TRADITIONAL MOCK EXAM 2

Directions: Choose the best answer. Indicate your answer on a sheet by writing the letter.

1. If the interest on a policy loan is not paid at the policy anniversary, the
Insurance company may

A. Demand full settlement of the loan

B. Terminate the contract
C. Refuse to grant future additional loans
D. Increase the present loan by the interest

2. The extent of the medical evidence required is determined by

A. The age of the applicant and the proposed sum to be insured

B. Occupation of the applicant
C. Financial condition of the applicant
D. Data of the last medical examination

3. Indicate which of the following is not a function of an application for life insurance
policy

A. To give details pertaining to non-forfeiture options

B. To furnish information on which contract of life Insurance may be written
C. To furnish initial information as to Insurability
D. To convey to the compnay the desire of the applicant to obtain insurance

4. The insurance companies make use of the laws of probability in order to

A. Estimate future death rate among members of a given group

B. Predict when an individual Insured will die
C. Develop statistics of past death among the general population
D. Determine the experienced death rate among Insured persons

5. Which of the following statements regarding Insurance premium is false

A. Cash is required for all premiums paid in the grace period

B. A premium is the legal consideration needed to effectuate a life Insurance
policy
C. The grace period is usually 31 days
D. Premiums which are paid quarterly or semi-annually are higher than those
paid annually
6. Endowment life Insurance and term life Insurance are similar in that both plans

A. Build up cash value rapidly in the early policy years

B. Provide for payment of the face amount in the Insured is alive at the
specified period
C. Provide life insurance protection for only the period of time specified in the
policy contract
D. Contain provisions for automatic continuation of the insurance protection at
the end of a specified period

7. A non-forfeiture option would ordinarily be selected at the time a policyowner

A. Renews the term life policy

B. Converts a term policy to a whole life policy
C. Choose a model of settlement for the life proceeds
D. Discontinues premium payments for a whole life or endowment

8. The conservation of a life Insurance policy is dependent on all the following except

A. The level of first year commission

B. Agent's service oriented attitude
C. Pressure selling
D. The use of effective needs selling

9. Purchasing a continuous-premium, whole life policy rather that a limited payment

whole life policy, gives the policyowner the advantage of

A. Concentration of premium payments during the period of the highest

earnings
B. Liberal risk selection procedures
C. More Insurance protection for the same annual premiums outlay
D. More rapid accumulation of cash values

10. Name the provision in a permanent life insurance polivy under which premiums are
discounted, full insurance will be maintained fo a specified period:

A. Extended term insurance

B. Paid-up Insurance additions
C. Life income options persons
D. Reduced paid-up insurance

11. The basic coverage provided by life insurance policies may be supplemented by
separate provision coverages for additional amounts of a different nature.
Collectively these provisions are as known:

A. Riders
B. Deposit privileges
C. Dividends
D. Assignment
 12. The insured name a primary and secondary revocable beneficiary for P20,000
policy. Which of the following is correct?

A. The designation of a contingent beneficiary is subject to the primary

beneficiary's approval
B. The insured can add a third beneficiary at any time
C. Any policy loan or assignment will require the primary beneficiary's
signature
D. Upon the insured's death the primary and secondary beneficiaries shall each
receive P10,000

13. An agent who determines a prospect's complete financial requirements preparatory to

offering him a policy using the correct approach known as

A. Conselor selling
B. Total needs selling
C. Planned selling
D. Multiple products selling

14. In a policy where an irrevocable beneficiary has been designated the insured,
without the beneficiary's permission, can

A. Avail on a non-forfeiture option

B. Discontinue premium options
C. Borrow minimal cash loan
D. Alter the dividend option presently in effect

15. Which of the following statements is false?

A. The cash value in a whole life polivy builds up at a slower rate than for a 20
year endowment
B. The cash value in a permanent policy is guaranteed by the company
C. The cash value of an endowment builds up faster than that for a limited pay
life policy of the same duration

16. Which of the following does not have a legitimate insurable interest?

A. An individual on the life of the mistress

B. An individual on his own life
C. An individual on the life oh his spouse
D. A finance company in the life of its borrower
17. Which of the following is the least important reason for requiring that the insurance
agents be licensed?

A. To establish and maintain high professionsl and ethical standards

B. To protect the public
C. To give the government adequate control over the conduct of agents
D. To provide additional income to the government through license fees

18. A yearly renewable term life insurances policy generally specifies that

A. The policyowner may renew the policy only once

B. Premiums shall increase every time the policy is renewed
C. Evidence of insurability shall be required every renewal
D. Cash value will increase for as long as the policy is in force

19. The interest on a policy loan is not paid at the policy anniversary, the insurance
company may

A. Increase the present loan by the interest

B. Terminate the contract
C. Refuse to grant future settlement of the loan
D. Demand full settlement of the loan

20. The incontestability clause

A. Gives the company the right to rescind a policy at any time

B. Permits the company to pay claims within 2 years
C. Makes in necessary for the beneficiary to present proof of death in the event
of death claim
D. Prevents the company from denying a claim after the policy has been in
force for 2 years

21. Non-forfeiture provisions are included in whole life and endowment policies to assure
the policyowner that certain minimum benefits shall remain with him even certain changed
conditions. Non-forfeiture values guarantee to the policyowner that

A. No death claim will be denied for any misstatement on the application

B. Any guaranteed policy values will belong to the policyowner even if
premium payments are discounted
C. The face aount of the policy will remain the same even if the insured's health
becomes impaired
D. The premium on the policy will remain the same even when another
beneficiary is added to the policy
22. In the case of renewable term insurance, the policyowner may

A. Renew the coverage based on a higher premium

B. Changed the Insured at renewed date
C. Renew providing the insurance company agrees to continue coverage
D. Renew at the same premium for further period of years

23. 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. Fice years later your wife died. The
insurer will pay

A. Slightly less than the face amount

B. The face amount
C. The face amount adjusted for misstatement of age
D. The sum of the premium paid

24. Both endowment and term life insurance policies provided that

A. No cash values is available to the policyowner during the term of the policy
B. Renewable and conversion privileges are available
C. A benefit will be paid at the end of the period of the coverage if the person
insured is alive
D. Insurance protection will be limited to a specified period

25. All of the following are sources of information to an insurance company pertaining to
the insurability of an applicant except

A. The applicant's personal appearance

B. Medical examination report
C. Agent's inspections report
D. Government tax record

26. An insurance company generally has the right to rescind a life insurance policy if

A. Company discovers at any time that the policy owner was actually a minor at
the time of application
B. Insured person intentionally kills himself during the suicide exclusion period
specified in the policy
C. Insured prson is killed in military action during the contestable period of the
policy
D. Company discovers during the contestability that the application contains a
material statement
27. In most life insurance applications, the largest amount of information requested is date
which

A. Identifies the applicant

B. Describes the type of insurance applied for
C. Relates to the insurability of the applicant
D. Describes the desired benefits and mode of payment

28. In the event that a policyowner selects the paid-up insurance option

A. The premium stop and the policy continues for the full face amount until
age 65
B. The insurance continues at a reduced amount and eith a reduced premium
C. The policy will automatically terminate
D. The premiums cease and protection continues with a reduced amount of
coverage

29. A father has 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 Liability?

A. Irrevocable primary beneficiary

B. Abolute assignee
C. Irrevocable secondary beneficiary
D. Revocable primary beneficiary

30. What are the settlement options?

A. Policy loans guaranteed isurability

B. Cash surrender values, automatic premium loans
C. Filed amount, fixed period, life income, interest on deposit
D. Double indemnity, total and permanent disability waiver

31. Nothwithstanding various possible legal impediments, of the owner on an endowment

as age 65 policy tells you that at the maturity of the policy he wants top provide his
church with a monthly donation for as long as the church exists. Which option do
you recommend?

A. Fixed income option

B. Periodic annuity option
C. Interest option
D. Life annuity option
32. A policy which permits the policyholder to vary the level of the premium or the sum
insured, and has its cash values dependent upon the investment performance and the
level of premium paid is known as ________ policy.

A. Participating whole life policy

B. Participating endowment
C. universal life
D. None of the above

33. Which of the following statement about “”Disability Waiver of Premium Rider”is
false?

A. Disability must occur before a stated date

B. The insured has to die while disable
C. There is a waiting period
D. It has to be attached to the life insurance policy

34. If the applicant for life insurance fails to disclose or misrepresents a material fact,the
contract is

A. Valid if the insurer issues a policy which is delivered to the applicant

B. Void from the beginning
C. Voidable by the insurer if it has been in force less than 2 years
D. Valid unless the insurer can prove fraud

35. A man applied for a P20,000 whole life policy and paid the full initial premium to the
soliciting agent. The agent issued a binding receipt. Under such a receipt, the
insurance company

A. Offers permanent insurance coverage effective as of the date of the

application
B. Promises what the insurance coverage will become effective as of the date
the application is approved
C. Guarantees that the policy will be issued as pplied for
D. Immediately provides interim insurance that remains in effect until the
policy is issued or the application is declined
36. Paid-up additions:

A. Affect both cash values of the policy

B. Don't affect the cash values of the policy
C. Don't affect the loan or cash values of the policy
D. Only affect the cash value of the policy

37. The company will allow a policy change from a higher premium to a lower premium
provided the Insured

A. Buys a new plan altogether

B. Presents satisfactory evidence of insurability
C. Momentarily assigns the policy to the company
D. Obtain written consent from his or her spouse

38. The total life coverage of a permanent basic policy can be greatly increased through
the use of

A. An accident death benefit rider

B. An interim term rider
C. A supplemental term rider
D. None of the above

39. The settlement options provisions may provide all of the following except:

A. Payment of the proceeds for the life of the insured

B. Payments of the proceeds over a fixed period
C. Payments of the proceeds in fixed amounts until exhausted
D. Proceeds held by the company with interest payable to the beneficiary upon
request

40. In certain situations a company may file interpleader actions with a Court of Law. This
remedy is used to

A. Determine if the cause of the insured's death was excluded risk

B. Decided conflicting claims on the same insurance proceeds
C. Resolve the question of insurable interest
D. Recommended the best settlement options for the beneficiary
Directions: Write T if the statement is TRUE and F if the statement is FALSE.

1. An endowment at age 65 policy with premium payable for a limited period of 20

years pays the full amount after 20 years.

2. In most life insurance applications, the largest amount of information requested is

data which identifies the applicant.

3. A policy is not rendered void by reason of misstatement of the assured's death.

4. In a case where the premium has not been paid and the cash values as been
exhausted, the policy can still avail of the grace period.

5. 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.

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

7. 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 as
availed of paid upo Insurance option.

8. In the case of misstatement of age, the amount of insurance is adjusted to the

amount when the premium paid at the correct age would have purchased.

9. 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.

10. 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.
 Traditional Life Mock Answer Key

1. D 21. B

2. A 22. A

3. B 23. C

4. A 24. D

5. A 25. D

6. B 26. D

7. D 27. C

8. C 28. D

9. B 29. B

10. D 30. C

11. A 31. B

12. B 32. D

13. B 33. B

14. B 34. C

15. D 35. D

16. A 36. D

17. D 37. D

18. B 38. C

19. A 39. D

20. D 40. B

TRUE OR FALSE
1. T 3. T 5. T 7. T 9. T

2. F 4. T 6. T 8. T 10. F