ALT MOCK EXAM SET 1
Instructions:
1. Encircle the letter of your answer.
2. You are given one (1) hour to finish the examination.
1. 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
2. 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
3. Under the law pertaining to life insurance
a) only minor children can be named irrevocable beneficiaries
b) only the wife can be named irrevocable beneficiary
c) on the wife and the children can be named irrevocable beneficiaries
d) any person with insurable interest can be named irrevocable beneficiaries
4. 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
5. When explaining dividends, the following information must be supplied
a) that they are not guaranteed
b) the dividends paid up in the previous years
c) the anticipated dividends
d) the relation to the cost of the policy
6. If a policyowner does not pay a premium on the due date, the policy will immediately
a) lapse
b) be converted to a paid up policy for a lesser amount
c) go into automatic premium loan
d) continue in full force for a period of grace
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7. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr.
Valdez?
a) Participating Plans c) Term Insurance
b) Non-participating Plans d) None of the above
8. A term policy only offers
a) Cash values c) savings
b) Protection d) dividends
9. Disability benefits are not paid
a) for self-inflicted injuries
b) if there is a loan against the policy
c) if all the policy dividends have been withdrawn
d) if disability resulted from sickness only
10. Life insurance policies for which higher than standard premium rates are payable are said to be
a) rated policies c) non-participating policies
b) contingent policies d) conditional policies
11. A risk is considered substandard based on any or all of the following criteria
a) death, occupation, and normal character
b) occupation, moral character and family health history
c) income, educational attainment and occupation
d) death, income and educational background
12. An annuity plan
a) offers life insurance protection
b) offers the waiver of premium benefit
c) is the same as an endowment plan
d) is a purchaser of income
13. Why is it important that the application is the basis of the policy?
a) because the completed application is the basis of the policy contract and the company may accept or
reject an application based on the information given in the application
b) for the agent to have available data of his prospect in connection with future sales
c) to avoid the necessity of the insurer putting all relevant details in the contract
d) none of the above
14. The insurance industry is under government regulations because
a) it is required to account for money spent in company operations
b) it pays high taxes
c) it affects public interest
d) it is a charitable institution
15. 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
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16. An agent is prohibited from doing all of the following except:
a) alter an application without the applicants 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 by the agent
c) refund some of his commission to his client
d) make complete comparisons of policies he sells and those offered by competing insurance
companies
17. In case of misstatement of age
a) the policy is cancelled and a new one is issued for the correct age
b) the insured can be changed
c) the amount of insurance is adjusted to the amount which the premium paid at the correct age
would have purchased
d) the policy remains in force and the company cannot contest it
18. If a policyowner commits suicide within one year, what’s the company’s liability?
a) the company is not liable at all
b) the company would be liable for the payment of the face value of the policy
c) the company would be liable for the payment of the premiums paid by the insured only
d) none of the above
19. The fundamental advantage of the use of life insurance as a means of meeting economic losses is that
through insurance these losses are
a) spread over a large number of people
b) deferred for a specified period of time
c) reduced for the group as a whole through the multiplier effect
d) met as they arise through savings accumulated on an assessment basis
20. A fixed amount added to the premium of a given policy regardless of policy size is known as
a) policy fee c) policy values
b) policy reserve d) extra premium
21. For a contract to be legal and binding
a) parties to the contract must be members if the bar
b) parties to the contract must legally competent
c) parties of the contract must be above 21
d) parties to the contract must possess blood relationship
22. When the proceeds of a life insurance policy are left with the company to earn interest
a) income tax is levied on the proceeds
b) income tax is levied on the interest earnings of the proceeds
c) estate tax is levied on the proceeds
d) donor’s tax is levied on the proceeds
23. Which one of the following provisions in a permanent life insurance policy may lapse for non-payment of
premium
a) Guaranteed insurability c) Settlement Options
b) Automatic Premium Loan d) Reinstatement Provisions
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24. If the insured dies during the grace period of an unpaid life insurance policy, the amount payable to the
beneficiary is usually the
a) total premium paid plus the interest
b) cash surrender value of the policy minus the unpaid premiums
c) face amount of the policy minus the unpaid premiums
d) full face amount
25. If a policyowner whose wife is the irrevocable beneficiary wishes to cash in his policy, he must
a) tell his wife what he is going to do
b) first take a loan to the policy
c) have the check issued in the name of his wife
d) have the wife’s consent
26. Which of the following can give the longest protection?
a) 20 Yr. Endowment c) Ordinary Life
b) Endowment at 65 d) 20 Yr. Term
27. The main difference between a term plan and a permanent plan is
a) permanent plans provide both protection and savings while term plans offer protection only
b) permanent plans provides savings and dividends while term plans provides savings only
c) permanent plans can be converted and renewed while term plans cannot
d) all of the above
28. Mr. Pedro Cruz became paralyzed as a result of jumping out of the window in an attempt to commit
suicide. Under the usual provisions of a disability income policy, he would be entitled to
a) receive the total disability income benefit and the waiver of premium
b) receive partial disability benefit
c) be granted the waiver of premium
d) receive neither disability income nor waiver of premiums
29. Since the purchase of life insurance is a voluntary choice, the individual must meet
a) comprehensive inspection report
b) certain standards of health and occupation
c) minimum income requirement
d) all of the above
30. A hazardous occupation could be defined
a) an occupation the duties of which expose the insured to a degree of danger of sustaining injury
b) an occupation I unhealthy working conditions exposing the insured to elements which can cause
sickness
c) an occupation which exposes the insured to social hazards
d) all of the above
31. . The person who purchases the annuity plan is called the
a) Assignor c) insured
b) Owner d) annuitant
32. . Which of the following statement is correct?
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a) advertising by life insurance agents is prohibited
b) all information about a client or a prospective client has to be treated as confidential
c) the agents should always recommend the amount and type of policy to a prospective client which would be
profitable for the company
d) when an agent advertises his services in the press, he is not allowed to state the name of his
company
3 3. Which one of the following statement is correct?
a) an agent is allowed to share commissions when selling a whole like policy but not when selling a term
policy
b) an agent is allowed to share commissions with another licensed agent or agents but with no one else
c) sharing the commissions with any other person is called twisting
d) an agent is not allowed to share commissions with any person
34. 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 companies
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
3 5. 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
3 6. Which of the following is a settlement option
a) policy loan
b) cash surrender value
c) extended term insurance option
d) interest to insurance proceeds
37. Which of the non-forfeiture option gives the largest amount of protection?
a) fully paid insurance
b) cash surrender value
c) extended term insurance
d) all of the above give equal protection
38. The term loading means
a) the difference between the gross and net premiums for the purpose of paying the insurance
overhead expenses including commissions and taxes
b) the amount which the company will lend to the policyholder with the policy as a security
c) the amount payable in the event of the occurrence of a loss which renders him unfit for insurance
d) none of the above
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39. To be able to calculate the required premiums for a given policy, the agent must know the applicant’s
a) Age
b) choice of plan
c) face amount desired
d) all of the above
40. Father enters into a life insurance contract on behalf of his child. In this case, the father is the
a) Insured c) Insurer
b) Beneficiary d) Applicant - Owner
41. A person has insurable interest in the life of
a) his child or grandchild
b) any person upon who he is wholly or in part dependent on, or from whom he is receiving support or
education
c) any person whom he has pecuniary interest
d) all of the above
42. The convertible feature of a term insurance policy provides that the policy may be
a) changed to a permanent insurance policy without evidence of insurability
b) changed to another life
c) changed for guaranteed sum
d) changed to permanent insurance with evidence of insurability
43. The typical grace period provision in a life insurance policy obliges the life insurance company to
a) establish a policy loan to cover any premium which the policyowner fails to pay by due date
b) keep the policy in force for the duration of any major disability suffered by the policyowner
c) allow the policyowner a three-month extension beyond the due date to make the late premium
payment without penalty
d) none of the above
44. Choose the incorrect statement
The entire contract between the policyowner and the insurance company include
a) the application and the policy
b) any verbal statement made by the agent to the applicant
c) any document attached to the policy when issued
d) any subsequent written amendments to the contract
45. An individual at age 3 5 purchases a policy under which he will in 20 years receive the face amount of the
policy himself, if he is still alive at that date. This policy is obviously a
a) 20 Yr. Endowment c) 20 Yr. Term
b) 20 Pay Life d) None of the above
46. The savings element of permanent plans allows for the build up of
a) Dividends c) maturity benefits
b) cash values d) death benefits
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47. A person wanting a greater coverage for the least amount of premium has an option of attaching what
rider in his permanent life policy?
a) a waiver of premium c) guaranteed insurability rider
b) term insurance d) accidental death rider
rider
48. Which of the following factors would have the least effect on the premium charged for life insurance?
a) Age c) income
b) Occupation d) all of the above
49. Statement in the application form are
c) warranties
a) Guarantees
d) none of the above
b) representation
50. A life insurance company earns income from two main sources
a) premium income and investment income
b) mortgage income and premium income
c) dividend income and interest income
d) mortgage income and dividend income
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