NAME :

CLASS :
TRad 2
DATE :
123 Questions

1. 14. The total life coverage of a permanent basic policy can be

greatly increased through the use of

a) An accidental death benefit rider b) A supplemental term rider

c) An interim term rider d) None of the above

2. 27. Non-forfeiture provisions are included in whole life and

endowment policies to assure the policy owner that certain
minimum policy benefits shall remain with him even under
certain changed conditions. Non-forfeiture values guarantee to
the policy owner that

a) a. No death claim will be denied for any b) b. Any guaranteed policy values will belong
misstatement on the application to the policy owner even if premium
payments are discounted

c) c. The face amount of the policy will remain d) d. The premium on the policy will remain the
the same even if the insured’s health same even when another beneficiary is
becomes impaired added to the policy

3. 40. A yearly renewable term life insurance policy generally

specifies that

a) a. The policy owner may renew the policy b) b. Premiums shall increase every time the
only once policy is renewed

c) c. Evidence of insurability shall be required d) d. Cash values will increase for as long as
every renewal the policy is in force

4. 44. If premiums are being waived under a waiver of premium

benefit and the insured dies, the proceeds will be the

a) a. The guaranteed insurability benefit b) b. The right to change beneficiaries

c) c. The waiver of premium for disability d) d. The cash surrender value

5. 47. Your client George wants to apply for a life insurance
policy, as his advisor, you would advise him to do all of the
following. Which one will you NOT advise him to do?

a) a. To furnish initial information as to b) b. To give details pertaining to non-forfeiture

insurability options

c) c. To convey to the company the desire of the d) d. To furnish information on which the
applicant to obtain insurance contract of life insurance may be written

6. 48. The premium on a participating life insurance policy is

a) a. The same as a non-participating policy b) b. Greater at younger ages

c) c. Lower than a non-participating policy d) d. Higher than a non-participating policy

7. 52.Your client tells you that when his father died, he received
Ps. 500,000 free of Estate Tax and that he had not even
known that this policy existed. Which of the following
classifications did your client fall under?

a) Collateral assignee b) Absolute assignee

c) Revocable primary beneficiary d) Irrevocable primary beneficiary

8. 53. Paul has recently retired and now wants to pass his
present life insurance policy which is payable to his estate 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 him from Estate Tax Liability?

a) Absolute Assignee b) Irrevocable primary beneficiary

c) Revocable primary beneficiary d) Irrevocable secondary beneficiary

9. 55. In life insurance, the term “substandard rates” generally is

used to refer to

a) a. Premiums charged for policies with low b) Premiums charged to persons who are
amount considered to be higher-than-average risk
categories

c) Mortality rates that are lower than the rates d) Mortality rates that are lower than those
suggested by the regulatory authorities expected by the company according to its
mortality table

10. 56. Life insurance policy loans are limited to an amount which
with interest will not exceed the

a) a. Cash value of the policy b) b. Total premiums paid

c) c. Net amount of risk d) d. Present value of future premiums

11. 59.Which of the following is false?

a) a. When an agent makes a sales b) b. The primary job of an agent is to get

presentation, he has to sell confidence in the people happily involved with the ownership of
product his policy

c) c. The job of an agent is to squeeze as much

money as possible out of making a new sale.

12. 62. If a policy owner wants to have a claim, what are his basic
settlement options?

a) a. Double indemnity, total and permanent b) b. Fixed amount, fixed period, life income,
disability waiver interest on deposit

c) c. Policy loan, guaranteed insurability d) d. Cash surrender value, automatic premium

loan

13. 64.In which circumstance does an insurance company has the

right to rescind a policy?

a) a. Insured person is killed in military action b) b. Insured person intentionally kills himself
during the contestable period of the policy during the suicide exclusion period specified
in the policy

c) c. Company discovers during the contestable d) d. Company discovers at any time that the
period that the application contains a material policy owner was actually a minor at the time
statement of application

14. 67. Which of the following is not correct with respect to

reinstatement process?

a) a. Assumption or repayment of any b) b. Written assurance of intent to keep the

indebtedness policy in force

c) c. Payment of back premiums with interest d) d. An application for reinstatement

15. 68. If the person whose life is insured dies during the grace
period and the premium was not paid, the amount that the
insurance company will pay to the beneficiary is usually the

a) a. Cash surrender value of the policy minus b) b. Full face amount of the policy
the unpaid premium

c) c. Total premiums paid up to the date of birth d) d. Face amount of the policy minus the
plus interest unpaid premium
16. 70. The basic purposes of a conditional premium receipt are to
acknowledge payment of initial premium for life insurance and
to

a) a. Eliminate the need for acceptance of the b) b. Provide insurance coverage earlier than
offer in forming the contract the policy delivery date if certain
requirements are met

c) c. Guarantee that a policy will be issued as d) d. Backdate the policy to save age
applied for

17. 72. The consideration required by the life insurance company

to make the insurance coverage effective is the

a) a. Beneficiary’s continuing insurable interest b) b. Payment of the initial premium

in the life of insured

c) c. Applicant’s promise to act in good faith d) d. Payment of each renewal premium before
the end of applicable period.

18. 77. A whole life provides

a) a. Protection for the life of the policyholder b) b. Low cost protection only for a limited term
with premiums payable for a limited term of of years with no savings
years

c) c. The highest level of savings for the insured d) d. Protection with premiums payable for life
within a specified term of years and low level of savings as an alternative to
continued protection in old age

19. 80. What policy 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?

a) a. Universal life b) b. Participating whole life policy

c) c. Participating endowment d) d. None of the above

20. 83. In a life insurance company, risk appraisal is necessary to

a) a. Prevent any anti-selection b) b. Project dividend rates for participating

policies

c) c. Collate mortality statistics d) d. Calculate the mortality rate for a given

policy
21. 84. Limited payment life policies are called such because
those policies

a) a. Shorten the period when the benefits may b) b. Limit the period during which the
be paid premiums are payable

c) c. Limit the conditions under which the d) d. Limit the number of beneficiaries thereby
policies are payable minimizing problems of paying too many
people

22. 86. The following are applicable about “Disability Waiver of

Premium Rider” except:

a) a. There is a waiting period b) b. Disability must occur before a stated date

c) c. The insured has to die while disabled d) d. It has to be attached to a life insurance
policy

23. 88. Under an endowment policy, if the person whose life is

insured survives to the end of the period stated in the policy,
the

a) a. Policy will terminate without value b) b. Face amount of the policy be paid

c) c. Policy will automatically be converted to d) d. The extended term insurance option will
paid-up whole life policy into effect

24. 90. Jared wants to update his yearly renewable term life
insurance policy. Which will apply to him?

a) a. The policyowner may renew the policy b) b. Evidence of insurability shall be required
only once every renewal

c) c. Cash values will increase for as long as d) d. Premiums shall increase every time the
the policy is in force policy is renewed

25. 93. Life insurance applications usually carry large amount of

information on which data?

a) a. Relates to the insurability of the applicant b) b. Identifies the applicant

c) c. Describe the desired benefits and mode of d) d. Describe the type of insurance applied for
payment

26. 96. All of the following apply under the beneficiary provision,
except

a) a. An irrevocable beneficiary’s interest is very b) b. The beneficiary must notify the company
similar to that of an absolute assignee of the insured’s death within 24 hours

c) c. The beneficiary can only receive the policy d) d. The interest of a contingent beneficiary
proceeds if he is alive at the time of the remains inoperative during the lifetime of the
insured’s death insured
27. 98. Paid-up additions option is one of the features available in
a participating policy. Which of the following is TRUE about
paid-up additions?

a) a. Don’t affect the cash value of the policy b) b. Don’t affect the loan or cash value of the
policy

c) c. Affect both cash and loan value of the d) d. Only affect the cash value of the policy
policy

28. 100. Harry made a policy loan to pay for the tuition fee of his
children, but after a year, he was still not able to pay it. What
will the insurance company do?

a) a. Increase the present loan by the interest b) b. Demand full settlement of the loan

c) c. Refuse to grant future additional loan d) d. Terminate the contract

29. 102. A client has a policy with you for Ps. 1,000,000 which is
payable to his estate and he tells you that he wants his wife to
receive the money free from Estate Tax. You recommend that
he

a) a. Appoint an irrevocable beneficiary b) b. Take out a new policy with the bank as a
third party

c) c. Make an absolute assignment d) d. Make a collateral assignment

30. 103. Which rider could greatly increase the total life coverage
of a permanent basic policy?

a) a. An accidental death benefit rider b) b. A supplemental term rider

c) c. An interim term rider d) d. None of the above

31. 104. Which of the following statements best describes the

Automatic Premium Loan Provision?

a) a. A provision whereby the company b) b. A provision whereby one life insurance

automatically pays the premium out of the company will guarantee payment of the
loan value and charges it as a loan to the premium to another life insurance company
insured, if said premium due is not paid
within the grace period

c) c. A provision whereby a loan up to the d) d. A provision whereby the company lends

amount of the annual premium is automatic the insured the amount of a premium to
assure that the non-forfeiture options will be
paid
32. 105. When does an interpleader action come into play?

a) a. Decide conflicting claims on the same b) b. Determine if the cause of the insured’s
insurance proceeds death was an excluded risk

c) c. Recommend the best settlement options d) d. Resolve the question of insurable interest
for the beneficiary if the interest on a policy
loan is not paid at the policy anniversary of
the insurance

33. 107.Most binding receipts have the following provisions

except:

a) a. An acknowledgment of the receipt of the b) b. A minimum amount of coverage

initial contractual premium

c) c. The right of the company to terminate the d) d. There is a confirmation of payment

initial coverage if the application is
disapproved by the company

34. 108. Non-productive agents in a company affect

a) a. Investment b) b. Risk sharing

c) c. Expense d) d. Profit allowance

35. 110. 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 alive at that date. This policy is obviously a

a) a. 20 pay life b) b. 20 year endowment

c) c. 20 year term d) d. None of the above

36. 111. One supplementary benefit offered is a payor’s benefit

which is intended to

a) a. Provide waiver of premium benefit in the b) b. Provide for the returns of premiums to an
event of death or disability of the person adult payor in the event that a minor insured
paying the premium dies

c) c. Assure that the adult payor will retain a d) d. Allow the insurance company to pay the
vested interest in the policy when the insured policy’s proceeds to the person who seems
reaches the age of majority equitably entitled to the proceeds

37. 112. How does the law of probability help life insurance
companies?

a) a. Predict when an individual insured will die b) b. Estimate future death rates among
members of a given group

c) c. Determine the experienced death rate d) d. Develop statistics of past deaths among
among the insured persons the general population
38. 113. Because the renewal of a term life insurance policy
presents an increased possibility of Anti-selection, it is
customary for the insurance company to

a) a. Require some evidence of insurability b) b. Charge higher premium rates for term
each time the policy is renewed policies that are renewable than for those
that are not renewable

c) c. Restrict the policyowner’s right to change d) d. Define insurable interest more strictly for
the beneficiary of a renewable term policy term policies than for other policies

39. 114. When the beneficiary of a life insurance policy has been
designated irrevocable, the policyowner must obtain the
consent of the beneficiary in order toI. Name a different person
to receive policy benefitsII. Obtain a loan under the policyIII.
Surrender the policy for it’s cash valueIV. Elects the extended
term non-forfeiture option

a) a. All of these b) b. I, III & IV

c) c. I, II & III d) d. II, III, IV

40. 115. If Phoebe wants to continue her renewable term

insurance, she may

a) a. Change the life insured at renewal date b) b. Renew at the same premium for further
period of years

c) c. Renew providing the insurance company d) d. Renew the coverage based on a higher
agrees to continue coverage premium

41. 116. Mr. Barrio has been insured under the employee group
life insurance plan for several years. If he leaves this job, Mr.
Barrio’s group life insurance will

a) a. Be changed, upon the employer’s notice to b) b. Continue to provide coverage of the same
the insurance company, to a permanent plan amount for a period of 31 days during which
of insurance for the same amount Mr. Barrio can convert to an individual policy

c) c. Cover him for a reduced amount of paid-up d) d. Coverage will stop at once
term insurance until the end of the current
policy year

42. 117. A whole life policy with initial premium rate that applies to
the first 5 years of the policy and a higher premium rate that
applies to the remainder of the premium-payment period is
known as

a) a. An extended life policy b) b. A modified life policy

c) c. An experience-premium policy d) d. A guaranteed renewable policy

43. 118. When belle purchased and a policy, her incontestability
clause immediately became in full effect. What is the purpose
of the clause?

a) a. Permits the company to pay claims within b) b. Gives the company the right to rescind a
2 years policy at any time

c) c. Prevents the company from denying a d) d. Makes it necessary for the beneficiary to
claim after the policy has been in force for 2 present proof of death in the event of a death
years claim

44. 119. In life insurance, there is always “agency” relationship

between the

a) a. Beneficiary and the insurance company b) b. Insured and the insurance company
c) c. Soliciting agent and insurance company d) d. Policyowner and the soliciting agent

45. 120. Clark applied for a Ps. 20,000 whole life policy and paid
the full initial premium to his agent, which then issued a
binding receipt. Under such scenario, the insurance company

a) a. Guarantees the policy will be issued as b) b. Offers permanent insurance coverage

applied for effective as of the date of the application

c) c. Immediately provides interim insurance d) d. Promises that the insurance coverage will
that remains in effect until the policy is issued become effective as of the date of the
or the application is declined application is approved

46. 122. The widow of your policyholder tells that she does not
want a lump sum payment, but she would like to receive
monthly allowance for the rest of her natural life. Which option
do you recommend?

a) a. Periodic annuity option b) b. Life annuity option

c) c. Fixed period option d) d. Fixed income option

47. 123. A risk is considered substandard based on any or all of

the following criteria

a) a. Death, income and educational attainment b) b. Death, occupation and moral character

c) c. Occupation, character and family health d) d. Income, educational attainment and

history occupation
48. 124. How are endowment life insurance and term life
insurance the same?

a) a. Build up cash value rapidly in the early b) b. Provide for payment of the face amount if
policy years the insured is alive at the end of the specified
period

c) c. Contain provisions for automatic d) d. Provide life insurance protection for only
continuation of the insurance protection at the period of time specified in the policy
the end of a specified period contract

49. 125. A prospect tells you that he wants the maximum possible
provision for his retirement with no life coverage. Would you
offer him

a) a. Whole life policy b) b. A life paid-up at age 65 policy

c) c. A 20 pay life policy d) d. None of the above

50. 127. At the end of 25 years, which statement is true for a 25-
pay life policy and is not a 25-year endowment

a) a. No further premiums are paid b) b. The contract is terminated

c) c. The sum insured is paid d) d. The insurance remains in-force

51. 128. Which correct selling approach does an agent do if he is

able to determine a prospect’s complete financial requirement
before offering a policy?

a) a. Planned selling b) b. Counselor selling

c) c. Multiple product selling d) d. Total needs selling

52. 129. Insurance provides protection against economic loss by

enabling the policyowner to

a) a. Transfer responsibility for the loss to b) b. Take speculative risk to compensate for
others the loss

c) c. Reduce the possibility of the occurrence of d) d. Share the loss with others exposed to
the event causing the loss similar risk

53. 130. The only instance when a life insurance contract is

treated primarily as an indemnity agreement is when a

a) a. A person insures the life of a friend b) b. Creditor insures the life of his debtor to
protect himself

c) c. Person insures the life of his or her spouse d) d. Person in a partnership insures the life of
to protect against the loss of income earned his partner to protect the firm against loss
by the spouse due to the death of that partner
54. 131. Which of the following describes the convertible feature of
a term insurance policy?

a) a. It may be changed to another term b) b. It may be changed for a guaranteed sum

insurance policy without evidence of
insurability

c) c. It may be changed to another whole life d) d. It may be changed to a permanent

policy insurance without evidence of insurability

55. 132. William bought a straight-premium whole life policy rather

than a limited payment whole life policy. What could be the
advantage of such purchase?

a) a. Liberal risk selection procedures b) b. Concentration of premium payments

during the period of highest earnings

c) c. More rapid accumulation of cash values d) d. More insurance protection for the same
annual premiums outlay

56. 133.1. Life insurance guarantees cash benefits for all the
following except

a) a. Clean-up fund b) b. Family dependency period income

c) c. Educational fund d) d. Mortgage

57. 135.1. Participating life insurance policies are policies which

a) a. Allow variation in the wording of certain b) b. Provide for the distribution of dividends to
provisions the policyowner

c) c. Develop profit which must be paid to d) d. Permit beneficiaries to exercise certain

stockholders ownership rights during the lifetime of the
insured

58. 136. The commuted value of an insurance policy is

a) a. The cash value of basic addition b) b. The single sum of money which is equal in
value to the discounted future payments

c) c. The cash value of the policy after the loan d) d. The paid-up value of the policy
has been deducted

59. 137. A policy which affords coverage for two or more persons
simultaneously with the face amount of the policy payable
when any of the insured dies at which time the policy
terminates automatically is known as

a) a. Joint and Survivor Annuity b) b. Double Duty Pesos Insurance

c) c. Joint Life Policy d) d. Split Pesos Insurance Plan

60. 138. What provision in a permanent life insurance policy
grants that even if premiums are discontinued, full insurance
will be maintained for a specified period?

a) a. Paid-up insurance additions b) b. Life income option pension

c) c. Reduced paid-up insurance d) d. Extended term insurance

61. 139. The savings element of permanent plans allow for the
build-up of

a) a. Dividends b) b. Cash value

c) c. Maturity benefits d) d. Death benefits

62. 140. In order for life insurance premiums to be waived under a

typical waiver of premium for disability clause, the disability of
the insured person must be total and the disability must

a) a. Be expected to continue until death b) b. Have continued for a specified period,

such as six months

c) c. Have been caused by illness of a chronic d) d. Have been caused by accident, not by
nature, not accident illness of a chronic nature

63. 150. The requirement that the beneficiary should have an

insurable interest in the insured is satisfied if the insured

a) a. And the beneficiary are engaged in a b) b. Belongs to the same club as the
similar occupation beneficiary

c) c. Is financially indebted to the beneficiary d) d. And the beneficiary regularly travel to and
from work in a car pool arrangement

64. 152. Most life insurance agents are expressly authorized to

perform the following functions:

a) a. Solicit applications for insurance, accept b) b. Solicit and approve the application of the
the initial premium and issue a receipt on proposed insured
behalf of the insurance company

c) c. Accept initial premium and waive the d) d. Appraise applicants and decide on a
insurable interest requirement standard or sub-standard rating

65. 157. Which of the following are requirements in reinstating a

policy after it has lapsed for non-payment of premiums?

a) a. Payment of all overdue premiums b) b. Application for reinstatement within the

specified time

c) c. Evidence of insurability and payment of d) d. All of the above

interest on overdue premiums
66. 162. In personal accident and/or sickness contracts, “blanket
policies” refer to

a) a. Group insurance covering loss from b) b. Insurance covering all hazards

specific hazards, incidental to or related to
particular activities

c) c. Insurance for all types of hospital and d) d. None of the above

health care expenses

67. 166. In developing a life insurance policy, the company must

accumulate from premium payments, a fund required to meet
the contract obligations. This fund is called

a) a. Dividend fund b) b. Policy reserve

c) c. Accrued discount d) d.Contingency fund

68. 167. A Retirement Annuity is

a) a. An arrangement where a person can pay a b) b. A special kind of medical examination that
life insurance company a sum of money in has to be repeated every year
return for a pension for life

c) c. A kind of regular annual savings d) d. A one-time payment for a pension to start

arrangement to provide a pension for life with at a predetermined date
no life coverage

69. 170. A client tells you that his bank wants him to use his life
insurance policy so that his bank loan will be paid off if he dies.
You recommend that he

a) a. Appoints an irrevocable beneficiary b) b. Makes an absolute assignment

c) c. Makes a collateral assignment d) d. None of the above

70. 172. Neal and his wife has a whole life and endowment policy
respectively, that is why they are both assured that certain
minimum policy benefits will remain with them even under
certain changed conditions. Which non-forfeiture provision
holds true with the given situation?

a) a. Any guaranteed policy values will belong b) b. No death claim will be denied for any
to the policy owner even if premium misstatement on the application
payments are discounted

c) c. The premium on the policy will remain the d) d. The face amount of the policy will remain
same even when another beneficiary is the same even if the insured’s health
added to the policy becomes impaired
71. 1. Both endowment and term life policies provide that

a) a. No cash value is available to the policy b) b. Renewal and conversion privileges are
owner during the term of the policy. available.

c) c. A benefit will be paid at the end of the d) d. Insurance protection will be limited to a
period of coverage if the person is then alive. specific period.

72. 2. Indicate which of the following is not a function of an

application for life insurance policy.

a) a. To give details pertaining to non-forfeiture b) b. To furnish information on which the

options. contract of life insurance may be written.

c) c. To furnish initial information as to d) d. To convey to the company the desire of

insurability. the applicant to obtain insurance.

73. 4. A policy where an irrevocable beneficiary has been

designated the insured, without the beneficiary’s permission,
can

a) a. Avail of a non-forfeiture option b) b. Discontinue premium payments

c) c. Borrow minimal cash loan d) d. Alter the dividend option now in effect

74. 8. In the event that a policy owner elects the paid-up insurance
option

a) a. The premium stop and the policy b) b. The insurance continues at a reduced
continues for the full face amount until age amount and with a reduced premium.
65

c) c. The policy will automatically terminate. d) d. The premium cease and protection
continues with a reduced amount of
coverage.

75. 11. Which of the following statements about “Disability Waiver

of Premium Rider” is false?

a) a. Disability must occur before a stated date b) b. The insured has to die while disabled

c) c. There is a waiting period d) d. It has to be attached to a life insurance

policy

76. 22. The extent of medical evidence required is determined by

a) a. The age of the applicant and the proposed b) b. Occupation of the applicant
sum to be insured

c) c. Financial condition of the applicant d) d. Date of the last medical examination

77. 23. The conservation of a life insurance policy is dependent on
all the following except

a) a. The level of first year commission b) b. Agent’s service oriented attitude

c) c. Pressure selling d) d. The use of effective needs selling

78. 26. The settlement options provisions may provide all of the
following except

a) a. Payment of the proceeds for the life of the b) b. Payment of the proceeds over a fixed
insured period

c) c. Payments of the proceeds in fixed d) d. Proceeds held by the company, with

amounts until exhausted interest payable to the beneficiary on request

79. 30. Which of the following statement is false

a) a. The cash value of a whole life policy builds b) b. The cash value in a permanent policy is
up at a slower rate than for a 20 year guaranteed by the company
endowment

c) c. The cash value of an endowment builds up d) d. Because of its very short duration the cash
faster than that for a limited pay life policy of value of a yearly renewable term policy
the same duration grows very fast

80. 33. Which of the following statements regarding insurance

premiums is false?

a) a. Cash is required for all premiums paid in b) b. A premium is the legal consideration
the grace period needed to effectuate a life insurance policy

c) c. The grace period is usually 31 days d) d. Premiums which are paid quarterly or
semi-annually are higher than those paid
annually

81. 34. A non-forfeiture option would ordinarily be selected at the

time a policy owner

a) a. Renews a term life policy b) b. Converts a term policy to a whole life

policy

c) c. Chooses a mode of settlement for the life d) d. Discontinues premium payments for a
proceeds whole life or endowment policy
82. 37. The insured named a primary and secondary revocable
beneficiary for Ps. 20,000 policy. Which of the following is
correct?

a) a. The designation of a contingent b) b. The insured can add a third beneficiary at

beneficiary is subject to the primary any time
beneficiary’s approval

c) c. Any policy loan assignment will require the d) d. Upon the insured’s death the primary and
primary beneficiary’s signature secondary beneficiaries shall each receive
Ps. 10,000

83. 42. Claire is considering either endowment or term life policies

to purchase. What similarity do both policies share?

a) a. Insurance protection will be limited to a b) b. Renewal and conversion privileges are

specified period available

c) c. No cash value is available to the policy d) d. A benefit will be paid at the end of the
owner during the term of the policy period of coverage if the person is then alive

84. 46. Insurable interest is necessary when a person insures

another

a) a. So that the person being insured may be b) b. To establish that there is a genuine risk
properly appraised

c) c. Because interest on premiums must be d) d. To make sure that he will pay the
earned premiums

85. 50. A limited pay life policy provides

a) a. Protection for the life of the policyholder b) b. Low cost protection only for a limited term
with premiums payable for a limited term of of years with no savings
years

c) c. The highest level of savings for the insured d) d. Protection with premiums payable for life
within a specified term of years and a low level of savings as an alternative to
continued protection in old age.

86. 52. Group life insurance covers

a) a. Death provided it is during working hours b) b. Death of the employee regardless of

and in the place of employment cause except suicide during the first year
(sometimes two years)

c) c. Accidental death only d) d. Only death by heart attack, pneumonia or

cancer
87. 58.1. What happens to a policy when an irrevocable
beneficiary has been designated the insured?

a) a. Alter the dividend option now in effect b) b. Avail of a non-forfeiture option

c) c. Discontinue premium payments d) d. Borrow minimal cash loan

88. 62. If a policyholder changes his occupation without notifying

the company, might it affect the benefits under his policy?

a) a. No, benefits and premiums may only be b) b. Yes, unless the policy specified otherwise,
changed at the renewal date of the policy if he engaged in a more hazardous
occupation, his benefits may be prorated

c) c. No, benefits agreed upon at the inception d) d. None of the above

of the policy may not be changed

89. 64. A businessman has arranged for a development loan

which will be available 1 year from now. Because he is unable
to wait until then he has arranged an interim loan with his
bank. The only problem is that the bank wants loan secured
against the risk of his death. What is the best economic
arrangement that you recommend?

a) Decreasing term b) Interim term

c) Extended term d) Yearly renewable term

90. 66. A prospect tells you that he wants to be insured at age 65

but he does not want to pay more than the minimum possible
level of premiums. Would you offer him

a) a. Endowment policy b) b. Term policy

c) c. Whole life policy d) d. A life at age 65 policy

91. 70. A person’s human economic value is defined as the

a) a. Total value of the individual’s tax b) b. Total value of his physical assets
contribution to the national economy

c) c. The amount of capital required to replace d) d. Total value of the assets and any future
family income needs earnings derived therefrom
92. 74. Gwen is thinking of electing her paid-up insurance option,
what would happen to her policy if she does?

a) a. The premium cease and protection b) b. The premiums stop and the policy
continues with a reduced amount of continues for the full face amount until age
coverage 65

c) c. The insurance continues at a reduced d) d. The policy will automatically terminate

amount and with a reduced premium

93. 76. An applicant wants a participating policy where the death

benefit will be maximized. Which of the following should he
choose?

a) a. Paid-up additions b) b. Accumulated dividend

c) c. Extended term d) d. Paid-up insurance (reduced insurance)

94. 77.1. Which statement is false when the new owner borrows
on a policy?

a) a. If a large loan is taken after the policy has b) b. Dividend will be reduced by the amount of
been in force for some years, the interest the current interest
cost may exceed the premium

c) c. The policy will lapse if, after reasonable d) d. The proceeds of the policy will be reduced
notice the indebtedness exceeds the cash by the amount of unpaid loan plus interest, if
value insured dies.

95. 78.1. A whole life provides

a) a. Protection for the life of the policyholder b) b. Low cost protection only for a limited term
with premiums payable for a limited term of of years with no savings
years

c) c. The highest level of savings for the insured d) d. Protection with premiums payable for life
within a specified term of years and low level of savings as an alternative to
continued protection in old age

96. 80. The following statements concerning insurable interest are

correct, except:

a) a. It is deemed to exist if economic loss b) b. It is deemed to exist by virtue of a

would occur at the death of the insured relationship by blood or by marriage

c) c. It is important for purposes of underwriting d) d. Everyone has an insurable interest in his

the risk own life

97. 83. For waiver of premium to be effective

a) a. Disability must be total b) b. Disability must be permanent

c) c. Both A & B d) d. Either A or B

98. Which of the following is a settlement option

a) a. Cash surrender value b) b. Extended term insurance option

c) c. Policy loan d) d. Interest on insurance proceeds

99. 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

a) True b) false

100. 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

a) True b) False

101. 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

a) false b) true

102. Anti-selection occurs when persons in poor health wish to buy

insurance.

a) true b) false

103. 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.

a) TRUE b) FALSE

104. 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.

a) TRUE b) FALSE

105. 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

a) TRUE b) FALSE
106. 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.

a) TRUE b) FALSE

107. An endowment at age 65 policy with premium payable for a

limited period of 20 years pays the full amount after 20 years

a) TRUE b) FALSE

108. In most life insurance applications, the largest amount of

information requested is data which identifies the applicant

a) TRUE b) FALSE

109. A policy is not rendered void by reason of misstatement of the

assured’s death

a) FALSE b) TRUE

110. The policy can still avail of the grace period even if the
premium has not been paid and the cash values have been
exhausted

a) FALSE b) TRUE

111. The law of large numbers is about the events occurring by

chance will actually follow a predictable pattern, if enough
such happening are observed

a) TRUE b) FALSE

112. Anti-selection occurs when persons in good health wish to buy

insurance.

a) TRUE b) FALSE

113. A policy is still in force for the full face amount and will remain
in force for a further period of four years and 117 days, without
the payment of any premiums has availed of paid-up
insurance option

a) TRUE b) FALSE

114. In the case of misstatement of age, the amount of insurance

will not be adjusted to the amount which the premium paid at
the correct age would have purchased.

a) TRUE b) FALSE
115. A participating endowment is a policy that provides guaranteed
cash values plus extra annual distributions and pays the
insured after a specified time

a) TRUE b) FALSE

116. 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 60 hours) each week

a) TRUE b) FALSE

117. In most life insurance applications, the largest amount of

information requested is data which identifies the applicant’s
interest in purchasing a policy

a) TRUE b) FALSE

118. A misstatement of the assured’s death does not make the

policy a void contract

a) TRUE b) FALSE

119. 179.All of the following are Standard Provision of a life

insurance policy except

a) a. A misstatement of age clause b) b. A grace period clause

c) c. An automatic premium loan clause d) d. An entire contract clause

120. 178. All of the following statements regarding a life insurance

application are correct except

a) a. Misstatement of material facts could void b) b. It must be signed by the applicant

the policy during the contestable period

c) c. Usually, it will be made a part of the policy d) d. Statements made on the application are
warranties

121. 1. The full face amount is received by the insured person

himself

a) a. When he becomes 65 years of age in the b) b. On the date of maturity in the case of
case of a whole life policy endowment policy

c) c. Only if he lives to 100 years of age in the d) d. When he becomes 65 years of age in the
case of an endowment case of limited pay life
122. 176.1. When the death benefit of a policy is restricted in
amount during the early years of the policy this restriction is
known as

a) a. Rate adjustment b) b. An increasing death benefit

c) c. A lien d) d. A subtractive clause

123. 47. Your client George wants to apply for a life insurance
policy, as his advisor, you would advise him to do all of the
following. Which one will you NOT advise him to do?

a) a. To furnish initial information as to b) b. To give details pertaining to non-forfeiture

insurability options

c) c. To convey to the company the desire of the d) d. To furnish information on which the
applicant to obtain insurance contract of life insurance may be written
Answer Key
1. b
2. b
3. b
4. d
5. c
6. d
7. d
8. a
9. b
10. a
11. c
12. b
13. d
14. b
15. d
16. b
17. b
18. d
19. a
20. a
21. b
22. c
23. b
24. d
25. a
26. b
27. c
28. a
29. a
30. b
31. a
32. a
33. b
34. c
35. b
36. a
37. b
38. b
39. c
40. d
41. c
42. b
43. c
44. c
45. c
46. b
46. b
47. c
48. d
49. d
50. d
51. d
52. d
53. b
54. d
55. b
56. b
57. b
58. b
59. c
60. d
61. b
62. b
63. c
64. b
65. d
66. b
67. b
68. c
69. c
70. a
71. d
72. a
73. b
74. d
75. b
76. a
77. c
78. d
79. d
80. a
81. d
82. b
83. a
84. b
85. a
86. b
87. c
88. c
89. d
90. b
91. d
92. a
92. a
93. a
94. b
95. d
96. c
97. c
98. d
99. b
100. a
101. b
102. a
103. b
104. a
105. a
106. b
107. b
108. b
109. b
110. a
111. a
112. b
113. b
114. b
115. a
116. b
117. b
118. a
119. d
120. d
121. b
122. a
123. c