Variable Universal Life (VUL) Mock Exam Reviewer

This set of vocabulary flashcards covers key terms, investment concepts, and regulatory definitions found in a Variable Universal Life insurance mock exam.

Top-up

The act of a policy owner paying a further single premium to buy additional units of the variable life fund, subject to a minimum amount.

Unit Trust

An investment vehicle established by a trust deed which enables a trustee to hold a pool of money and assets in trust on behalf of the investor.

Fixed Income Securities

The most suitable investment instrument for an investor interested in protecting principal while receiving a steady stream of income.

Rebating

An act prohibited under the Insurance Code consisting of offering a prospect a special inducement to purchase a policy.

Single Premium Variable Life Policy

A policy with no fixed term that is technically whole life insurance, allowing for top-up single premium injections and varying levels of cover.

Switching

A facility allowing policyholders to move their investments from one variable life fund to another offered by the company for financial planning purposes.

Bid Price

The price at which units under the policy are bought back by the life company, used to calculate withdrawal values.

Offer Price

The price at which units under the policy are offered for sale by the life company to the policy owner.

Twisting

A specific form of misrepresentation where an agent induces a policyholder to discontinue a policy with another company without disclosing disadvantages.

Equity Funds

Funds that invest in shares of stocks, usually aimed at achieving capital appreciation for the investor.

Investment Diversification

Reducing investment risks by putting funds into several categories of investment rather than a single category.

Policy Fee

A charge payable by a variable life insurance policy owner to cover the administrative expenses of setting up the policy.

Bid-Offer Spread

The margin between the bid and offer price used to cover the management cost of the policy.

Premium Holiday

A flexibility feature in variable life products allowing policy owners to temporarily cease premium payments.

Implicit Charges

Charges generally used to meet protection costs, commissions, and company expenses in variable life policies.

Traditional Participating Life Insurance

Policies that aim to produce a steady return by smoothing out market fluctuations and are not directly linked to investment performance.

Liquidity Ranking

The ordering of assets from least to most liquid: Property, Equities, Short Term Securities, and Cash.

Trustee

An entity responsible for ensuring that the fund manager adheres to the provisions of trust deeds and acting to protect unit-holders.