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TRAD NEW REVIEWER

Terms in this set (50)

A life insurance agent is permitted to

a. Approve an application for insurance
b. Waive any of the requirements of the company
c. Guarantee dividends on participating policies
d. Prepare routine proposals for life insurance coverage
d. Prepare routine proposals for life insurance coverage
Claire is considering to purchase either endowment or term life policy. What do these
policies have in common?




a. Insurance protection will be limited to a specified period
b. Renewal and conversion privileges are available
c. No cash value is available to the policy owner during the term of the policy
d. A benefit will be paid at the end of the period of coverage if the person is then
alive
a. Insurance protection will be limited to a specified period
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. Appoints an irrevocable beneficiary
b. Makes an absolute assignment
c. Makes a collateral assignment


d. None of the above
c. Makes a collateral assignment
If premiums are being waived under a waiver of premium benefit and the insured dies,
the proceeds will be the




a. Reduced paid-up face amount
b. Face amount less unpaid premiums
c. Cash surrender value
d. Face amount
d. Face amount
A living benefit in an insurance policy is




a. The guaranteed insurability benefit
b. The right to change beneficiaries
c. The waiver of premium for disability
d. The cash surrender value
d. The cash surrender value
Insurable interest is necessary when a person insures another




a. So that the person being insured may be properly appraised
b. To establish that there is a genuine risk
c. Because interest on premiums must be earned
d. To make sure that he will pay the premiums
b. To establish that there is a genuine risk
If a policyholder wants to get the maximum immediate value from his non-participating
policy by surrendering it, which of the following would he get?




a. Cash value
b. Loan value
c. Extended term insurance
d. Accumulated dividend
a. Cash value
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. To furnish initial information as to insurability
b. To give details pertaining to non-forfeiture options
c. To convey to the company the desire of the applicant to obtain insurance
d. To furnish information on which the contract of life insurance may be written
c. To convey to the company the desire of the applicant to obtain insurance
The premium on a participating life insurance policy is
a. The same as a non-participating policy.
b. Greater at younger ages
c. Lower than a non-participating policy
d. Higher than a non-participating policy
d. Higher than a non-participating policy
A limited pay life policy provides:

a. Protection for the life of the policyholder with premiums payable for a limited
term of years.
b. Low-cost protection only for a limited term of years with no savings
c. The highest level of savings for the insured within a specified term of years.
d. Protection with premiums payable for life and a low level of savings as an
alternative to continued protection in old age
a. Protection for the life of the policyholder with premiums payable for a limited
term of years.
When you bought an insurance policy on your wifeís 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.

a. The face amount adjusted for misstatement of age
b. Slightly less than the face amount
c. The sum of the premium paid
d. The face amount
a. The face amount adjusted for misstatement of age
Group life insurance covers

a. Death provided it is during working hours and in the place of employment.
b. Death of the employee regardless of cause except suicide during the first year
(sometimes two years)
c. Accidental death only
d. Only death by heart attack, pneumonia or cancer
b. Death of the employee regardless of cause except suicide during the first year
(sometimes two years)
Your client tells you that when his father died, received P500, 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
d. Irrevocable primary beneficiary
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 have to appoint his son to achieve his desire
and protect the son from Estate Tax Liability?

a. Absolute Assignee
b. Irrevocable primary beneficiary
c. Revocable primary beneficiary
d. Irrevocable secondary beneficiary
a. Absolute Assignee
Mr. Sy walked out of his house one night and was never heard 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?




a. It would be four years before the court could declare him legally dead.
b. It would be seven years before the court could declare him legally dead.
c. The company would pay immediately
d. It would require 6 months before the court could declare him dead
b. It would be seven years before the court could declare him legally dead.
In life insurance, the term substandard rates generally is used to refer to


a. Premiums charged for policies with low amounts
b. Premiums charged to persons who are considered to be higher-than-average risk
categories
c. Mortality rates that are lower than the rates suggested by the regulatory
authorities
d. Mortality rates that are lower than those expected by the company according to
its mortality table
b. Premiums charged to persons who are considered to be higher-than-average risk
categories
Life insurance policy loans are limited to an amount which with interest will not exceed
the




a. Cash value of the policy
b. Total premiums paid
c. Net amount of risk
d. Present value of future premiums
a. Cash value of the policy
What happens to a policy when an irrevocable beneficiary has been designated and the


Policy owner needs to loan against his policy for a specific reason?



a. Alter the dividend option now in effect
b. Any transactions or changes in the policy would need the endorsement of the
Irrevocable beneficiary
c. Avail of a non-forfeiture option
d. Borrow minimal cash loan
b. Any transactions or changes in the policy would need the endorsement of the
Irrevocable beneficiary
The fundamental advantage of the use of life insurance as a means of meeting
economic losses is that through life insurance these losses are



a. Reduced for the group as a whole through the multiplier effect
b. Deferred for a specified period of time
c. Met as they rise through savings accumulated on an assessment basis
d. Spread over a large number of people
d. Spread over a large number of people
20. Which of the following is false?




a. When an agent makes a sales presentation, he has to sell confidence in the
product.
b. When an agent meets a prospect for the first, he has to sell confidence in
himself.
c. The primary job of an agent is to get people happily involved with the ownership
of his policy.
d. The job of an agent is to squeeze as much money as possible out of making a
new sale.
d. The job of an agent is to squeeze as much money as possible out of making a
new sale.
What will happen if the insured fails to pay the interest on a policy loan during its
policy anniversary?




a. Terminate the contract
b. Refuse to grant future additional loan
c. Increase the present loan by the interest
d. Demand full settlement of the loan
c. Increase the present loan by the interest
If a policyholder changes his occupation without notifying the company, might it affect
the benefits under his policy?
a. No, benefits and premiums may only be changed at the renewal date of the
policy.
b. Yes, unless the policy specified otherwise, if he engaged in a more hazardous
occupation, his benefits may be prorated.
c. No, benefits agreed upon at the inception of the policy may not be changed.
d. None of the above
c. No, benefits agreed upon at the inception of the policy may not be changed.
If a policy owner avails of a claim, what are his basic settlement options?




a. Double indemnity, total and permanent disability waiver
b. Fixed amount, fixed period, life income, interest on deposit
c. Policy loan, guaranteed insurability
d. Cash surrender value, automatic premium loan
b. Fixed amount, fixed period, life income, interest on deposit
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
d. Yearly renewable term
In which circumstance does an insurance company have the right to rescind a policy?




a. Insured person is killed in military action during the contestable period of the
policy
b. Insured person intentionally kills himself during the suicide exclusion period
specified in the policy
c. Company discovers during the contestable period that the application contains a
material statement
d. Company discovers at any time that the policy owner was actually a minor at the
time of application
d. Company discovers at any time that the policy owner was actually a minor at the
time of application
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. Endowment policy
b. Term policy
c. Whole life policy
d. A life at age 65 policy
b. Term policy
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
b. Extended term insurance
c. Loan value
d. Paid-up addition
a. Accumulated dividends
Which of the following is not correct with respect to reinstatement process?




a. Assumption or repayment of any indebtedness
b. Written assurance of intent to keep the policy in force
c. Payment of back premiums with interest
d. An application for reinstatement
b. Written assurance of intent to keep the policy in force
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. Cash surrender value of the policy minus the unpaid premium
b. Full face amount of the policy
c. Total premiums paid up to the date of birth plus interest
d. Face amount of the policy minus the unpaid premium
d. Face amount of the policy minus the unpaid premium
A personís human economic value is defined as the




a. Total value of the individuals tax contribution to the national economy
b. Total value of his physical assets
c. The amount of capital required to replace family income needs
d. Total value of the assets and any future earnings derived therefrom
d. Total value of the assets and any future earnings derived therefrom
The basic purposes of a conditional premium receipt are to acknowledge payment of
initial premium for life insurance and to
a. Eliminate the need for acceptance of the offer in forming the contract
b. Provide insurance coverage earlier than the policy delivery date if certain
requirements are met
c. Guarantee that a policy will be issued as applied for
d. Backdate the policy to save age
b. Provide insurance coverage earlier than the policy delivery date if certain
requirements are met
A Pure Endowment Policy




a. Pays proceeds to the insured only if he lives to the end of a specified period
b. Pays proceeds to the insured if he lives to the end of endowment period, or pays
the face amount to the named beneficiary if the insured dies before the end of
the endowment period
c. It is actually a combination of endowment insurance and term insurance
d. None of the above
a. Pays proceeds to the insured only if he lives to the end of a specified period
The consideration required by the life insurance company to make the insurance
coverage effective is the




a. Beneficiaryís continuing insurable interest in the life of insured
b. Payment of the initial premium
c. Applicantís promise to act in good faith
d. Payment of each renewal premium before the end of applicable period
b. Payment of the initial premium
Gwen is thinking of electing the paid-up insurance option, what will happen to her
policy if she does?




a. The premiums cease and protection continues with a reduced amount of
coverage
b. The premiums stop and the policy continues for the full face amount until age 65
c. The insurance continues at a reduced amount and with a reduced premium
d. The policy will automatically terminate
a. The premiums cease and protection continues with a reduced amount of
coverage
The company usually allows a policy change from a higher premium to a lower
premium if the insured




a. Momentarily assigns the policy to the company
b. Buys a new plan altogether
c. Presents satisfactory evidence of insurability
d. Obtains written consent from his or her spouse
c. Presents satisfactory evidence of insurability
An applicant wants a participating policy where the death benefit will be maximized.
Which of the following should he choose?




a. Paid-up additions
b. Accumulated dividend
c. Extended term
d. Paid-up insurance (reduced insurance)
a. Paid-up additions
Which statement is false when the new owner borrows on a policy?




a. If a large loan is taken after the policy has been in force for some years, the
interest cost may exceed the premium
b. Dividend will be reduced by the amount of the current interest.
c. The policy will lapse if, after reasonable notice the indebtedness exceeds the
cash value.
d. The proceeds of the policy will be reduced by the amount of unpaid loan plus
interest, if insured dies.
b. Dividend will be reduced by the amount of the current interest.
A whole life provides:

a. Protection for the life of the policyholder with premiums payable for a limited
term of years
b. Low cost protection only for a limited term of years with no savings
c. The highest level of savings for the insured within a specified term of years
d. Protection with premiums payable for life and low level of savings as an
alternative to continued protection in old age
d. Protection with premiums payable for life and low level of savings as an
alternative to continued protection in old age
In practice, most claims for the death benefits of life insurance policies are




a. Investigated thoroughly for evidence of misrepresentation or fraud before
payment is made
b. Paid on the first policy anniversary after the death of the insured
c. Settled by interpleader proceedings
d. Paid promptly as soon as properly completed claim forms are received by the
company
d. Paid promptly as soon as properly completed claim forms are received by the
company
The following statements concerning insurable interest are correct, except:




a. It is deemed to exist if economic loss would occur at the death of the insured
b. It is deemed to exist by virtue of a relationship by blood or by marriage
c. It is important for purposes of underwriting the risk
d. Everyone has an insurable interest in his own life
c. It is important for purposes of underwriting the risk
What policy permits the policyholder to vary the level of premiums, the sum insured
and has its cash values dependent on the investment performance and the level of
premiums paid?




a. Universal life
b. Participating whole life policy
c. Participating endowment
d. None of the above
a. Universal life
Life insurance contributes directly to the welfare and progress of the country by




a. Partially relieving the community of the care of dependents
b. Encouraging provision for the future
c. Accumulating capital for investment in commerce and industry
d. All of the above
d. All of the above
For waiver of premium to be effective,




a. Disability must be total
b. Disability must be permanent
c. Both a & b
d. Either a or b
c. Both a & b
In a life insurance company, risk appraisal is necessary to




a. Prevent any anti-selection
b. Project dividend rates for participating policies
c. Collate mortality statistics
d. Calculate the mortality rate for a given policy
a. Prevent any anti-selection
Limited payment life policies are called such because those policies




a. Shorten the period when the benefits may be paid
b. Limit the period during which the premiums are payable
c. Limit the conditions under which the policies are payable
d. Limit the number of beneficiaries thereby minimizing problems of paying too
many people
b. Limit the period during which the premiums are payable
Which of the following is a settlement option?




a. Cash surrender value
b. Extended term insurance option
c. Policy loan
d. Interest on insurance proceeds
d. Interest on insurance proceeds
The following statements about Disability Waiver of Premium Rider except:




a. There is a waiting period
b. Disability must occur before a stated date
c. The insured has to die while disabled
d. It has to be attached to a life insurance policy
c. The insured has to die while disabled
Non-productive agents in a company affect




a. Investment Yield
b. Risk sharing
c. Expense
d. Profit allowance
c. Expense
Which of the following statements is false?




a. Too many lapsed policies can cause an agentís agreement to be cancelled.
b. When a policy lapses, the agent loses a valuable source of prospect.
c. When a policy lapses, the agent loses all future commissions on renewal
premiums
d. Agents with persistent business seldom stay long with one company
d. Agents with persistent business seldom stay long with one company
Under an endowment policy, if the person whose life is insured survives to the end of
the period stated in the policy, the




a. Policy will terminate without value
b. Face amount of the policy be paid
c. Policy will automatically be converted to paid-up whole policy
d. The extended term insurance option will into effect
b. Face amount of the policy be paid
Sets with similar terms