TRADITIONAL INSURANCE

MOCK EXAMS
SET A

1.) The life insurance industry is under government supervision because

D. It affects public interest
2.) All of the following are correct statements except
D. There is a higher risk element for the insurance company involved in connection
with endowment policies than with whole life policies
3.) The guaranteed cash value is
A. The amount that the company will pay if the policy is surrendered
4.) Antiselection refers to general tendency on the part of
B. Persons with impaired insurability to be more keen in obtaining insurance
coverages than those persons who are in good health
5.) Substandard premium rates are charged
D. Applicants who carry a higher health or occupational risk
6.) For anyone to have the benefit of compensation on the value of the life of
someone else, there must be an established
D. Insurable interest
7.) The premium on a participation life insurance policy is
D. Higher than a non-participating policy
8.) In a child insurance policy, the Parent Waiver Clause provides that:
B. The premiums are waived if the father is disabled or dies
9.) The term “Quality Business” refers to those policies which
C. Are persistent and demonstrate good mortality experience
10.) All of the following statements regarding “Absolute Assignment” are true,
except
C. The insurer must agree to an absolute assignment
11.) A limited pay life policy provides
A. A protection for the life of the policyholder with premiums payable for a limited
term of years
12.) In meet lie insurance applications, the largest amount of information requested
is data which
D. Relates to the insurability of the applicant
13.) Which of the following is the least important reason for requiring that insurance
agents be licensed?
A. To provide additional income to the government through license fees
14.) A company cam restrict its liability if death occurs as a result of an aviation
accident. The aviation exclusion clause usually applies to which of the following?
B. Only for pilots
15.) Group life insurance covers
B. Death of the employee regardless of cause except suicide during the first year
(sometime two years)
16.) If the interest on a policy loan is not paid at the policy anniversary, the
insurance company may
D. Increase the present loan by the interest
17.) Your client tells you that when his father died, he received P 500,000 free of
Estate Tax and he had even known that this policy existed. Which of the following
classifications did your client fall under?
D. Irrevocable primary beneficiary
18.) Mr. Sy walked out of his house one night and was never hear of again. His wife
wanted to make a claim on his life insurance policy, as she believes that he is dead.
Which of the following statements is correct in this case?
B. It would be seven years before the court could declare him legally dead
19.) In life insurance, the term “substandard rates” generally is used to refer to
B. Premiums charged to persons who are considered to be higher-than-average risk
categories
20.) Life insurance policy loans are limited to an amount which with interest will not
exceed the
A. Cash value of the policy
21.) A man made his wife his irrevocable beneficiary and if she died before him then
his children were each named as irrevocable beneficiaries, which of the following
best describes the classification of the children?
B. Irrevocable secondary beneficiary
22.) In the Philippines, an insurance company’s right to rescind a life insurance
contract is generosity limited to the first 2 years following policy issue date or date
of approval of last reinstatement. The provision is embodied in
A. Incontestability clause
23.) All of the following are true except:
D. There are no automatic non-forfeiture provision in life insurance policies
24.) The fundamental advantage of the use of life insurance as a means of meeting
economic losses is that through life insurance these losses are
D. Spread over a large number of people
25.) Which of the following is false?
D. The job of an agent is to squeeze as much money as possible out of making a
new sale
26.) If a policyholder elects to take the Extended Term Insurance option on a 20 year
endowment policy where the cash value is more that sufficient to provide the term
coverage to maturity, in which of the following ways would the excess fun be used?
A. To provide a pure endowment policy at maturity
27.) One requirements a policyowner must meet in order to reinstate a life
insurance policy is to
A. Furnish evidence of insurability which is satisfactory to the insurance company
28.) If a policyholder changes his occupation without notifying the company, might
it affect the benefits under his policy?
C. No, benefits agreed upon at the inception of the policy may not be changed.
29.) Which of the following statements is false?
C. When a policy lapses, the company neither gains no loses since it ceases to carry
risk of covering the insured
30.) 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?
D. Absolute assignee
31.) 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 death. What is the best economic arrangement that you can recommend?
D. Yearly renewable term
32.) 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
B. Term policy
33.) An applicant wants to get a participating policy, which will have the maximum
cash available for emergencies. Which of the following should he select?
A. Accumulated dividends
34.) Which of the following is not correct with respect to reinstatement process?
B. Written assurance of intent to keep the policy in force
35.) If the person whose life is insured dies during the grace period and the
premium as not paid, the amount that the insurance company will pay to the
beneficiary is usually the
D. Face amount of the policy minus the unpaid premium
36.) Which of the following statements is false?
D. Because of its very short duration, the case value of a yearly renewable term
policy grows very fast
37.) The insurance Commissioner has the power to revoke or refuse to renew an
agent’s license in all of the following instances except:
B. When an agent makes any material misrepresentation
38.) A person’s human economic value is defined as the
D. Total value of the assets and any future earnings derived there from
39.) The basic purposes of a conditional premium receipt are to acknowledge
payment of the initial premium for life insurance and to
B. Provide insurance coverage earlier than the policy delivery date if certain
requirements are met
40.) A pure endowment policy
A. Pays proceeds to the insured only if he lives to the end of the specified period
41.) The consideration required by the insurance company to make the insurance
coverage effective is the
B. Payment of the initial premium
42.) An applicant wants a participating policy where the death benefit will be
maximized. Which of the following should he choose?
A. Paid-up additions
43.) The beneficiary, a widow, wishes to pay off the remaining balance of a 15-year
mortgage. Which of the following options do you recommend?
D. None of the above
44.) Which statement is false when the new owner borrows on a policy?
B. Dividend will be reduced by the amount of the current interest
45.) A whole life policy provides:
D. Protection with premiums payable for life and low level of savings as an
alternative to continued protection in old age
46.) In practice, most claims for death benefits of life insurance policies are
D. Paid promptly as soon as properly completed claim forms are received by the
company
47.) The following statements concerning insurable interest are correct, except:
C. It is important for purposes of underwriting the risk
48.) The company will allow a policy change from a higher to a lower premium plan,
provided the insured
C. Presents satisfactory evidence of insurability
49.) A policyholder with a whole life policy has reached the age of 65 and he does
not want to go on paying premiums but he does want to remain insured for life.
Which of the following would he take?
D. Paid-up insurance (reduced amount)
50.) Life insurance contributes directly to the welfare and progress of the country by
D. All of the above
51.) For waiver of premium to be effective,
C. Disability must be permanent
52.) In a life insurance company, risk appraisal is necessary to
A. Prevent any anti-selection
53.) Limited payment life policies are called such because those policies
B. Limit the period during which the premiums are payable
54.) Which of the following is a settlement option?
D. Interest on insurance proceeds
55.) Which of the following statement is false?
D. Agents with persistent business seldom stay long with one company
56.) Under and endowment policy, if the person whose life is insured survives to the
end of the period stated in the policy, the
B. Face amount of the policy will be paid
57.) “Critical years” in programming of life insurance means
D. Period during which the children are small and cannot provide for themselves
58.) Generally, a reinstatement application will be accepted from the owner of a
lapsed insurance policy
B. Within a period of three or five year after the date of lapse as specified in the
policy
59.) The insurance Commissioner has the power to revoke or refuse to renew an
agent’s license in all of the following instances except:
C. When an agent influences the applicant’s choice of plan to be purchased
60.) In a case where the premium has not been paid and the cash value has been
exhausted, the policy can still avail of
B. Reinstatement provision
61.) The information on a life insurance application relating to an applicant’s
birthday, occupation and avocation is used by the company primarily for the
purpose of:
A. Appraising Risk
62.) A client has policy with you for P 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. Appoint an irrevocable beneficiary

SET B

1.) You visit a prospect who tells you that he does not believe in life insurance
because when his mother died, he was beneficiary under the life policy and most of
the money went to pay Estate taxes because her agent made a mistake. Only this
man and his sister were named in the policy. Which of the following did they fall
under?
C. Revocable secondary beneficiary
2.) The basic coverage provided by life insurance policies may be supplemented by
separate provisions that provide coverage for additional amounts or of a different
nature. Collectively these provisions are known as
A. Riders