Traditional Mock Exam
1. Both endowment and term life policies provide that
No cash value is available to the policy owner during the term of the policy
Renewal and conversion privileges are available
A benefit will be paid at the end of the period of coverage if the person is then alive
Insurance protection will be limited to a specified period
2. Indicate which of the following is not a function of an application for life insurance policy.
To give details pertaining to non-forfeiture options
To furnish information on which the contract of life insurance may be written
To furnish initial information as to insurability
To convey to the company the desire of the applicant to obtain insurance
3. A father has his present life insurance payable to his estate and because he has now retired he wants to pass the policy on to his son who will assume the premium payments. Which of the following will he have to appoint his son to achieve his desire and protect the son from Estate Tax Liability?
Irrevocable primary beneficiary
Absolute assignee
Irrevocable secondary beneficiary
Revocable primary beneficiary
4. A policy where an irrevocable beneficiary has been designated the insured, without the beneficiary’s permission, can
Avail of a non-forfeiture option
Discontinue premium payments
Borrow minimal cash loan
Alter the dividend option now in effect
5. What are the basic settlement options?
Policy loan, guaranteed insurability
Cash surrender value, automatic premium loan
Fixed amount, fixed period, life income, interest on deposit
Double indemnity, total and permanent disability waiver
6. An insurance company generally has the right to rescind a life insurance policy if
Company discovers at any time that the policy owner was actually a minor at the time of application
Insured person intentionally kills himself during the suicide exclusion period specified in the policy
Insured person is killed in military action during the contestable period of the policy
Company discovers during the contestable period that the application contains a material statement.
7. Which of the following is the least important reason for requiring that insurance agents be licensed?
To establish and maintain high professional and ethical standards
To protect the public
To give the government adequate control over the conduct of agents
To provide additional income to the government through license fees
8. In the event that a policy owner elects the paid-up insurance option
The premiums stop and the policy continues for the full face amount until age 65
The insurance continues at a reduced amount and with a reduced premium
The policy will automatically terminate
The premiums cease and protection continues with a reduced amount of Coverage
9. The company will allow a policy change from a higher premium to a lower premium provided the insured
Buys a new plan altogether
Presents satisfactory evidence of insurability
Momentarily assigns the policy to the company
Obtains written consent from his or her spouse
10. A policy which permits the policyholder to vary the level of premiums, the sum insured and has its cash values dependent upon the investment performance and the level of premium paid is known as __________ policy
Participating whole life policy
Participating endowment
Universal life
None of the above
11. Which of the following statements about “ Disability Waiver of Premium Rider” is false?
Disability must occur before a stated date
The insured has to die while disabled
There is a waiting period
It has to be attached to a life insurance policy
12. In most life insurance applications, the largest amount of information requested is data which
Identifies the applicant
Describes the type of insurance applied for
Relates to the insurability of the applicant
Describes the desired benefits and mode of payment
13. Paid-up additions
Affect both cash and loan value of the policy
Don’t affect the cash value of the policy
Don’t affect the loan or cash value of the policy
Only affect the cash value of the policy
14. The total life coverage of a permanent basic policy can be greatly increased through the use of
An accidental death benefit rider
An interim term rider
A supplemental term rider
None of the above
15. Life insurance companies make use of the laws of probability in order to
Estimate future death rates among members of a given group
Predict when an individual insured will die
Develop statistics of past deaths among the general population
Determine the experienced death rate among the insured persons
16. In the case of renewable term insurance, the policy owner may
Renew the coverage based on a higher premium
Change the life insured at renewal date
Renew providing the insurance company agrees to continue coverage
Renew at the same premium for further period of years
17. A man applied for a PhP 20,000 whole life policy and paid the full initial premium to the soliciting agent. The agent issued a binding receipt. Under such a receipt, the insurance company
Offers permanent insurance coverage effective as of the date of the application
Promises that the insurance coverage will become effective as of the date the application is approved
Guarantees the policy will be issued as applied for
Immediately provides interim insurance that remains in effect until the policy is issued or the application is declined
18. Endowment life insurance and term life insurance are similar in that both plans
Build up cash value rapidly in the early policy years
Provide for payment of the face amount if the insured is alive at the end of the specified period
Provide life insurance protection for only the period of time specified in the policy contract
Contain provisions for automatic continuation of the insurance protection at the end of a specified period
19. An agent who determines a prospect’s complete financial requirements preparatory to offering him a policy using the correct selling approach knows as
Counselor selling
Total needs selling
Planned selling
Multiple products selling
20. Name the provision in a permanent life insurance policy under which premiums are discontinued, full insurance will be maintained for a specified period:
Extended term insurance
Paid-up insurance additions
Life income option pension
Reduced paid-up insurance
21. Notwithstanding various possible legal impediments, if the owner of an endowment at age 65 policy tells you that the maturity of the policy he wants to provide his church with a monthly donation for as long as the church exists. Which option do you recommend?
Fixed income option
Periodic annuity option
Interest option
Life annuity option
22. The extent of medical evidence required is determined by
The age of the applicant and the proposed sum to be insured
Occupation of the applicant
Financial condition of the applicant
Date of the last medical examination
23. The conservation of a life insurance policy is dependent on all the following except
The level of first year commission
Agent’s service oriented attitude
Pressure selling
The use of effective needs selling
24. All of the following are sources of information to an insurance company pertaining to the insurability of an applicant except
The applicant’s personal appearance
Medical examination report
Agent’s inspection report
Government tax records
25. If the applicant for life insurance fails to disclose or misrepresents material fact, the contract is
Valid if the insurer issues a policy which is delivered to the applicant
Void from the beginning
Voidable by the insurer if it has been in force less than 2 years
Valid unless the insurer can prove fraud
26. The settlement options provision may provide all of the following except:
Payment of the proceeds for the life of the insured
Payment of the proceeds over a fixed period
Payments of the proceeds in fixed amounts until exhausted
Proceeds held by the company, with interest payable to the beneficiary on request
27. Non-forfeiture provisions are included in whole life and endowment policies to assure the policyowner that certain minimum policy benefits shall remain with him even under certain changed conditions. Non-forfeiture values guarantee to the policyowner that
No death claim will be denied for any misstatement on the application
Any guaranteed policy values will belong to the policy owner even if premium payments are discounted
The face amount of the policy will remain the same even if the insured’s health becomes impaired
The premium on the policy will remain the same even when another beneficiary is added to the policy
28. Purchasing a continuous-premium, whole life policy rather than a limited payment, whole life policy gives the policyowner the advantage of
Concentration of premium payments during the period of highest earnings
Liberal risk selection procedures
More insurance protection for the same annual premiums outlay
More rapid accumulation of cash values
29. In certain situations a company may file interpleader actions with a Court of Law. This remedy is used to
Determine if the cause of the insured’s death was an excluded risk
Decide conflicting claims on the same insurance proceeds
Resolve the question of insurable interest
Recommend the best settlement options for the beneficiary If the interest on a policy loan is not paid at the policy anniversary the insurance
30. Which of the following statement is false?
The cash value of a whole life policy builds up at a slower rate than for a 20 year endowment
The cash value in a permanent policy is guaranteed by the company
The cash value of an endowment builds up faster than that for a limited pay life policy of the same duration
Because of its very short duration the cash value of a yearly renewable term policy grows very fast
31. Which of the following does not have a legitimate insurable interest?
An individual on the life of his mistress
An individual on his own life
An individual on the life of his spouse
A finance company on the life of its borrower
32. The basic coverage provided by the life insurance policies may be supplemented by a separate provision that provides coverage for accidental amounts or of a different nature. Collectively these provisions are known as
Riders
Deposit privileges
Dividends
Assignment
33. Which of the following statements regarding insurance premiums is false?
Cash is required for all premiums paid in the grace period
A premium is the legal consideration needed to affectuate a life insurance policy
The grace period is usually 31 days
Premiums which are paid quarterly or semi-annually are higher than those paid annually
34. A non-forfeiture option would ordinarily be selected at the time a policyowner
Renews a term life policy
Converts a term policy to a whole life policy
Chooses a mode of settlement for the life proceeds
Discontinues premium payments for a whole life or endowment policy
35. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
Demand full settlement of the loan
Terminate the contract
Refuse to grant future additional loan
Increase the present loan by the interest
36. The incontestability clause
Gives the company the right to rescind a policy at any time
Permits the company to pay claims within 2 years
Makes it necessary for the beneficiary to present proof of death in the event of a death claim
Prevents the company from denying a claim after the policy has been in force for 2 years
37. The insured named a primary and secondary revocable beneficiary for PhP 20,000 policy. Which of the following is correct?
The designation of a contingent beneficiary is subject to the primary beneficiary’s approval
The insured can add a third beneficiary at any time
Any policy loan assignment will require the primary beneficiary’s signature
Upon the insured’s death the primary and secondary beneficiaries shall each receive PhP 10,000
38. When you bought an insurance policy on your wife’s life, you were 27 and she was 26, but you stated that you were 26 and she was 27. Five years later your wife died. The insurer will pay
Slightly less than the face amount
The face amount
The face amount adjusted for misstatement of age
The sum of the premium paid
39. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
Increase the present loan by the interest
Terminate the contract
Refuse to grant future additional loan
Demand full settlement of the loan
40. A yearly renewable term life insurance policy generally specifies that
The policyowner may renew the policy only once
Premiums shall increase every time the policy is renewed
Evidence of insurability shall be required every renewal
Cash values will increase for as long as the policy is in force
41. In a case where the premium has not been paid and the cash values has been exhausted, the policy can still avail of the grace period.
True
False
42. According to the law of large numbers, events which happen seemingly by chance will actually be bound to follow a predictable pattern, if enough such happenings are observed.
True
False
43. Anti-selection occurs when persons in poor health wish to buy insurance.
True
False
44. A policy is still in force for the full face amount and will remain in force for a further period of four years and 118 days, without the payment of any premiums has availed of paid up insurance option.
True
False
45. In the case of misstatement of age, the amount of insurance is adjusted to the amount which the premium paid at the correct age would have purchased.
True
False
46. A policy that provides guaranteed cash values plus extra annual distributions and pays the insured after a specified time is known as a participating endowment.
True
False
47. In a group insurance it is assumed that every member of the group is insurable, provided that every member of the group is working a minimum number of (usually 50 hours) each week.
True
False
48. An endowment at age 65 policy with premium payable for a limited period of 20 years pays the full amount after 20 years.
True
False
49. In most life insurance applications, the largest amount of information requested is data which identifies the applicant.
True
False
50. A policy is not rendered void by reason of misstatement of the assured’s death.
True
False
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