Instructions: 1. Encircle the letter of your answer. 2. You are given one (1) hour to finish the examination.
1. An insurance plan which offers both protection and saving is called
a) temporary plan c) participating plan b) permanent plan d) non-participating plan
2. 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: a) Ordinary Life c) Decreasing Term b) Limited Pay Life d) Level Term
3. For the waiver of premium to be effective
c) both a & b a) disability must be total d) either a or b b) disability must be permanent
4. A policy with a minor as the proposed insured is called
a) rated policy c) regular policy b) juvenile policy d) substandard policy
5. In an application, the information that must be disclosed include
a) only his date and place of birth b) only his family history c) every fact in his knowledge that is material to the insurance d) only information he wants the agent to know
6. An agent is filling up the Agent’s Confidential Report. What information must he put in his report7 a) information about insured’s standing in the community b) information about insured’s finances c) all information he knows which are material to the application for insurance d) a & b only
7. Stock companies are owned by
c) creditors a) policyowners b) stockholders d) government
8. Which one 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 b) an insurance agent’s license is valid only for one month c) an insurance agent’s license is valid during the lifetime of the agent d) an insurance agent’s license will be renewed when the corresponding application and fee are received by the Insurance Commissioner
Page 1 of 7 9. An insurance agent’s license can be revoked for a) fraudulent practices b) violation of any provision of the Insurance code c) misrepresentation in the application for license d) any or all of the above
10. Selling a person more insurance than what is warranted by his sources is called a) overloading c) rebating b) twisting d) knocking
11. What are the basic settlement options?
a) cash surrender value, automatic premium loan b) fixed amount, fixed period, interest, fixed period and for like c) double indemnity, total disability waiver of premium d) policy loans, assignment, beneficiary designation
12. In the event that the policyowner elects the paid up insurance option a) premiums stop and the policy continues for a full face amount until age 65 b) premium cease and protection continues for a reduced amount c) insurance continues at a reduced amount and with reduced premium d) the policy will automatically terminate
1 3. Since the purchase of life insurance is a voluntary choice the individual must meet a) a comprehensive inspection report b) certain standards of health and occupation c) a satisfactory medical examination d) a minimum income figure
14. The number of years that persons at a given age will live on the average as shown by the mortality table is called a) law of large numbers b) life income option c) life annuity d) life expectancy
15. A man with moderate means can have maximum protection possible through a) 20 Yr. Endowment c) term insurance b) limited pay like d) whole life insurance
16. Two attractive features of a Term insurance are:
a) convertibility and cash values b) cash values and dividends c) protection and dividends d) convertibility and renewability
Page 2 of 7 17. If a policy with the accident death rider becomes paid up a) the accidental death rider ceases b) the face amount of the policy is reduced c) premiums on the basic policy stop but the rider premium continues d) none of the above
18. Insurance companies have various sources of information about the insured. These are: a) application form c) inspection report b) medical information bureau d) all of the above
19. In the case of life insurance, a sale is considered completed if the applications 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 b) payment of the first premium has to be made by the applicant in full or in part, as specified. One of the acceptable methods of settlement is by cash or check in part, with a note for the balance c) payment of the first premium has to be made in full by a note first d) the first premium has to be paid for in full and in cash
20. A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains feature a) convertibility c) dividend option b) renewability d) both a & b
21. In insurance risks are classified as
a) unacceptable and acceptable b) regular and irregular c) standard, substandard and declined d) complete and incomplete
22. A single premium policy means a policy
a) requiring only a single premium each year b) under which only one premium payment is required c) only available to single individuals d) on which no more than one premium can be paid in advance
23. In the event an employee leaves the company in which he is a member of its group insurance policy, his group coverage can be changed to an individual policy using the a) policy exchange facility b) conversion privilege c) change of plan provision d) policy change form
24. Under the law pertaining life insurance
Page 3 of 7 a) only minor children can be named irrevocable beneficiaries b) only the wife can be named irrevocable beneficiaries c) only the wife and the children can be named irrevocable beneficiaries d) any person with insurable interest can be named irrevocable beneficiaries
25. According to insurance law, a common-law spouse cannot be designated a beneficiary
a) since there is no benefit of marriage in the relationship b) if his/her legal partner is still living and the previous marriage has not been legally dissolved c) since the common-law relationship is an immoral relationship d) all of the above
26. Which one of the following provisions in a permanent life insurance policy may lapse for non- payment of premium? a) Guaranteed insurability b) Automatic premium loan c) Settlement options d) Reinstatement provision
27. The convertible features of a term insurance policy provide that the policy may be a) changed to a permanent insurance policy without evidence of insurability b) change to another life c) cashed for a guaranteed sum d) changed to permanent insurance with evidence of insurability
28. 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 a) refund premiums because it is suicide b) pay double the face amount c) pay the face amount d) pay nothing
29. A policyholder may obtain money from the insurance company and sti!! remain insured by a) surrendering the policy for its cash value b) discounting payment of premium for some period c) taking a policy loan d) taking the extended insurance option
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
a) the face amount
b) the face amount adjusted for misstatement of age c) the sum of the premium paid d) slightly less than the face amount
31. . The insurance industry is under government regulations because
a) it is required to account for money spent in company operations
Page 4 of 7 b) it pays high taxes c) it affects public interest d) it is a charitable institution
32. Which one of the following statements is correct?
a) an agent is allowed to share commission when selling a whole like policy but not when selling a term policy b) an agent is allowed to share commission with another licensed agent or agents but with no one else c) sharing the commission with any other person is called twisting d) an agent is not allowed to share commissions with any person
3 3. Which one of the following statements is correct?
a) rebating of premiums can only be authorized by the head office of the insurer b) a life insurance is not allowed to identify on his letterhead the name of the insurer he represents c) life insurance agents are allowed to act for two insurers at the same time under the same license d) rebating of premiums by insurance agent is prohibited
34. Persuading a policyholder, directly or indirectly, to surrender or lapse a policy in one company and replacing it with a policy in another company is a) rebating b) twisting c) knocking d) discounting
3 5. Rebating is a) dating the policy a month in advance b) giving false information c) twisting d) premium discrimination against policyholder
3 6. An insurance agent’s license can be revoked for
a) fraudulent practices b) violation of any provision of the Insurance code c) misrepresentation in the application for license d) any or all of the above
37. One example covered under the ethical practices and procedures is a) keep all policyholders information confidential b) always recommend a will c) never drink in front of client d) always pick up the first premium with the application for insurance
38. The term knocking means
a) promising to pay to two annuitants a fixed annual income as long as both survive b) making derogatory remarks about competing underwriters or companies
Page 5 of 7 c) the number of years that person at a given age will live on the average as shown by the mortality table d) none of the above
39. The following are unethical practices in the solicitation and procurement of insurance except a) misleading estimates of the dividends or shares of surplus to be received thereon b) inducing a policyholder to lapse, forfeit or surrender a policy he holds fro another company c) misrepresenting the terms of any policy issued by any insurance company or benefits or advantages promised thereon d) obtaining or attempting to obtain a license by fraud or misrepresentation
40. Twisting is a) paying the premium on one policy by surrendering the dividends of another policy b) the replacement of a policy in one company with another policy in another company c) an attempt made by an insurance company to secure the services of an agent from another company d) an offense which does not apply to variable concepts
41. The misstatement of facts by either of the parties of insurance to the other whether in writing or orally preliminary and in reference to making the insurance contract is a) Knocking c) misrepresentation b) Overloading d) twisting
42. Selling a person more insurance than what is warranted by his sources is called a) Overloading c) rebating b) Twisting d) knocking
43. An agent is prohibited from doing all of the following except:
a) alter an application without the applicant’s prior written approval b) convince a prospective client to cancel his policy in one insurance company in order to buy a policy in the insurance company represented c) refund some of his commission to his client d) make complete comparisons of policies he sells and those offered by competing insurance companies
44. Inducing an insured to lapse or forfeit his insurance
a) is not allowed by the conditions of the contract b) is always to the advantage of the policyholder c) is an offense in the great majority of cases d) is a manner left entirely to the discretion of the agent
45. The suicide clause is in effect for
a) the first 6 months b) the first year c) the first 2 years
Page 6 of 7 d) the first 18 months
46. The three non-forfeiture values in a permanent policy are
a) cash dividends, bonus additions and extended term insurance b) cash surrender value, loan value and assignment c) waiver of premium, reinstatement and the policy loan d) cash surrender value, paid value, extended term insurance
47. Which one of the following is not derived for the non-forfeiture values a) cash surrender value b) paid up insurance c) dividends d) extended term insurance
48. In the event that the policyowner elects the paid up insurance option a) premiums stop and the policy continues for a full face amount until age 65 b) premium cease and protection continues for a reduced amount c) insurance continues at a reduced amount and with reduced premium d) the policy will automatically terminate
49. Life insurance can provide money when income stops because of a) disability c) retirement b) death d) all of the above
50. Part of the premium paid by a policyholder is invested by the insurance company. In premium computation, this factor is known as a) interest c) loading b) investment d) mortality
