PRU LIFE VUL - MOCK EXAM Questions with Correct Answers
(Grade A+)
Question 1: Rank the following investment instruments in terms of their level of risks, from the least
risky to the most risky I. cash and deposit II. derivatives III. a well-diversified investment portfolio of a
company IV. stock options
Answer: a. I, IV, III & II
Question 2: Which of the following statements about option to top-up under variable life insurance
products is TRUE? I. Policy owners may buy additional units of the variable life fund and these units
will be allocated to new variable life insurance policies. II. 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.
III. To top-up a policy, the policy owner pays further single premium at the time of top-up. IV. Policy
owners are normally allowed to top-up their policies at any time, subject to a minimum amount
Answer: a. II, III, and IV
Question 3: Which of the following statements BEST describes "variable life" policies?
Answer: d. It is a flexible premium policy with returns that will vary with the underlying value of
investments
Question 4: What is the most suitable investment instrument for someone who is interested in
protecting his principal, while receiving a steady stream of income?
Answer: d. Fixed Income Securities
Question 5: 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.
Answer: c. I, II, and III
Question 6: Which of the following statements about rebating are TRUE? I. Rebating is prohibited
under the Insurance Code II. Rebating deals with offering the prospect a special inducement to
purchase a policy III. Rebating will enhance the sales performance and uphold the prestige of an agent
Answer: a. I & II
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, Question 7: Which of the following statements about option top —up under variable life insurance is
false?
Answer: a. Policy owners may buy additional units of the variable life fund and these units will be allocated
to new variable life insurance policies
Question 8: The benefits of investing in variable life funds include: 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 policies have clear structures which cater
separately for investment and III. Insurance protection IV. 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
Answer: c. I, II & III
Question 9: Which of the following statements is FALSE?
Answer: c. Misrepresentation is a specific form of twisting.
Question 10: Which of the following duties of the trustees are FALSE?
Answer: a. Managing the portfolio of investment and administering the buying and selling of shares in the
unit trust itself
Question 11: In a 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.
Answer: b. II, III, and IV
Question 12: Which of the following statements about twisting is FALSE?
Answer: d. It refers to an agent offering a prospect a special inducement to purchase a policy
Question 13: Which of the following statements about surrender value under traditional participating
life insurance products is TRUE?
Answer: c. The amount of surrender value is usually higher than the amount under non-participating
policies and it varies with the age of the assured, being lower at older ages.
Question 14: A single premium variable life insurance policy must be issued with ____.
Answer: a. A minimum death benefit
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(Grade A+)
Question 1: Rank the following investment instruments in terms of their level of risks, from the least
risky to the most risky I. cash and deposit II. derivatives III. a well-diversified investment portfolio of a
company IV. stock options
Answer: a. I, IV, III & II
Question 2: Which of the following statements about option to top-up under variable life insurance
products is TRUE? I. Policy owners may buy additional units of the variable life fund and these units
will be allocated to new variable life insurance policies. II. 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.
III. To top-up a policy, the policy owner pays further single premium at the time of top-up. IV. Policy
owners are normally allowed to top-up their policies at any time, subject to a minimum amount
Answer: a. II, III, and IV
Question 3: Which of the following statements BEST describes "variable life" policies?
Answer: d. It is a flexible premium policy with returns that will vary with the underlying value of
investments
Question 4: What is the most suitable investment instrument for someone who is interested in
protecting his principal, while receiving a steady stream of income?
Answer: d. Fixed Income Securities
Question 5: 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.
Answer: c. I, II, and III
Question 6: Which of the following statements about rebating are TRUE? I. Rebating is prohibited
under the Insurance Code II. Rebating deals with offering the prospect a special inducement to
purchase a policy III. Rebating will enhance the sales performance and uphold the prestige of an agent
Answer: a. I & II
Page 1
, Question 7: Which of the following statements about option top —up under variable life insurance is
false?
Answer: a. Policy owners may buy additional units of the variable life fund and these units will be allocated
to new variable life insurance policies
Question 8: The benefits of investing in variable life funds include: 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 policies have clear structures which cater
separately for investment and III. Insurance protection IV. 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
Answer: c. I, II & III
Question 9: Which of the following statements is FALSE?
Answer: c. Misrepresentation is a specific form of twisting.
Question 10: Which of the following duties of the trustees are FALSE?
Answer: a. Managing the portfolio of investment and administering the buying and selling of shares in the
unit trust itself
Question 11: In a 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.
Answer: b. II, III, and IV
Question 12: Which of the following statements about twisting is FALSE?
Answer: d. It refers to an agent offering a prospect a special inducement to purchase a policy
Question 13: Which of the following statements about surrender value under traditional participating
life insurance products is TRUE?
Answer: c. The amount of surrender value is usually higher than the amount under non-participating
policies and it varies with the age of the assured, being lower at older ages.
Question 14: A single premium variable life insurance policy must be issued with ____.
Answer: a. A minimum death benefit
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