TRAD

Question 1

Which of the following is false? *

a. The primary job of an agent is to get people happily involved with the ownership of his policy.
b. When an agent meets a prospect for the first time, he has to sell confidence in himself.
c. The job of an agent is to squeeze as much money as possible out of making a new sale.
d. When an agent makes a sales presentation, he has to sell confidence in the product.

Answer 1

c. The job of an agent is to squeeze as much money as possible out of making a new sale.

Question 2

Which of the following describes the convertible feature of a term insurance policy?

a. It may be changed for a guaranteed sum.
b. It may be changed to a permanent insurance without evidence of insurability.
c. It may be changed to another term insurance policy without evidence of insurability.
d. It may be changed to another whole life policy.

Answer 2

b. It may be changed to a permanent insurance without evidence of insurability.

Question 3

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. Loan Value
b. Paid-Up Addition
c. Extended Term Insurance
d. Accumulated dividends

Answer 3

d. Accumulated dividends

Question 4

The level premium system means the ___.

a. face amount of insurance premium remains the same each year
b. mortality rate remains the same each year
c. policy reserves increase by the same amount each year
d. premiums remains the same each year

Answer 4

premiums remains the same each year

Question 5

The only instance when a life insurance contract is treated primarily as an indemnity agreement is when a ___.

a. person in a partnership insures the life of his partner to protect the firm against loss due to the death of that partner
b. creditor insures the life of his debtor to protect himself
c. person insures the life of a friend
d. person insures the life of his or her spouse to protect against the loss of income earned by the spouse

Answer 5

b. creditor insures the life of his debtor to protect himself

Question 6

A parent taking a life insurance policy on his minor child wishing to provide that the policy will continue in force in the event of his own death, would apply for ___.

a. Total and Permanent Disability Clause
b. Family Income Provision
c. Term Insurance
d. Payor Insurance Benefit

Answer 6

d. Payor Insurance Benefit

Question 7

Which of the following best describes a pure endowment policy?

a. It pays proceeds to the insured only if he lives to the end of a specified period.
b. It 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 these statements.

Answer 7

a. It pays proceeds to the insured only if he lives to the end of a specified period.

Question 8

A policy that is in force for less than the original sum assured with no indebtedness has availed of ___.

a. Grace Period
b. Reinstatement Provision
c. Cancellation
d. Paid-up Insurance option

Answer 8

d. Paid-up Insurance option

Question 9

The Insurance Commissioner has the power to revoke or refuse to renew an agent’s license in all of the following instances EXCEPT:

a. When the applicant for license has intentionally withheld information concerning his conviction of a crime involving moral turpitude
b. When the agent has diverted any premium collection for his personal use
c. When an agent influences the applicant’s choice of plan to be purchased
d. When the agent makes any material misstatement in his application for license

Answer 9

c. When an agent influences the applicant’s choice of plan to be purchased

Question 10

For waiver of premium to be effective, ___.

a. Disability must be total
b. Disability must be permanent
c. Disability must be total and permanent
d. Disability may either be total or permanent

Answer 10

b. Disability must be total and permanent

Question 11

Insurable interest is necessary when a person insures another ___.

a. to establish that there is a genuine risk
b. because interest on premiums must be earned
c. so that the person being insured may be properly appraised
d. to make sure that he will pay the premiums

Answer 11

to establish that there is a genuine risk

Question 12

One requirement a policyowner must meet in order to reinstate a life insurance policy is to ___.

a. agree to apply future policy dividends toward the payment of premium
b. assign the policy collaterally to the insurance company for the amount of the overdue premiums plus any outstanding policy loan
c. pay future premiums at the rate for his or her attained age at the time of reinstatement
d. furnish evidence of insurability which is satisfactory to the insurance company

Answer 12

d. furnish evidence of insurability which is satisfactory to the insurance company

Question 13

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

Answer 13

b. provide insurance coverage earlier than the policy delivery date if certain requirements are met

Question 14

The requirement that the beneficiary should have an insurable interest in the insured is satisfied if the insured ___.

a. and the beneficiary regularly travel to and from work in a car pool arrangement
b. is financially indebted to the beneficiary
c. and the beneficiary are engaged in a similar occupation
d. belongs to the same club as the beneficiary

Answer 14

is financially indebted to the beneficiary

Question 15

An insurance company which is owned and controlled by the policyowners who also share in the earnings of the insurance company in the form of dividends is known as a ___.

a. mutual company
b. domestic company
c. foreign company
d. stock company

Answer 15

mutual company

Question 16

Which of the following is a settlement option?

a. Policy loan
b. Extended term insurance option
c. Cash surrender value
d. Interest on insurance proceeds

Answer 16

d. Interest on insurance proceeds

Question 17

An agent is prohibited from doing all of the following practices except to ___.

a. alter an application without the applicant’s prior written approval
b. refund some of his commission to his client
c. convince a prospect to cancel his policy in one insurance company to buy a policy from the insurance company represented by the agent
d. make complete comparison of the policies he sells and those offered by competing insurance companies

Answer 17

d. make complete comparison of the policies he sells and those offered by competing insurance companies

Question 18

A man is about to retire. He has Php 100,000 which he wishes to use to provide income for himself as long as he lives and which would continue to his wife as long as she lives after his death. You would sell him a ___.

a. retirement income endowment
b. cash refund policy
c. joint and survivorship annuity
d. straight life annuity

Answer 18

c. joint and survivorship annuity

Question 19

A person’s human economic value is defined as the ___.

a. Total value of the individual’s tax contribution to the national economy
b. Total value of the assets and any future earnings derived therefrom
c. The amount of capital required to replace family income needs
d. Total value of his physical assets

Answer 19

b. Total value of the assets and any future earnings derived therefrom

Question 20

In most life insurance application, the largest amount of information requested is data which ___.

a. describes the desired benefits and mode of payment
b. identifies the applicant
c. describes the type of insurance applied for
d. relates to the insurability of the applicant

Answer 20

d. relates to the insurability of the applicant

Question 21

The life insurance industry is under government supervision because ___.

a. it affects public interest
b. it is required to account for money spent in company operations
c. it is a charitable institution
d. it pays such high taxes

Answer 21

a. it affects public interest

Question 22

A company can restrict its liability if death occurs as a result of an aviation accident. The aviation exclusion clause usually applies to which of the following?

a. Only for pilots
b. Anybody in an aircraft flight
c. Anybody in the aviation industry who works on, around or in the aircraft
d. Anybody aboard an aircraft in flight who has duties aboard the aircraft

Answer 22

Only for pilots

Question 23

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 will take four years before the court could declare him legally dead.
b. It will take 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.

Answer 23

b. It will take seven years before the court could declare him legally dead.

Question 24

Limited payment life policies are called such because those policies ___.

a. limit the conditions under which the policies are payable
b. limit the number of beneficiaries thereby minimizing problems of paying too many people
c. limit the period during which the premiums are payable
d. shorten the period when the benefits may be paid

Answer 24

c. limit the period during which the premiums are payable

Question 25

The following statements concerning insurable interest are correct, EXCEPT:

a. It is deemed to exist by virtue of a relationship by blood or by marriage.
b. It is deemed to exist if economic loss would occur at the death of the insured.
c. It is important for purposes of underwriting the risk.
d. Everyone has an insurable interest in his own life.

Answer 25

Everyone has an insurable interest in his own life.

Question 26

For life insurance coverage to be valid, insurable interest must exist ___.

a. only at the time of the loan
b. throughout the lifetime of the policy
c. both at the time of the policy issue and at the time of the loan but not necessarily throughout the lifetime of the policy
d. only at the inception of the policy

Answer 26

d. only at the inception of the policy

Question 27

Insurable interest must exist ___.

a. throughout the premium paying period
b. at the inception of the policy
c. for as long as the insurance policy remains in force
d. until the maturity date of the policy

Answer 27

b. at the inception of the policy

Question 28

All of the following policies can be used to afford retirement income EXCEPT:

a. Endowment at age 60
b. Whole life
c. Term to age 65
d. Limited payment life

Answer 28

c. Term to age 65

Question 29

Anti-selection refers to a general tendency on the part of ___.

a. agents to call those prospects who state no obligations to life insurance
b. persons with impaired insurability to be keener in obtaining insurance coverage than those persons who are in good health
c. agency managers to discriminate between loyal agents and disloyal agents
d. applicants for life insurance to opt for inexpensive plans of insurance

Answer 29

b. persons with impaired insurability to be keener in obtaining insurance coverage than those persons who are in good health

Question 30

Life insurance is ___.

a. Only available to a specific group
b. A speculative risk
c. A cooperative risk-sharing plan
d. Paid-up insurance (reduced insurance)

Answer 30

c. A cooperative risk-sharing plan

Question 31

Your client tells you that when his father died, he received Php 500,000 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. Absolute Assignee
b. Revocable Primary Beneficiary
c. Collateral Assignee
d. Irrevocable Primary Beneficiary

Answer 31

b. Irrevocable Primary Beneficiary

Question 32

The following are correct statements EXCEPT: *
a. The cash value of a 20-year endowment policy are greater than those of a whole life policy.
b. Premiums for whole life-insurance are less than for endowment policies.
c. There is a higher risk element for the insurance company involved in connection with endowment policies than with whole life policies.
d. Whole life insurance and endowment insurance serve different purpose.

Answer 32

c. There is a higher risk element for the insurance company involved in connection with endowment policies than with whole life policies.

Question 33

“Critical years” in the programming of life insurance means: *
a. Retirement years
b. Years between the time the youngest child is 15 years old and the mother is 62 years old
c. Period during which the children are small cannot provide for themselves
d. Years immediately following the insured’s death

Answer 33

c. Period during which the children are small cannot provide for themselves

Question 34

The conservation of a life insurance policy is dependent on all of the following EXCEPT: *
a. The use of effective needs selling
b. Agent’s service-oriented attitude
c. Quality of agent’s prospecting habits
d. The level of first year commission

Answer 34

d. The level of first year commission

Question 35

Life insurance companies make use of the laws of probability in order to ___.

a. predict when an individual insured will die
b. determine the experienced death rate among insured persons
c. develop statistics of past deaths among the general population
d. estimate future death rates among members of a given group

Answer 35

d. estimate future death rates among members of a given group

Question 36

The grace period provision in life insurance policies is designed to ___.

a. terminate the contract of insurance automatically
b. compel the insured to pay premiums more promptly
c. give the insured more time to pay the premium while coverage remains in-force
d. permit the company to extra charges

Answer 36

c. give the insured more time to pay the premium while coverage remains in-force

Question 37

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

a. terminate the contract
b. increase the present loan by the interest
c. demand full settlement of the loan
d. refuse to grant future additional loans

Answer 37

b. increase the present loan by the interest

Question 38

The Insurance Code specifies that a contract does not take effect unless:

a. The insured has named in the policy no fewer than two beneficiaries
b. No change has taken place in the insurability of the life to be insured between the time the application was completed and the time the policy was delivered
c. The policy is delivered to an insured, his assignee, agent or beneficiary
d. Payment of the first premium is made to the insurer or its authorized agent

Answer 38

d. Payment of the first premium is made to the insurer or its authorized agent

Question 39

Mr. Kho’s participating whole life insurance policy includes a waiver of premium for disability benefit. During the period when premium payments are being waived under this provision, the cash value of this policy will ___.

a. stop increasing for the term of the rider
b. remain the same and Mr. Kho will continue to receive policy dividends
c. increase and Mr. Kho will continue to receive policy dividends
d. decrease but Mr. Kho will continue to receive policy dividends

Answer 39

increase and Mr. Kho will continue to receive policy dividends

Question 40

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. Full face amount of the policy
b. Cash surrender value of the policy minus the unpaid premium
c. Face amount of the policy minus the unpaid premium
d. Total premiums paid up to the date of birth plus interest

Answer 40

Face amount of the policy minus the unpaid premium

Question 41

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. Assignment
b. Riders
c. Deposit privileges
d. Dividends

Answer 41

b. Riders

Question 42

For anyone to have the benefit of compensation on the value of the life of someone else, there must be an established ___.

a. risk sharing
b. probability
c. insurable interest
d. pure risk

Answer 42

c. insurable interest

Question 43

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

Answer 43

d. Paid promptly as soon as properly completed claim forms are received by the company

Question 44

The widow of your policyholder tells that she does not want a lump sum payment, but she would like to receive monthly allowance for the rest of her natural life. Which option do you recommend? *
a. Fixed Income Option
b. Life Annuity Option
c. Fixed Period Option
d. Periodic Annuity Option

Answer 44

b. Life Annuity Option

Question 45

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
b. To give the government adequate control over the conduct of agents
c. To protect the public
d. To establish and maintain high professional and ethical standards

Answer 45

a. To provide additional income to the government through license fees

Question 46

In the Philippines, an insurance company’s right to rescind a life insurance contract is generally limited to the first years following policy issue date or date of approval of last reinstatement. The provision is embodied in ___.

a. Incontestability clause
b. Omnibus clause
c. Lifetime clause
d. No-exclusion clause

Answer 46

a. Incontestability clause

Question 47

A prospect tells you that he has a loan with a financial institution and he would like an Insurance Company to pay it off if he dies but, he is hard up and he wants this coverage at the lowest possible cost. What would you offer him?

a. A whole life policy
b. A 20 pay life policy
c. An endowment policy
d. A term policy

Answer 47

d. A term policy

Question 48

Participating life insurance policies are policies which ___.

a. provide for the distribution of dividends to the policyowner
b. allow variation in the wording of certain provisions
c. permit beneficiaries to exercise certain ownership rights during the lifetime of the insured
d. develop profit which must be paid to stockholders

Answer 48

a. provide for the distribution of dividends to the policyowner

Question 49

A Retirement Annuity is ___.

a. a kind of regular annual savings arrangement to provide a pension for life with no life coverage
b. a special kind if medical examination that has to be repeated every year
c. an arrangement where a person can pay a Life Insurance Company a sum of money in return for a pension for life
d. a one-time payment for a pension to start at a predetermined date

Answer 49

a. a kind of regular annual savings arrangement to provide a pension for life with no life coverage

Question 50

Applicants for life insurance with moderate physical impairments are called sub-standard risks and ___.

a. are required to pay premiums on an annual basis
b. may be insured at increased rates to compensate for the extra hazard
c. therefore cannot obtain life insurance in any company
d. are issued policies without any non-forfeiture values

Answer 50

b. may be insured at increased rates to compensate for the extra hazard