VUL MOCK EXAM Questions with Correct Answers (Grade A+)
Question 1: The Investment returns under variable life insurance policy ________________. I. Are not
guaranteed II. Are assured III. Are linked to the performance of the investment fund managed by the
life company IV. Fluctuated according to the rise and fall of market prices.
a. I,II and I
b. I,II and IV
c. I,III and IV
d. II,III and
Answer: C. I,III and IV
Question 2: Variable life insurance policy owners may make withdrawals in terms of ___________.
a. Number of units or fixed monetary amount through cancellation of units
b. Number of units or fixed monetary amount through reduction of the life cover sum assured
c. Fixed monetary amount only through reduction of the life
d. Number of units through cancellation of units.
Answer: A. Number of units or fixed monetary amount through cancellation of units
Question 3: What is the most suitable investment instrument for an investor who is interested in
protecting his principal and receiving a steady stream of income?
a. Equities
b. Warrants
c. Variable Life Policies
d. Fixed Income
Answer: D. Fixed Income
Question 4: 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 off its assets if large number of investor sell their shares.
c. One whereby investor buys units in the trust itself and not shares in the company.
d. An organization invests in a wide range of equities and other investment.
Answer: 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.
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, Question 5: Which is the following is False?
a. Rebating is to offer a prospect a special inducement to purchase a policy
b. Twisting is a specific form of mispresentation
c. Mispresentation is a specific form of twisting
d. Switching is a facility allowing policy holder to switch to another variable life funds offered by company.
Answer: C. Misrepresentation is form of twisting
Question 6: Which of the following statement 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 value 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. I and II
b. I,II and III
c. I and III
d. II and III
Answer: D. II and III
Question 7: Which of the following statement about the variable life policies are True? I. Offer price is
used to determined the number of units to be credited 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 in to the policy
a. I and II
b. I and III
c. II and III
d. All of the above
Answer: D. All of the above
Question 8: What are the disadvantage of investing in common shares? I. Dividends are paid not more
that fixed rates II. Investors are exposed to market and specific risks III. Shares can become worthless
if company become insolvent
a. I and II
b. I and III
c. II and III
d. I, II, and III
Answer: C. II and III
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Question 1: The Investment returns under variable life insurance policy ________________. I. Are not
guaranteed II. Are assured III. Are linked to the performance of the investment fund managed by the
life company IV. Fluctuated according to the rise and fall of market prices.
a. I,II and I
b. I,II and IV
c. I,III and IV
d. II,III and
Answer: C. I,III and IV
Question 2: Variable life insurance policy owners may make withdrawals in terms of ___________.
a. Number of units or fixed monetary amount through cancellation of units
b. Number of units or fixed monetary amount through reduction of the life cover sum assured
c. Fixed monetary amount only through reduction of the life
d. Number of units through cancellation of units.
Answer: A. Number of units or fixed monetary amount through cancellation of units
Question 3: What is the most suitable investment instrument for an investor who is interested in
protecting his principal and receiving a steady stream of income?
a. Equities
b. Warrants
c. Variable Life Policies
d. Fixed Income
Answer: D. Fixed Income
Question 4: 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 off its assets if large number of investor sell their shares.
c. One whereby investor buys units in the trust itself and not shares in the company.
d. An organization invests in a wide range of equities and other investment.
Answer: 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.
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, Question 5: Which is the following is False?
a. Rebating is to offer a prospect a special inducement to purchase a policy
b. Twisting is a specific form of mispresentation
c. Mispresentation is a specific form of twisting
d. Switching is a facility allowing policy holder to switch to another variable life funds offered by company.
Answer: C. Misrepresentation is form of twisting
Question 6: Which of the following statement 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 value 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. I and II
b. I,II and III
c. I and III
d. II and III
Answer: D. II and III
Question 7: Which of the following statement about the variable life policies are True? I. Offer price is
used to determined the number of units to be credited 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 in to the policy
a. I and II
b. I and III
c. II and III
d. All of the above
Answer: D. All of the above
Question 8: What are the disadvantage of investing in common shares? I. Dividends are paid not more
that fixed rates II. Investors are exposed to market and specific risks III. Shares can become worthless
if company become insolvent
a. I and II
b. I and III
c. II and III
d. I, II, and III
Answer: C. II and III
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