1. A single premium policy means a policy
b. under which only one premium payment is required
2. A fixed amount added to the premium of a given policy regardless of policy size is known as
a. policy fee
3. To be able calculate the required premiums for a given policy, the agent must know the applicant’s
d. all of the above
4. To calculate premiums for the other modes of premium payment, the annual premium is
c. multiplied by a conversion factor for the mode of payment desired
5. The convertible feature of a term insurance policy provides that the policy may be
a. changed to a permanent insurance policy without evidence of insurability
6. Within two years of buying a life insurance policy, you are accidentally killed when your car hits a tree. In these circumstances the insurance company will
c. pay the face amount
7. When explaining dividends, the following information must be supplied
a. that they are not guaranteed
8. The fundamental advantage of the use of insurance as a means of meeting economic losses is that through insurance these losses are
a. spread over a large number of people
9. An Individual, at age 35, purchases a policy under which he will in 20 years receive the face amount of the policy himself if he is still alive at that date. This policy is obviously a
a. 20 Yr. Endowment
10. In a 20 Life policy
a. protection is until age 100, payment of premium is for 20 years
11. A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains features:
a. convertibility
12. The main difference between a term plan and a permanent plan is
a. permanent plans provide both protection and savings while term plans offer protection only
13. If an insured is disabled and his life insurance policy is being continued in force through the waiver of premium, the dividends of the policy would
c. continue as if the owner is paying the premium
14. Since the purchase of life insurance is a voluntary choice, the individual must meet
b. certain standards of health and occupation
15. Which of the following factors would have the least effect on the premium charged for life insurance
c. income
16. Anti-selection occurs
d. when persons in poor health wish to buy insurance
17. In an application, the information that must be disclosed include
c. every fact in his knowledge that is material to the insurance
18. Why is it important that the application is the basis of the policy?
a. because the completed application is the basis of the policy contract and the company may accept or reject an application based on the information given in the application
19. The term loading means
a. the difference between the gross and net premiums for the purpose of paying the insurance overhead expenses including commissions and taxes
20. The three elements that make up a life insurance premium are
a. mortality experience, investment earnings and operating expenses
21. If the insured dies during the grace period of an unpaid life insurance policy, the amount payable to the beneficiary is usually the
c. face amount of the policy minus the unpaid premium.
22. Which of the following statements is correct?
a. an insurance agent’s license will be renewed when the Commissioner is satisfied that the information in the application is accurate and all requirements are met.
23. Which of the following statements is correct?
d. an agent is not allowed to share commissions with any person.
24. Persuading a policyowner, directly or indirectly, to surrender or lapse a policy in one company and replacing it with a policy from another company is
b. twisting
25. Interest is charged on policy loans
c. to replace investment income the insurer cannot earn since a loan has been granted.
26. An insurance agent’s license can be revoked for
d. any or all of the above
27. The term knocking means
b. making derogatory remarks about competing underwriters or companies.
28. The three non-forfeiture values in a permanent policy are
d. cash surrender value, paid value, extended term insurance.
29. What are the basic settlement options?
b. fixed amount, fixed period, interest, fixed period and for life.
30. 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 insurance company will pay
b. the face amount adjusted for misstatement of age.
31. For a contract to be legal and binding
b. parties to the contract must be legally competent.
32. All of the following would be practicable to become beneficiaries except
c. someone who owes you money.
33. Policy reserves are future obligations on the part of
b. the Insurance Company
34. If the policy did not contain the name of a beneficiary, the beneficiary will be
d. the insured’s estate.
35. For life insurance coverage to be valid, insurable interest must exist
a. only at the inception of the policy.
36. In the case of life insurance, a sale is considered completed if the application is signed and payment of the first premium is made by the applicant. For the sale to be considered completed
a. a medical examination has to be made first.
37. An automatic premium loan differs from the other policy loans in that an automatic premium loan
c. goes into effect requiring no separate action from the policyowner.
38. If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be
c. unaffected.
39. Endowment life insurance and term life insurance are similar in that both plans
c. Provide life insurance protection for only the period of time specified in the policy contract
40. The typical grace period provision in a life insurance policy obliges the life insurance company to
d. none of the above
41. In most life insurance applications, the largest amount of information requested is data which
c. Relates to the insurability of the applicant
42. The conservation of a life insurance policy is dependent on all the following except
c. Pressure selling
43. All of the following are sources of information to an insurance company pertaining to the insurability of an applicant except
d. Government tax records
44. Indicate which of the following is not a function of an application for life insurance policy.
d. To convey to the company the desire of the applicant to obtain insurance
45. A father enters into a life insurance contract on behalf of his child. In this case, the father is the
d. applicant-owner
46. Part of the premium paid by a policyholder is invested by the insurance company. In premium computation, this factor is known as
a. interest
47. The parties involved in life insurance contract are the
b. insurance company and insured
48. Life insurance contributes directly to the welfare and progress of the country by
49. The number of years that persons at a given age will live on the average as shown by the mortality table is called
d. life expectancy
50. An insurance plan which offers both protection and savings is called
b. Permanent Plan
51. A man with moderate means can have maximum protection possible through
c. Term Insurance
52. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez?
a. Participating
53. Which of the following can give the longest protection?
c. Ordinary Life
54. A participating plan entitles the policyowner to receive a return of excess premium. Such is termed as:
b. dividends
55. Mrs. Rose Cortez owns a policy which does not provide for the build up of cash values and whose premiums remain level. Mrs. Cortez owns:
d. Level Term
56. Two attractive features of a Term insurance are:
d. convertibility and renewability
57. A term policy only offers
b. protection
58. The savings element of permanent plans allows for the build up of
b. cash values
59. A term rider is
d. a term insurance added to a permanent plan
60. An optional rider which can be attached to a policy stopping further premium payment in the event of disability is called
c. waiver of premium
61. For the waiver of premium to be effective
c. both a & b
62. Disability benefits are not paid
a. for self-inflicted injuries
63. Mr. Pedro Cruz became paralyzed as a result of jumping out of the window in an attempt to commit suicide. Under the usual provisions of a disability income policy, he would be entitled to
d. receive neither disability income nor waiver of premiums
64. A person wanting a greater coverage for the least amount of premium has an option of attaching what rider in his permanent life policy?
b. term insurance rider
65. One supplementary benefit offered is a payor’s benefit which is intended to
b. provide a waiver of premium benefit in the event of death or disability of the person paying the premium
66. A policy with a minor as the proposed insured is called
b. juvenile policy
67. Life insurance policies for which higher than standard premium rates are payable are said to be
a. rated policies
68. Insurance Companies have various sources of information about the insured. These are
69. In insurance, risk means
b. hazard on people’s lives
70. In insurance risks are classified as
c. standard, substandard and declined
71. A risk is considered substandard based on any or all of the following criteria
b. occupation, moral character and family health history
72. A hazardous occupation could be defined
73. Statements in the application forms are
b. representations
74. An agent is filling up the Agent’s Confidential Report. What information must he put in his report?
c. all information he knows which are material to the application for insurance
75. Mr. Roel Reyes has been confined in a hospital 3 years prior to his application for insurance. He, therefore, needs to give the following information
a. name of attending doctor, diagnosis, date of confinement
76. Insurance companies have a source of confidential medical information on applicants for life insurance. This is the
d. medical impairment bureau
77. Insurance companies which are owned by the policyowners are examples of
b. mutual companies
78. Stock companies are owned by
b. stockholders
79. Which one of the following statements is correct?
b. all information about a client or a prospective client has to be treated as confidential
80. Choose the incorrect statement. The entire contract between the policyowner and the insurance company include:
b. any verbal statement made by the agent to the application
81. Life insurance is
c. a cooperative risk-sharing plan
82. A life insurance company earns income from two main sources
a. premium income and investment income
83. The official who makes the necessary assumption and calculation with respect to the principal elements of life insurance premium in order to arrive at the premium rates to be charged is the
d. Actuary
84. Life insurance can provide money when income stops because of
85. The insurance industry is under government regulations because
c. it affects public interest.
86. Which of the following statements is correct?
d. rebating of premiums by an insurance agent is prohibited.
87. Rebating is
d. premium discrimination against policyholders.
88. One example covered under the ethical practices and procedures is
a. keep all policyholders information confidential.
89. The following are unethical practices in the solicitation and procurement of insurance except
d. obtaining or attempting to obtain a license by fraud or misrepresentation.
90. The misstatement of facts by either of the parties of insurance, whether in writing or orally, preliminary and in reference to making the insurance contract is
c. misrepresentation
91. An agent is prohibited from doing all of the following except:
d. make complete comparisons of policies he sells and those offered by competing insurance companies.
92. Inducing an insured to lapse or forfeit his insurance
c. is an offense in the great majority of cases.
93. The suicide clause is in effect for
c. the first 2 years.
94. Benefits payable under health insurance policies cover
95. In case of misstatement of age
c. the amount of insurance is adjusted to the amount which the premium paid at the correct age would have purchased.
96. Name the provision in a permanent life insurance policy under which, if the premiums are discontinued, full insurance coverage will be maintained for a specified period.
a. extended term insurance
97. Which of the following is not derived from the non-forfeiture values?
c. dividends
98. In the event that the policyowner elects the paid-up insurance option
b. premiums cease and protection continues for a reduced amount.
99. Which of the non-forfeiture option gives the largest amount of protection?
c. extended term insurance
100. Any policy which has lapsed can be reinstated subject to normal conditions of proof of insurability within
a. three years