VUL Mock Test Questions with Correct Answers (Grade A+)
Question 1: Which of the following statements describe the differences between variable universal life
insurance products and traditional participating products I. Traditional participating life policies aim
to produce steady return by smoothing out market fluctuations, while Variable Universal Life
insurance policies offer the potential for higher returns but at the expense of market volatility and
higher risk. II. Variable Universal Life insurance products can take the form of Whole life or
endowment policies but traditional participating life policies do not III. The investment element of
Variable Universal Life insurance policies is made known on the outset and is invested in a separately
identifiable fund, which is made up of units of investment.
A. I only
B. I & III only
C. II & III only
D. I, II, & III
Answer: B. I & III only
Question 2: which one of the following statements about diversification in portfolio management is
FALSE?
A. Diversification can completely eliminate the risk of investing in stock portfolio
B. Diversification helps to spread the portfolio risk by investing in the different categories of investment in a
portfolio
C. Diversification involves purchasing different types of stocks and investing in stocks of different countries
D. A diversified portfolio provides greater security to an investor without having to sacrifice the return for the
portfolio
Answer: A. Diversification can completely eliminate the risk of investing in stock portfolio
Question 3: People generally invest their money to provide: I. an improvement in their financial
position II. a less comfortable standard of living III. income in retirement IV. funds for paying
necessary expenses and taxes when the person dies
A. I, II, & III
B. I, III, & IV
C. I, II & IV
D. II, III, & IV
Answer: B. I, III, & IV
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, Question 4: Which of the following statement is/ are FALSE? I. Higher capital gain is normally
associated with lower risk II. One way to lower risks in investment is to diversify III. One method of
measuring risk is to determine the average return and its standard deviation from future data. IV.
Diversification can be acheived by investing in different countries and/or types of assets. V. An investor
can always choose an investment that is risk free
A. I, II & III
B. II, III & IV
C. I, III & V
D. All of the above
Answer: C. I, III & V
Question 5: The risk profile of a person depends on I. age II. investment objectives III. financial
conditions IV. personality
A. I & II only
B. II, III & IV
C. I, II, & III only
D. All of the above
Answer: D. All of the above
Question 6: Which of the following information must not be conveyed to client in sales of Variable
Universal Life insurance policies?
A. Guaranteed interest rate
B. Time horizon of the product
C. The risk involved
D. Benefits illustrations using 10% as the gross
E. Rate of return
Answer: A. Guaranteed interest rate
Question 7: Which of the following is NOT a characteristic of a variable Universal Life policy?
A. It is used solely for investment purposes
B. the commissions and office expenses are met by explicit charges
C. Its generally, though not necessarily, more exposure to equity investments.
D. its cash value is usually the value of units allocated to the policy calculated at the prevailing bid price
Answer: A. It is used solely for investment purposes
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Question 1: Which of the following statements describe the differences between variable universal life
insurance products and traditional participating products I. Traditional participating life policies aim
to produce steady return by smoothing out market fluctuations, while Variable Universal Life
insurance policies offer the potential for higher returns but at the expense of market volatility and
higher risk. II. Variable Universal Life insurance products can take the form of Whole life or
endowment policies but traditional participating life policies do not III. The investment element of
Variable Universal Life insurance policies is made known on the outset and is invested in a separately
identifiable fund, which is made up of units of investment.
A. I only
B. I & III only
C. II & III only
D. I, II, & III
Answer: B. I & III only
Question 2: which one of the following statements about diversification in portfolio management is
FALSE?
A. Diversification can completely eliminate the risk of investing in stock portfolio
B. Diversification helps to spread the portfolio risk by investing in the different categories of investment in a
portfolio
C. Diversification involves purchasing different types of stocks and investing in stocks of different countries
D. A diversified portfolio provides greater security to an investor without having to sacrifice the return for the
portfolio
Answer: A. Diversification can completely eliminate the risk of investing in stock portfolio
Question 3: People generally invest their money to provide: I. an improvement in their financial
position II. a less comfortable standard of living III. income in retirement IV. funds for paying
necessary expenses and taxes when the person dies
A. I, II, & III
B. I, III, & IV
C. I, II & IV
D. II, III, & IV
Answer: B. I, III, & IV
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, Question 4: Which of the following statement is/ are FALSE? I. Higher capital gain is normally
associated with lower risk II. One way to lower risks in investment is to diversify III. One method of
measuring risk is to determine the average return and its standard deviation from future data. IV.
Diversification can be acheived by investing in different countries and/or types of assets. V. An investor
can always choose an investment that is risk free
A. I, II & III
B. II, III & IV
C. I, III & V
D. All of the above
Answer: C. I, III & V
Question 5: The risk profile of a person depends on I. age II. investment objectives III. financial
conditions IV. personality
A. I & II only
B. II, III & IV
C. I, II, & III only
D. All of the above
Answer: D. All of the above
Question 6: Which of the following information must not be conveyed to client in sales of Variable
Universal Life insurance policies?
A. Guaranteed interest rate
B. Time horizon of the product
C. The risk involved
D. Benefits illustrations using 10% as the gross
E. Rate of return
Answer: A. Guaranteed interest rate
Question 7: Which of the following is NOT a characteristic of a variable Universal Life policy?
A. It is used solely for investment purposes
B. the commissions and office expenses are met by explicit charges
C. Its generally, though not necessarily, more exposure to equity investments.
D. its cash value is usually the value of units allocated to the policy calculated at the prevailing bid price
Answer: A. It is used solely for investment purposes
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