IC EXAM

REVIEW
VARIABLE
 Objectives

At the end of this session, you should be able to:

 Review VUL insurance concepts.

Variable Life Insurance
Review
 A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Clients payment
 A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Charges to set up
the policy
A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE
 A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Cover for the cost of

insurance
A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Maintenance of the
regular premium
A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Additional premium
on top of regular
premium
A. HOW VUL WORKS: INVESTMENT LINKED INSURANCE

Not guaranteed
KEY FEATURES OF VUL

IC EXAM REVIEW
IC EXAM REVIEW
Which of the following statements about option to top-up under
variable life insurance products is FALSE?

a. To top-up a policy, the policy owner pays further single premium at the time of top-up.
b. Policy owner may buy additional units in the variable life fund and these units will be allocated to new
variable life insurance policies.
c. Further premiums at time of top-up will be used in full, after deducting charges for top-ups, to purchase
additional units of the variable life funds.
d. Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount

IC EXAM REVIEW
Which of the following statements about option to top-up under
variable life insurance products is FALSE?

a. To top-up a policy, the policy owner pays further single premium at the time of top-up.
b. Policy owner may buy additional units in the variable life fund and these units will be allocated to new
variable life insurance policies.
c. Further premiums at time of top-up will be used in full, after deducting charges for top-ups, to purchase
additional units of the variable life funds.
d. Policy owners are normally allowed to top-up their policies at any time, subject to a minimum amount

Answer: Key word not new variable life insurance, it must be existing.

IC EXAM REVIEW
Which of the following statements about the flexibility features
of variable life policies is FALSE?
a. Policyholders may request for a partial withdrawal of the policy and the withdrawal
amount will be met by cashing the units at bid price.
b. Policyholders can take loans against their variable life policies up to the entire
withdrawal value of their policies.
c. Policyholders have the flexibility of switching from one fund to another, provided it
satisfies the company’s switching criteria.
d. Policyholders have the flexibility of increasing or decreasing their premiums for regular
premiums variable life policies.

IC EXAM REVIEW
Which of the following statements about the flexibility features
of variable life policies is FALSE?
a. Policyholders may request for a partial withdrawal of the policy and the withdrawal
amount will be met by cashing the units at bid price.
b. Policyholders can take loans against their variable life policies up to the entire
withdrawal value of their policies.
c. Policyholders have the flexibility of switching from one fund to another, provided it
satisfies the company’s switching criteria.
d. Policyholders have the flexibility of increasing or decreasing their premiums for regular
premiums variable life policies.
Answer: Key word is loan. In VUL you can withdraw, but loans are available in TRAD.
IC EXAM REVIEW
 The following are characteristics of a variable life insurance
policy
I. Its withdrawal value and protection benefits are determined by the investment performance of the
underlying assets.
II. Its protection costs are generally met by implicit charges.
III. Its commissions and company expenses are met by a variety of explicit charges, notice of which
is given by life companies normally 6 months prior to any change in such charges.
IV. Its withdrawal value is normally the value of units allocated to the policyholder calculated at the
bid price
 
a. I, II and IV b. II, III and IV c. I, II and III d. I, III and IV

IC EXAM REVIEW
The following are characteristics of a variable life insurance
policy
I. Its withdrawal value and protection benefits are determined by the investment performance of the
underlying assets.
II. Its protection costs are generally met by implicit charges.
III. Its commissions and company expenses are met by a variety of explicit charges, notice of which
is given by life companies normally 6 months prior to any change in such charges.
IV. Its withdrawal value is normally the value of units allocated to the policyholder calculated at the
bid price
 
a. I, II and IV b. II, III and IV c. I, II and III d. I, III and IV

Answer: II is not included. Key word is implicit charges. Implicit is for TRAD, Explicit is for VUL.
IC EXAM REVIEW
An investor in variable life funds gets to enjoy these benefits:

I. Policy owners have access to pooled or diversified portfolios of investment.

II. Policy owners can easily change the level of the premium payments as the product design of
variable life insurance policies have clear structures which cater separately for investment and
insurance protection.
III. Policy owners can gain access to variable life funds managed by professional investment
managers with proven track records.
IV. Policy owners can buy a variable life insurance policy only with a high initial investment.
 
a. I, II, and IV b. I, III, and IV c. I, II, and III d. II, III, and IV
 

IC EXAM REVIEW
An investor in variable life funds gets to enjoy these benefits:

I. Policy owners have access to pooled or diversified portfolios of investment.

II. Policy owners can easily change the level of the premium payments as the product design of
variable life insurance policies have clear structures which cater separately for investment and
insurance protection.
III. Policy owners can gain access to variable life funds managed by professional investment
managers with proven track records.
IV. Policy owners can buy a variable life insurance policy only with a high initial investment.
 
a. I, II, and IV b. I, III, and IV c. I, II, and III d. II, III, and IV
 

Answer: IV is not included. It is not necessary to have high initial investment.

IC EXAM REVIEW
Which of the following statements is FALSE?
a. Variable life insurance policies offer investors plans with values that are indirectly linked to the
investment performance of the life company.
b. A life insurance company will carry out a valuation of its funds yearly and any surplus may be
allocated to participating policyholders as cash dividends.
c. Both Whole Life and Endowment policies can be used as an investment media with benefits that
become payable at a future date.
d. The investment element of variable life policies varies according to underlying assets of portfolio.

IC EXAM REVIEW
 Which of the following statements is FALSE?
a. Variable life insurance policies offer investors plans with values that are indirectly linked to the
investment performance of the life company.
b. A life insurance company will carry out a valuation of its funds yearly and any surplus may be
allocated to participating policyholders as cash dividends.
c. Both Whole Life and Endowment policies can be used as an investment media with benefits that
become payable at a future date.
d. The investment element of variable life policies varies according to underlying assets of portfolio.

Answer: Key words are indirectly linked. It should be directly linked to the investment performance.
IC EXAM REVIEW
Which of the following statements about variable life policies
is/are TRUE?

I. The cash withdrawal value is not guaranteed.

II. The volatility of the returns depends on the investment strategy of the fund.
III. The variable life policyholder has direct control over the investment decisions of the variable life
fund.
 
a. I, II, and III b. I and II c. I and III d. II and III

IC EXAM REVIEW
Which of the following statements about variable life policies
is/are TRUE?

I. The cash withdrawal value is not guaranteed.

II. The volatility of the returns depends on the investment strategy of the fund.
III. The variable life policyholder has direct control over the investment decisions of the variable life
fund.
 
a. I, II, and III b. I and II c. I and III d. II and III

Answer: III is not included. Policy holders has no direct control over the investment decisions. It is the fund
managers.
IC EXAM REVIEW
Which of the following statements about variable life policies are
TRUE?

I. Variable life policies generally have larger exposure to equity investment that with
participating and other traditional policies.
II. The protection costs are generally met by implicit charges, which vary with age and level
of cover.
III. Commissions and company expenses are met by a variety of explicit charges, some of
which are variable.
 
a. I, II, and III b. I and II c. II and III d. I and III

IC EXAM REVIEW
Which of the following statements about variable life policies are
TRUE?

I. Variable life policies generally have larger exposure to equity investment that with
participating and other traditional policies.
II. The protection costs are generally met by implicit charges, which vary with age and
level of cover.
III. Commissions and company expenses are met by a variety of explicit charges, some of
which are variable.
 
a. I, II, and III b. I and II c. II and III d. I and III

Answer: II is not included, key word implicit charges. Again in VUL it is Explicit.
IC EXAM REVIEW
Which of the following are main characteristics of variable life
policies?

I. The policies can be used for investment, as a source of regular savings and protection.
II. The withdrawal values and protection benefits are determined by the investment performance of
the underlying assets.
III. The net cash values of the policies are the gross cash values shown in the policy that includes
dividends up to the date of surrender, less any indebtedness including interest.
 
a. II b. I c. I, II, and III d. I and II

IC EXAM REVIEW
Which of the following are main characteristics of variable life
policies?

I. The policies can be used for investment, as a source of regular savings and protection.
II. The withdrawal values and protection benefits are determined by the investment performance of
the underlying assets.
III. The net cash values of the policies are the gross cash values shown in the policy that includes
dividends up to the date of surrender, less any indebtedness including interest.
 
a. II b. I c. I, II, and III d. I and II

Answer: III is not included. We don’t have dividends for VUL, it is for TRAD.
IC EXAM REVIEW
The investment returns under variable life insurance _____.

I. Are not guaranteed

II. Are assured
III. Are linked to the performance of the investment fund managed by the life company
IV. Fluctuate according to the rise and fall of the market prices
 
a. I, II, and III b. I, II, and IV c. I, III, and IV d. II, III, and IV

IC EXAM REVIEW
The investment returns under variable life insurance _____.

I. Are not guaranteed

II. Are assured
III. Are linked to the performance of the investment fund managed by the life company
IV. Fluctuate according to the rise and fall of the market prices
 
a. I, II, and III b. I, II, and IV c. I, III, and IV d. II, III, and IV

Answer: II is not included. Key word is assured. VUL in general is not assured or guaranteed.
IC EXAM REVIEW
Which of the following statements about the differences between variable life
policies and endowment policies are FALSE?

I. The policy values of variable life and endowment policies directly reflect the performance of the fund of
the life company.
II. The premiums and benefits of the endowment policies are described at inception of the policy whereas
variable life policies are flexible as they are account-driven.
III. The benefits and risks variable life and endowment policies directly accrue to the policyholders.
 
a. I and II b. I, II, and III c. I and III d. II and III

IC EXAM REVIEW
Which of the following statements about the differences between variable life
policies and endowment policies are FALSE?

I. The policy values of variable life and endowment policies directly reflect the performance of the fund of
the life company.
II. The premiums and benefits of the endowment policies are described at inception of the policy whereas
variable life policies are flexible as they are account-driven.
III. The benefits and risks variable life and endowment policies directly accrue to the policyholders.
 
a. I and II b. I, II, and III c. I and III d. II and III

Answer: II is not included. Key word directly.

IC EXAM REVIEW
Which of the following best describes the benefits of variable life
policies?

a. The policy benefits are payable only on death or disability.

b. The policy benefits will depend on the long-term performance of the life
company.
c. The policy benefits are directly linked to the investment performance of the
underlying assets.
d. The policy benefits are guaranteed.

IC EXAM REVIEW
Which of the following best describes the benefits of variable life
policies?

a. The policy benefits are payable only on death or disability.

b. The policy benefits will depend on the long-term performance of the life
company.
c. The policy benefits are directly linked to the investment performance of the
underlying assets.
d. The policy benefits are guaranteed.

Answer: Key word directly linked. Because the benefit of VUL is directly linked to the investment
performance of the underlying assets.
IC EXAM REVIEW
The differences between traditional participating life insurance and variable
life insurance include:

I. Variable life insurance policies are less likely to offer more choices in terms of the type of
investment funds.
II. The investment elements of variable life insurance policies is made known to the policy owner at
the outset and is invested in a separately identifiable fund which is made up units of investment.
III. Variable life insurance policies offer the potential for higher returns.
IV. Traditional participating policies aim to produce a steady return by smoothing out market
fluctuation.
 
a. I, III, and IV b. II, III, and IV c. I, II, and III d. I, II, and IV

IC EXAM REVIEW
The differences between traditional participating life insurance and variable life
insurance include:
I. Variable life insurance policies are less likely to offer more choices in terms of the type of
investment funds.
II. The investment elements of variable life insurance policies is made known to the policy owner at
the outset and is invested in a separately identifiable fund which is made up units of investment.
III. Variable life insurance policies offer the potential for higher returns.
IV. Traditional participating policies aim to produce a steady return by smoothing out market
fluctuation.
 
a. I, III, and IV b. II, III, and IV c. I, II, and III d. I, II, and IV

Answer: I is not included. It’s not less likely to offer because there’s a lot of choices when it comes to
investment funds.
IC EXAM REVIEW
When investing in variable life funds, what are the benefits
available?

I. The variable life funds offer policyholders an access to pooled or diversified portfolios.
II. The variable life policyholder can vary his premium payments, take premium holidays, add single
premium top-ups, and change the level of sum assured easily.
III. The variable life policyholder can have access to a pool of qualified and trained professional
fund managers
a. I and II b. I and III c. I, II, and III d. II and III

IC EXAM REVIEW
When investing in variable life funds, what are the benefits
available?

I. The variable life funds offer policyholders an access to pooled or diversified portfolios.
II. The variable life policyholder can vary his premium payments, take premium holidays, add single
premium top-ups, and change the level of sum assured easily.
III. The variable life policyholder can have access to a pool of qualified and trained professional
fund managers

a. I and II b. I and III c. I, II, and III d. II and III

Answer: All are benefits of variable life funds.

IC EXAM REVIEW
Why is it important that the customer has to understand the sales
proposal in full?

a. Because the insurer does not guarantee any return

b. Because the impact of changes in investment condition on variable life policy
borne solely by the customer
c. Because the agent may give the wrong recommendations
d. Because the policyholders expects higher returns

IC EXAM REVIEW
Why is it important that the customer has to understand the sales
proposal in full?

a. Because the insurer does not guarantee any return

b. Because the impact of changes in investment condition on variable life policy
borne solely by the customer
c. Because the agent may give the wrong recommendations
d. Because the policyholders expects higher returns

Answer: Because there is a risk involve, the customer or the client is involve on that risk.
IC EXAM REVIEW
IC EXAM REVIEW
Which of the following statements about single premium variable life policy are
TRUE?

I. There is no fixed term in a single premium variable life policy, and therefore, they are technically whole
life insurance.
II. Top-up single premium injections are allowed in these plans.
III. Policyholders have the flexibility of varying the life coverage.
 
a. I, II, and III b. II and III c. I and II d. I and III
 

IC EXAM REVIEW
Which of the following statements about single premium variable life policy are
TRUE?

I. There is no fixed term in a single premium variable life policy, and therefore, they are technically whole
life insurance.
II. Top-up single premium injections are allowed in these plans.
III. Policyholders have the flexibility of varying the life coverage.
 
a. I, II, and III b. II and III c. I and II d. I and III
 

Answer: varying life coverage

IC EXAM REVIEW
Under regular premium, variable whole life insurance plan:
 

Premium top-ups and holidays, subject to the life company’s administrative rules are usually allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose.
III. Withdrawals after the payment of a few years premium are usually allowed.
IV. A single premium contribution is made to the policy which uses the premium to purchase units in
variable life fund and to provide certain level of life cover.
 
a. II, III, and IV b. I, III, and IV c. I, II, and IV d. I, II, and III

IC EXAM REVIEW
In regular premium, variable whole life insurance plan is which of the
following? Choose all that apply.
 
I. Premium top-ups and holidays, subject to the life company’s administrative rules are usually allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose.
III. Withdrawals after the payment of a few years premium are usually allowed.
IV. A single premium contribution is made to the policy which uses the premium to purchase units in
variable life fund and to provide certain level of life cover.
 
a. II, III, and IV b. I, III, and IV c. I, II, and IV d. I, II, and III

Answer: key word is single premium. We are talking about regular premium not single premium.
IC EXAM REVIEW
A single premium variable life insurance policy ____.
 

a. Has no withdrawal value

b. Must be issued with a maximum withdrawal value
c. Has no death benefit
d. Must be issued with a minimum death benefit

IC EXAM REVIEW
A single premium variable life insurance policy ____.
 

a. Has no withdrawal value

b. Must be issued with a maximum withdrawal value
c. Has no death benefit
d. Must be issued with a minimum death benefit

Answer: There is a minimum death benefit for both single and regular premium as mandated of insurance
commission.
IC EXAM REVIEW
IC EXAM REVIEW
Which of the following is/are TRUE about the flexibility benefit of investing in
variable life funds?

I. Policy owners can easily change the level of sum assured and switch their investment between funds. II.
Policy owners can easily take premium holidays and add single premium to top-ups.
III. Variable life insurance products have a single product design with a clear structure which cater
separately for investment and insurance protection.
IV. Policy owners can easily change the level of their premium payment.
 
a. All of the above b. I, II, and III c. I, II, and IV d. I, III, and IV

IC EXAM REVIEW
Which of the following is/are TRUE about the flexibility benefit of investing in
variable life funds?

I. Policy owners can easily change the level of sum assured and switch their investment between funds.
II. Policy owners can easily take premium holidays and add single premium to top-ups.
III. Variable life insurance products have a single product design with a clear structure which cater
separately for investment and insurance protection.
IV. Policy owners can easily change the level of their premium payment.
 
a. All of the above b. I, II, and III c. I, II, and IV d. I, III, and IV

Answer: key word can easily

IC EXAM REVIEW
IC EXAM REVIEW
IC EXAM REVIEW
IC EXAM REVIEW
Variable life insurance policy owners may withdraw in terms of ____.

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

b. Number of units or fixed monetary amount though reduction of the life cover sum
assured.
c. Fixed monetary amount only through reduction of the life cover sum assured.
d. Number of units through cancellation of units.
 

IC EXAM REVIEW
Variable life insurance policy owners may withdraw in terms of ____.

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

b. Number of units or fixed monetary amount though reduction of the life cover sum
assured.
c. Fixed monetary amount only through reduction of the life cover sum assured.
d. Number of units through cancellation of units.
 

Answer: You have the option either number of units or fixed monetary amount through cancellation of units.

IC EXAM REVIEW
The policy fee payable by a variable life insurance policy owner is to cover
____.

a. The handling charges by professional investment managers

b. The prices for each unit bought under the variable life insurance policy
c. The mortality costs of the variable life insurance policy
d. The administrative expenses of setting up the variable life insurance policy
 

IC EXAM REVIEW
The policy fee payable by a variable life insurance policy owner is to cover
____.

a. The handling charges by professional investment managers

b. The prices for each unit bought under the variable life insurance policy
c. The mortality costs of the variable life insurance policy
d. The administrative expenses of setting up the variable life insurance policy
 

Key word: expenses of setting up the VUL policy.

IC EXAM REVIEW
Under a variable life insurance policy, the protection costs ____.

I. Are met by a flat initial charges for regular premium loans

II. Are generally covered by cancellation of units in the fund
III. Are generally met by explicit charges stipulated openly in the policy terms
IV. Vary with age of policy owner and level of coverage -
 
a. I, II, and III b. I, II, and IV c. I, III, and IV d. II, III, and IV

IC EXAM REVIEW
Under a variable life insurance policy, the protection costs ____.

I. Are met by a flat initial charges for regular premium loans

II. Are generally covered by cancellation of units in the fund
III. Are generally met by explicit charges stipulated openly in the policy terms
IV. Vary with age of policy owner and level of coverage -
 
a. I, II, and III b. I, II, and IV c. I, III, and IV d. II, III, and IV

Answer: Key word loan. Again loans are for Trad.

IC EXAM REVIEW
IC EXAM REVIEW
The objective of satisfying customers’ need and business profitability can be
achieved by an agent through ______.

I. The giving of freebies to customers

II. Extensive investment training by the company
III. The use of sales plan, where sales goals, strategic and objectives are coordinated with market analysis,
segmentation and targeting
IV. The giving of monetary assistance and discount to the customers
 
a. I and III b. II and III c. I, II, and IV d. II, III, and IV
 

IC EXAM REVIEW
The objective of satisfying customers’ need and business profitability can be
achieved by an agent through ______.

I. The giving of freebies to customers

II. Extensive investment training by the company
III. The use of sales plan, where sales goals, strategic and objectives are coordinated with market analysis,
segmentation and targeting
IV. The giving of monetary assistance and discount to the customers
 
a. I and III b. II and III c. I, II, and IV d. II, III, and IV
 

Answer: II as an agent or advisor, you need trainings. III, you have to build the foundation.

IC EXAM REVIEW
Which of the following statements about investment objectives is FALSE?

a. People invest money in fixed deposits to produce high and guaranteed returns.
b. People invest money to enhance a comfortable standard living.
c. People invest money to provide funds for higher education for their children.
d. Investment in commodities has no regular income

IC EXAM REVIEW
Which of the following statements about investment objectives is FALSE?

a. People invest money in fixed deposits to produce high and guaranteed returns.
b. People invest money to enhance a comfortable standard living.
c. People invest money to provide funds for higher education for their children.
d. Investment in commodities has no regular income

Answer: when we say investment it is not guaranteed.

IC EXAM REVIEW
IC EXAM REVIEW
IC EXAM REVIEW
IC EXAM REVIEW
What are the disadvantages when investing in common shares?

I. Dividends are paid not more than fixed rates.

II. Investors are exposed to market and specific risks.
III. Shares can become worthless if company becomes insolvent.
 
a. I, and II b. I, and III c. II, and III d. I, III, and III
 

IC EXAM REVIEW
What are the disadvantages when investing in common shares?

I. Dividends are paid not more than fixed rates.

II. Investors are exposed to market and specific risks.
III. Shares can become worthless if company becomes insolvent.
 
a. I, and II b. I, and III c. II, and III d. I, III, and III
 

Answer: Common shares do not paid out dividends. II and III kasi may risk involved

IC EXAM REVIEW
What is the most suitable investment instrument for someone who is
interested in protecting his principal, while receiving a steady stream
of income?

a. Equities b. Warrants c. Variable Life Policies d. Fixed Income Securities

IC EXAM REVIEW
What is the most suitable investment instrument for someone who is
interested in protecting his principal, while receiving a steady stream
of income?

a. Equities b. Warrants c. Variable Life Policies d. Fixed Income Securities

Answer: From the word itself secure, the answer is letter D.

IC EXAM REVIEW
Which of the following statements about risks of investing in
variable life funds is TRUE?
a. Policy owners who are risk averse should buy variable life insurance policies with high equity
investment.
b. Investment in variable life funds, which are fully invested in units of equity bonds, is not suitable for
policy owners who can tolerate the risks of short-term fluctuations in their cash value.
c. Policy owners who invest in variable life funds with high equity investment face greater risk but offer
the potential for higher returns over the long term than traditional life insurance policies.
d. Policy owners who are risk averse should not purchase life insurance policies with high protection
and guaranteed cash and maturity values.

IC EXAM REVIEW
Which of the following statements about risks of investing in
variable life funds is TRUE?
a. Policy owners who are risk averse should buy variable life insurance policies with high equity
investment.
b. Investment in variable life funds, which are fully invested in units of equity bonds, is not suitable for
policy owners who can tolerate the risks of short-term fluctuations in their cash value.
c. Policy owners who invest in variable life funds with high equity investment face greater risk but
offer the potential for higher returns over the long term than traditional life insurance policies.
d. Policy owners who are risk averse should not purchase life insurance policies with high protection
and guaranteed cash and maturity values.

Key word: face greater risk.

IC EXAM REVIEW
 Investing in bonds offers the following advantages EXCEPT :

a. It allows the investor a chance for capital preservation

b. It is a place of temporary refuge when the investor foresees that the market outlook is uncertain
c. It enables the investor an opportunity for capital appreciation
d. It offers protection to the principal and a guaranteed steady stream of income

IC EXAM REVIEW
 Investing in bonds offers the following advantages EXCEPT :

a. It allows the investor a chance for capital preservation.

b. It is a place of temporary refuge when the investor foresees that the market outlook is uncertain.
c. It enables the investor an opportunity for capital appreciation.
d. It offers protection to the principal and a guaranteed steady stream of income.

Answer: it should be capital preservation not capital appreciation.

IC EXAM REVIEW
Which of the following are advantages of investing in preferred shares?

I. It gives shareholders the right to a fixed dividend.

II. Has the priority over company assets during dissolution.
III. They enjoy benefit of capital appreciation.
 
a. I, II, and III b. I and II c. I and III d. II and II

IC EXAM REVIEW
Which of the following are advantages of investing in preferred shares?

I. It gives shareholders the right to a fixed dividend.

II. Has the priority over company assets during dissolution.
III. They enjoy benefit of capital appreciation.
 
a. I, II, and III b. I and II c. I and III d. II and II

Answer: All are advantages of investing preferred shares.

IC EXAM REVIEW
IC EXAM REVIEW
A unit trust is ____.

a. Established by a trust deed, which enables a trustee to hold the pool of money and assets in trust on
behalf of the investor.
b. A close-end fund, and does not have to dispose of its assets if a large number of investors sell their
shares.
c. One whereby an investor buys units in the trust itself and not shares in the company.
d. An organization registered under the Securities and Exchange Commission (SEC) which usually invests
in a wide range of equities and other investments.

IC EXAM REVIEW
A unit trust is ____.

a. Established by a trust deed, which enables a trustee to hold the pool of money and assets in trust on
behalf of the investor.
b. A close-end fund, and does not have to dispose of its assets if a large number of investors sell their
shares.
c. One whereby an investor buys units in the trust itself and not shares in the company.
d. An organization registered under the Securities and Exchange Commission (SEC) which usually invests
in a wide range of equities and other investments.

Answer: Commonly known as UTIF Unit Trust Investment Fund. From the itself to trust. Example of this is
bank.
IC EXAM REVIEW
The facility to do switching under a variable life insurance policy is a
very useful ____.

a. For the purpose of profit planning by the life policies

b. For the purpose of assets planning by the trustee
c. For the purpose of sales planning by the fund managers
d. For the purpose of financial planning by the policy owners
 

IC EXAM REVIEW
The facility to do switching under a variable life insurance policy is a
very useful ____.

a. For the purpose of profit planning by the life policies

b. For the purpose of assets planning by the trustee
c. For the purpose of sales planning by the fund managers
d. For the purpose of financial planning by the policy owners
 

Answer: it is about financial planning after all. It is making sure that our clients is still on tract on their goals.

IC EXAM REVIEW
Which of the following statements about an investor diversifying his
portfolio is FALSE?

a. A diversified portfolio provides greater security to an investor having to sacrifice the return for the
portfolio.
b. A diversified portfolio can completely eliminate the risk of investing the stocks in a portfolio.
c. A diversified portfolio can involve purchasing different types of stocks and investing in stocks of
different countries
 

IC EXAM REVIEW
Which of the following statements about an investor diversifying his
portfolio is FALSE?

a. A diversified portfolio provides greater security to an investor having to sacrifice the return for the
portfolio.
b. A diversified portfolio can completely eliminate the risk of investing the stocks in a portfolio.
c. A diversified portfolio can involve purchasing different types of stocks and investing in stocks of
different countries
 

Answer: It is not necessarily eliminating completely the risk but potentially yes.

IC EXAM REVIEW
Which of the following statements is TRUE about cash?

a. It has high yield potential.

b. Amount invested in cash depends on the size of the cash flow requirement.
c. Investment in cash increases when there is a bull run in the stock market.
d. Investment in cash decreases when interest rates rise.

IC EXAM REVIEW
Which of the following statements is TRUE about cash?

a. It has high yield potential.

b. Amount invested in cash depends on the size of the cash flow requirement.
c. Investment in cash increases when there is a bull run in the stock market.
d. Investment in cash decreases when interest rates rise.

Answer: Letter B is the correct answer.

IC EXAM REVIEW
In risk-return profile of bond funds, cash funds, managed funds, balanced funds, and
equity funds, a risk - return graph will show that ____.

I. Higher return normally comes with lower risk.

II. Higher return normally comes with higher risk.
III. At the top end of the graph are the equity funds.
IV. The relatively risk-less cash funds sit at the bottom end of the graph.
 
a. I, II, and III b. II, III, and IV c. I, II, and IV d. I, III, and IV

IC EXAM REVIEW
In risk-return profile of bond funds, cash funds, managed funds, balanced funds, and
equity funds, a risk - return graph will show that ____.

I. Higher return normally comes with lower risk.

II. Higher return normally comes with higher risk.
III. At the top end of the graph are the equity funds.
IV. The relatively risk-less cash funds sit at the bottom end of the graph.
 
a. I, II, and III b. II, III, and IV c. I, II, and IV d. I, III, and IV

Answer: I is not included. The higher the return the higher the risk.

IC EXAM REVIEW
Variable life funds can be invested in any financial instruments including bond
funds, property funds, specialized funds, and equity funds. Equity funds ____.

a. Invest in shares of stocks and the magnitude of the change in unit prices will only depend on the quantity
of the equities held
b. Invest in shares of stocks and during market recession, such assets are usually the last to depreciate
c. Invest in share of stocks which are inherently of lower risk in nature and the prices of stocks are stable
d. Invest in share of stocks and investor who buys such assets usually aims for capital appreciation

IC EXAM REVIEW
Variable life funds can be invested in any financial instruments including bond
funds, property funds, specialized funds, and equity funds. Equity funds ____.

a. Invest in shares of stocks and the magnitude of the change in unit prices will only depend on the quantity
of the equities held
b. Invest in shares of stocks and during market recession, such assets are usually the last to depreciate
c. Invest in share of stocks which are inherently of lower risk in nature and the prices of stocks are stable
d. Invest in share of stocks and investor who buys such assets usually aims for capital appreciation

Answer: When we say equity fund, capital appreciation and share of stocks.

IC EXAM REVIEW
Rank the following in terms of liquidity, from the least liquid to the most
liquid:
I. Short Term Securities
II. Property
III. Cash
IV. Equities
 
a. IV, I, III, I b. III, I, IV, II c. II, I, IV, III d. II, IV, I, III

IC EXAM REVIEW
Rank the following in terms of liquidity, from the least liquid to the most
liquid:
I. Short Term Securities
II. Property
III. Cash
IV. Equities
 
a. IV, I, III, I b. III, I, IV, II c. II, I, IV, III d. II, IV, I, III

Answer: least property, you cannot convert it easily into cash, next is equity since it’s long term, short term
securities – asset less than 1 year to mature, and cash is the most liquid. Acronym PESC.
IC EXAM REVIEW
Which of the following statements about diversification in portfolio
management is FALSE?
a. Diversification helps to spread the portfolio risk by investing in different categories of investment in a
portfolio.
b. Diversification can completely eliminate risk of investing in stocks in a portfolio.
c. A diversified portfolio provides greater security to an investor without sacrificing the returns of the
portfolio.
d. Diversification can involve purchasing different types of stocks and investing in stocks of different
countries

IC EXAM REVIEW
Which of the following statements about diversification in portfolio
management is FALSE?
a. Diversification helps to spread the portfolio risk by investing in different categories of investment in a
portfolio.
b. Diversification can completely eliminate risk of investing in stocks in a portfolio.
c. A diversified portfolio provides greater security to an investor without sacrificing the returns of the
portfolio.
d. Diversification can involve purchasing different types of stocks and investing in stocks of different
countries

Answer: Diversification does not eliminate completely the risk. There is still a risk, it just eliminates.

IC EXAM REVIEW
Risk can be classified into two particular categories in relation to
investment. They include__________
I. The risk of not losing some or all of a person’s initial investment
II. The risk of rate of return on the investment not matching up to the individual’s expectation
III. The risk of rate of return on the investment matching up to the individual’s expectation
IV. The risk of losing some or all of a person’s initial investment

a. I and III b. I and II c. III and IV d. II and IV

 

IC EXAM REVIEW
Risk can be classified into two particular categories in relation to
investment. They include__________
I. The risk of not losing some or all of a person’s initial investment
II. The risk of rate of return on the investment not matching up to the individual’s expectation
III. The risk of rate of return on the investment matching up to the individual’s expectation
IV. The risk of losing some or all of a person’s initial investment

a. I and III b. I and II c. III and IV d. II and IV

 

Answer: it talks about risk management. That is why we have risk profiling.

IC EXAM REVIEW
Diversification in investment involves ___.

a. Putting all the funds under management into one category of investment
b. Spreading the risks of investment by not putting the fund into several categories investment
c. Reducing the risks of investment by putting one fund under management into several
categories of investment
d. Reducing the risks of investment by putting all one’s eggs in one basket

IC EXAM REVIEW
Diversification in investment involves ___.

a. Putting all the funds under management into one category of investment
b. Spreading the risks of investment by not putting the fund into several categories investment
c. Reducing the risks of investment by putting one fund under management into several
categories of investment
d. Reducing the risks of investment by putting all one’s eggs in one basket

Answer: Diversification means reducing the risk, by putting it in different basket which is allocating your
funds.
IC EXAM REVIEW
 The Risk to
money how
many
The years
interest
rate
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IC EXAM REVIEW
 What would be the withdrawal value after a year? Based on the
details below.

Sum assured is 190% of single premium of the

Offer price = Ps 16.00 value of the units, whichever is higher.
Bid-offer spread = 4.5%  
Number of Units bought = 25,000 units Assumptions:
Policy Fee = Ps. 1,800 • Charges and fees are deducted after the single
Admin and Mortality Charge = Ps. 8,750 premium has been invested into the account.
• The growth rate of the unit price and the bid-
Top-Up Fee = Ps. 700
offer spread is maintained at 8% and 4.5%
Admin for Top-Up = Ps. 2,000
respectively.  
 

a. Ps. 432,000.00 b. Ps. 420,069.02 c. Ps. 401,107.58 d. Ps. 412,500.00

IC EXAM REVIEW
IC EXAM REVIEW
 What would be the withdrawal value after a year? Based on the
details below.

Sum assured is 190% of single premium of the

Offer price = Ps 16.00 value of the units, whichever is higher.
Bid-offer spread = 4.5%  
Number of Units bought = 25,000 units Assumptions:
Policy Fee = Ps. 1,800 • Charges and fees are deducted after the single
Admin and Mortality Charge = Ps. 8,750 premium has been invested into the account.
• The growth rate of the unit price and the bid-
Top-Up Fee = Ps. 700
offer spread is maintained at 8% and 4.5%
Admin for Top-Up = Ps. 2,000
respectively.  
 

a. Ps. 432,000.00 b. Ps. 420,069.02 c. Ps. 401,107.58 d. Ps. 412,500.00

IC EXAM REVIEW
Which of the following statements are TRUE?

I. The policy value of variable life policies is determined by the offer price at the time of
valuation.
II. The policy value of endowment policies is the cash values plus any accumulated dividends less
any outstanding loans due at time of surrender.
III. The life company needs to maintain a separate account for variable life policies distinct from
the general account.

a. II and III b. I, II, and III c. I and III d. I

IC EXAM REVIEW
Which of the following statements are TRUE?

I. The policy value of variable life policies is determined by the offer price at the time of
valuation.
II. The policy value of endowment policies is the cash values plus any accumulated dividends less
any outstanding loans due at time of surrender.
III. The life company needs to maintain a separate account for variable life policies distinct from
the general account.

a. II and III b. I, II, and III c. I and III d. I

Answer: all are correct.

IC EXAM REVIEW
Which of the following statements about variable life policies are
TRUE?

I. Offer price is used to determine the numbers of units to be cancelled to the account
II. The margin between the bid and offer price is used to cover the management cost of the policy.
III. The policy value is calculated based on the bid price of units allocated into the policy.
 
a. I, II, and III b. I and II c. I and III d. II and III

IC EXAM REVIEW
Which of the following statements about variable life policies are
TRUE?

I. Offer price is used to determine the numbers of units to be cancelled to the account
II. The margin between the bid and offer price is used to cover the management cost of the policy.
III. The policy value is calculated based on the bid price of units allocated into the policy.
 
a. I, II, and III b. I and II c. I and III d. II and III

Answer: I is not included. It should be bid price not offer price.

IC EXAM REVIEW
The selling price under a variable life insurance policy is _____.

a. The price at which units the policy are bought back by the life company
b. The price at which units under the policy are offered for sale by the life company
c. Also known as the bid price
d. A fixed amount throughout

IC EXAM REVIEW
The selling price under a variable life insurance policy is _____.

a. The price at which units the policy are bought back by the life company
b. The price at which units under the policy are offered for sale by the life company
c. Also known as the bid price
d. A fixed amount throughout

Keyword: offered for sale

IC EXAM REVIEW
Which of the following statements are TRUE in variable life insurance
policies?
I. There is no guaranteed minimum sum assured for the purpose of declaring dividends
II. There is no guaranteed minimum sum assured as a level of life insurance protection
III. Each of the policy owner’s premium will be used to purchase units, the number of which is dependent
on the selling price of each unit
IV. Purchase of units can only be made from the variable life fund itself, which will then create new units
and the investment will add value to the fund

a. I, II and III b. I, II and IV c. III and IV d. I, III and I

IC EXAM REVIEW
Which of the following statements are TRUE in variable life insurance
policies?
I. There is no guaranteed minimum sum assured for the purpose of declaring dividends
II. There is no guaranteed minimum sum assured as a level of life insurance protection
III. Each of the policy owner’s premium will be used to purchase units, the number of which is dependent
on the selling price of each unit
IV. Purchase of units can only be made from the variable life fund itself, which will then create new units
and the investment will add value to the fund

a. I, II and III b. I, II and IV c. III and IV d. I, III and I

Answer: I & II is wrong because in VUL we have guaranteed face amount.

IC EXAM REVIEW
 Have a bright day!
Thank you and God bless! 

IC EXAM REVIEW