bid price of the units allocated into the policy.
The correct answer is "Misinterpretation is a specific form of twisting." This statement is false because misinterpretation is not a specific form of twisting. Twisting refers to the act of persuading a policyholder to surrender an existing insurance policy in order to purchase a new one, while misinterpretation refers to providing false or misleading information about an insurance policy. These are two separate concepts and are not interchangeable.
Variable life policies do not allow policy holders to take loans against the entire withdrawal value of their policies. They can only take loans up to a certain percentage of the cash value of the policy.
Based on the information provided, Mr. Juan Dela Cruz is currently earning a moderate income and has a reasonable amount of savings. Additionally, he has a moderate level of risk tolerance. Variable Life Policies would be the recommended policy for him to buy. Variable life insurance offers both a death benefit and an investment component. It allows policyholders to invest their premiums in a variety of investment options, such as stocks and bonds, providing potential for higher returns. This would be suitable for someone with a moderate risk tolerance and the desire for potential growth on their investments.
