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IC VUL & TRAD Reviewer 2024 > TRAD Reviewer (Set C) > Flashcards

TRAD Reviewer (Set C) Flashcards

TRAD Reviewer consisting of 85 items for the third set.

1
Q

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

A

a. That they are not guaranteed

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2
Q

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 policy owner a three-month extension beyond the due date to make the late premium payment without penalty
d. None of the above

A

d. None of the above

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3
Q

Automatic premium loan differs from the other policy loans in that an automatic premium loan

a. Need not be repaid by the policy owner
b. Must be repaid during the policy year in which it is granted
c. Goes into effect requiring no separate action from the policy owner
d. Involves higher interest payments because of the greater cost of
administration

A

c. Goes into effect requiring no separate action from the policy owner

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4
Q

When a policy is assigned absolutely

a. The assignee acquires all the rights and interests of the original policyholder
b. The original policyholder still can exercise some of the rights
c. The original beneficiary is not changed
d. None of the above

A

a. The assignee acquires all the rights and interests of the original policyholder

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5
Q

If a policy did not contain the name of a beneficiary, the beneficiary will be

a. The wife
b. The children
c. The insured’s brothers and sisters
d. The insured estate

A

d. The insured estate

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6
Q

If the 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 grace period

A

d. Continue in full force for a grace period

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7
Q

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 on the policy
c. Have the check issued in the name of his wife
d. Have the wife’s consent

A

c. Have the check issued in the name of his wife

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8
Q

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

A

b. Any verbal statement made by the agent to the applicant

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9
Q

If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be

a. Suspended
b. Paid in a reduced rate
c. Unaffected
d. Increased

A

c. Unaffected

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10
Q

Interest is charged on policy loans

a. For registered policies only
b. If the loan is outstanding for more than a year, a loan repaid within a year is interest free
c. To replace investment income the insurer cannot earn since a loan has been granted
d. For participating policies only

A

c. To replace investment income the insurer cannot earn since a loan has been granted

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11
Q

An insurance plan which offers both protection and savings is called

a. Temporary plan
b. Permanent plan
c. Participating plan
d. Non-participating plan

A

b. Permanent plan

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12
Q

A man with moderate means can have maximum protection possible through

a. 20 Yr. Endowment
b. Limited pay life
c. Term insurance
d. Whole life insurance

A

c. Term insurance

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13
Q

Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez?

a. Participating plan
b. Non-participating Plans
c. Term insurance
d. None of the above

A

a. Participating plan

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14
Q

Which of the following can give the longest protection?

a. 20 yr. Endowment
b. Endowment at 65
c. Ordinary life
d. 20 yr term

A

c. Ordinary life

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15
Q

In a 20 Life policy

a. Protection is until age 100, payment of premium is for 20 years
b. Protection is until age 100, payment of premiums until age 100
c. Protection is for 20 years, payment of premium is for 20 years
d. Protection is for 20 years, payment of premiums until age 100

A

a. Protection is until age 100, payment of premium is for 20 years

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16
Q

A participating plan entitles the policyowner to receive a return of excess premiums. Such is termed as:

a. Endowments
b. Dividends
c. Cash values
d. Cash surrender value

A

b. Dividends

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17
Q

Mrs. Rose Cortez owns a policy which does not provide for the build up of cash values and whose premiums remain level. Mrs. Cortez owns:

a. Ordinary Life
b. Limited Pay Life
c. Decreasing term
d. Level Term

A

d. Level Term

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18
Q

Two attractive features of a term insurance are:

a. Convertibility and cash values
b. Cash values and dividends
c. Protection and dividends
d. Convertibility and renewability

A

d. Convertibility and renewability

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19
Q

A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains__________ feature:

a. Convertibility
b. Renewability
c. Dividend option
d. Both a & b

A

a. Convertibility

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20
Q

A term policy only offers

a. Cash values
b. Protection
c. Savings
d. Dividends

A

b. Protection

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21
Q

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 provide savings and dividends while term plans provide savings only
c. Permanent plans can be converted and renewed while term plans cannot
d. All of the above

A

a. Permanent plans provide both protection and savings while term plans offer protection only

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22
Q

A term rider is

a. A term policy with a waiver of premium
b. Another name for a convertible term policy
c. A renewable term policy
d. A term insurance added to a permanent plan

A

d. A term insurance added to a permanent plan

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23
Q

An optional rider which can be attached to a policy stopping further premium

payments in the event of disability is called
a. Policyholder protection clause
b. Accidental death and dismemberment
c. Waiver of premium
d. Total disability monthly income

A

c. Waiver of premium

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24
Q

If a policy with the accidental death rider becomes paid-up

a. The accidental death rider ceases
b. The face amount of the policy is reduced
c. Premiums on the basic policy stop but the rider premium continues
d. None of the above

A

a. The accidental death rider ceases

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25
Q

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 benefits
c. Be granted the waiver of premiums
d. Receive neither disability income nor waiver of premiums

A

d. Receive neither disability income nor waiver of premiums

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26
Q

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
b. Term insurance rider
c. Guaranteed insurability rider
d. Accidental death rider

A

b. Term insurance rider

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27
Q

If an insured is disabled and his life insurance policy is being continued in force through the waiver of premium, the dividends of the policy would

a. Cease
b. Continue at reduced rate
c. Continue as if the owner is paying the premium
d. Continue but they would be applied toward premium being waived

A

c. Continue as if the owner is paying the premium

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28
Q

A policy with a minor as the proposed insured is called

a. Rated policy
b. Juvenile policy
c. Regular policy
d. Substandard policy

A

b. Juvenile policy

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29
Q

Life insurance policies for which higher than standard premium rates are payable are said to be

a. Rated policies
b. Contingent policies
c. Non-participating policies
d. Conditional policies

A

a. Rated policies

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30
Q

Which of the following factors would have the least effect on the premium charged for life insurance

a. Age
b. Occupation
c. Income
d. All of the above

A

c. Income

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31
Q

Anti-selection occurs

a. When an agent thinks only of his own interest and not of his policyowners
b. When you purchase bad stocks with expectation that they will improve
c. When the insurance company accepts more than a share of poor risks
d. When persons in poor health wish to buy insurance

A

d. When persons in poor health wish to buy insurance

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32
Q

In insurance, risk means

a. Chances of you being paid by the company
b. Hazard on people’s lives
c. Chances of the beneficiary being paid
d. None of the above

A

b. Hazard on people’s lives

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33
Q

Insurance companies have various sources of information and the insured. These are

a. Application form
b. Medical information bureau
c. Inspection report
d. All of the above

A

d. All of the above

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34
Q

In insurance risks are classified as

a. Unacceptable and acceptable
b. Regular and irregular
c. Standard, substandard and declined
d. Complete and incomplete

A

c. Standard, substandard and declined

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35
Q

Statement in the application forms are

a. Guarantees
b. Representation
c. Warranties
d. None of the above

A

b. Representation

36
Q

Mr. Roel Reyes has been confined in a hospital for 3 years prior to his application for insurance. He therefore needs to give the following information

a. Name of attending doctor, diagnosis, date of confinement
b. The bill and medicines
c. Name of doctor only
d. Date of confinement only

A

c. Name of doctor only

37
Q

Insurance companies have a source of confidential medical information on

applicants for life insurance. This is the
a. Agents confidential report bureau
b. Inspection reports bureau
c. Financial standing bureau
d. Medical impairment bureau

A

d. Medical impairment bureau

38
Q

An agent is filling up the Agent’s Confidential Report. What information must be put in his report?

a. Information about insured’s standing in the community
b. Information about insured’s finances
c. All information he knows which are material to the application for insurance
d. a & b only

A

c. All information he knows which are material to the application for insurance

39
Q

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 purchase of income

A

d. is a purchase of income

40
Q

The person who purchases the annuity plan is called the

a. assignor
b. owner
c. insured
d. annuitant

A

d. annuitant

41
Q

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 premium income
d. dividend income and interest income
e. mortgage income and dividend income

A

a. premium income and investment income

42
Q

Policy reserves are future obligations on the part of

a. the insurance commission
b. the insurance company
c. the beneficiary
d. the policyowner

A

b. the insurance company

43
Q

Stock companies are owned by

a. policyowners
b. stockholders
c. creditors
d. government

A

b. stockholders

44
Q

In the case of life insurance, a sale is considered completed if the application is signed and payment of the first premium is made by the applicant. For the sale to be considered completed

a. a medical examination has to be made first
b. payment of the first premium has to be made by the applicant in full or in part, as specified. One of the acceptable methods of settlement is by cash or check in part, with a note for the balance
c. payment of the first premium has to be made in full by a note first
d. the first premium has to be paid for in full and in cash

A

a. a medical examination has to be made first

45
Q

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

A

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

46
Q

Which one of the following statements is correct?

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 to the press, he is not allowed to state the name of his company

A

b. All information about a client or a prospective client has to be treated as confidential

47
Q

Prior to granting a license, the IC requires proof of

a. A clean record of employment
b. A reasonable educational background
c. A prospective agent’s character and reputation
d. All of the above

A

d. All of the above

48
Q

The IC has the power to adjudicate insurance claims against companies for any single claim not exceeding

a. 1,000,000.00
b. 250,000.00
c. 100,000.00
d. 500,000.00

A

c. 100,000.00

49
Q

Which one of the following statements is correct?

a. An insurance agent’s license will be renewed when the commissioner is satisfied that the information in the application is accurate and all requirements are met
b. An insurance agent’s license is valid only for one month
c. An insurance agent’s license is valid during the lifetime of the agent
d. An insurance agent’s license will be renewed when the corresponding application and fee are received by the insurance commissioner

A

a. An insurance agent’s license will be renewed when the commissioner is satisfied that the information in the application is accurate and all requirements are met

50
Q

The insurance industry is under government regulations because
a. It is required to account for the money spent in company operations

b. It pays high taxes
c. It affects public interest
d. It is a charitable institution

A

c. It affects public interest

51
Q

Which one of the following statements is correct?

a. An agent is allowed to share commissions when selling a whole life 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 commission with any other person is called twisting
d. An agent is not allowed to share commissions with any person

A

b. An agent is allowed to share commissions with another licensed agent or agents but with no one else

52
Q

Which one of the following statements is correct?

a. Rebating of premiums can only be authorized by the head office of the insurer
b. A life insurance is not allowed to identify on his letterhead the name of the insurer he represents
c. Life insurance agents are allowed to act for two insurers at the same time under the same license
d. Rebating of premiums by an insurance agent is prohibited

A

d. Rebating of premiums by an insurance agent is prohibited

53
Q

Persuading a policyowner, directly or indirectly, to surrender or lapse a policy in one company and replacing it with a policy in another company is

a. Rebating
b. Twisting
c. Knocking
d. Discounting

A

b. Twisting

54
Q

Rebating is

a. Dating the policy a month in advance
b. Giving false information
c. Twisting
d. Premium discrimination against policyholders

A

d. Premium discrimination against policyholders

55
Q

An insurance agent’s license can be revoked for

a. Fraudulent practices
b. Violation of any provision of the insurance code
c. Misrepresentation in the application for license
d. Any or all of the above

A

d. Any or all of the above

56
Q

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. Offer to pay the first premium with the application for insurance in behalf of the client

A

a. Keep all policyholders information confidential

57
Q

The term knocking means

a. Promising to pay two annuitants a fixed annual income as long as both survive
b. Making derogatory remarks about competing underwriters or 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

A

b. Making derogatory remarks about competing underwriters or companies

58
Q

The following are unethical practices in the solicitation and procurement of insurance except

a. Misleading estimates of the dividends or shares of surplus to be received thereon
b. Inducing a policyholder to lapse, forfeit or surrender a policy he holds for another company
c. Misrepresenting the terms of any policy issued by any insurance company or the benefits or advantages promised thereon
d. Obtaining or attempting to obtain a license by fraud or misrepresentation

A

d. Obtaining or attempting to obtain a license by fraud or misrepresentation

59
Q

Twisting is

a. Paying the premium on one policy by surrendering the dividends of another policy
b. The replacement of a policy in one company with another policy in another company
c. An attempt made by an insurance company to secure the services of an agent from another company
d. An offense which does not apply to variable concepts

A

b. The replacement of a policy in one company with another policy in another company

60
Q

The misstatement of facts by either of the parties of insurance to the other whether in writing or orally preliminary and in reference to making the insurance contract is

a. Knocking
b. Overloading
c. Misrepresentation
d. Twisting

A

c. Misrepresentation

61
Q

Selling a person more insurance than what is warranted by his sources is called

a. Overloading
b. Twisting
c. Rebating
d. Knocking

A

a. Overloading

62
Q

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 matter left entirely to the discretion of the agent

A

c. Is an offense in the great majority of cases

63
Q

The suicide clause is in effect for

a. The first 6 months
b. The first year
c. The first 2 years
d. The first 18 months

A

c. The first 2 years

64
Q

The three non-forfeiture values in a permanent policy are

a. Cash dividends, bonus additions and extended term insurance
b. Cash surrender value, loan value, assignment
c. Waiver of premium, reinstatement and the policy loan
d. Cash surrender value, paid value, extended term insurance

A

d. Cash surrender value, paid value, extended term insurance

65
Q

In the event that a policy elects the paid-up insurance option
a. The premiums stop and the policy continues for the full face amount until age 65

b. The premiums cease and protection continues with a reduced amount of coverage
c. The insurance continues with a reduced amount and a reduced premium
d. The policy will automatically terminate

A

b. The premiums cease and protection continues with a reduced amount of coverage

66
Q

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

A

c. The amount of insurance is adjusted to the amount which the premium paid at the correct age would have purchased

67
Q

Which one of the following is not derived from the non-forfeiture values

a. Cash surrender value
b. Paid-up insurance
c. Dividends
d. Extended term insurance

A

c. Dividends

68
Q

Mr. Dela Cruz stated in his application that he was 30 years of age and a policy was issued to him on that basis. When he died twenty years later it was found out that, in fact, he was 34 years of age at the time of his application. In conformity with the Insurance Code, the company

a. Paid the amount of insurance payable to his beneficiary reduced in relation to his actual age at the time the contract was signed
b. Paid one-half of the face value of the policy
c. Need not pay the face value of the policy, but refund all premiums paid
d. Paid the full face value of the policy without any extra charges

A

a. Paid the amount of insurance payable to his beneficiary reduced in relation to his actual age at the time the contract was signed

69
Q

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

A

c. The company would be liable for the payment of the premiums paid by the insured only

70
Q

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

A

c. Extended term insurance

71
Q

Any policy which has lapsed can be reinstated subject to normal conditions of proof of insurability within

a. Three years
b. Six months
c. One year
d. Two years

A

a. Three years

72
Q

Life insurance is

a. A luxury afforded by the rich
b. Only available to a specific group
c. A cooperative risk sharing plan
d. A speculative risk

A

c. A cooperative risk sharing plan

73
Q

The official who makes the necessary assumption and calculation in respect of the principal elements in life insurance premium in order to arrive at the premium rates to be charged is the

a. Life agent
b. Senior statistician
c. Insurance commissioner
d. Actuary

A

d. Actuary

74
Q

Since the purchase of life insurance is a voluntary choice the individual must meet

a. A comprehensive inspection
b. Certain standards of health and occupation
c. A satisfactory medical examination
d. A minimum income figure

A

b. Certain standards of health and occupation

75
Q

The fundamental advantage of the use of insurance as 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

A

a. Spread over a large number of people

76
Q

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

A

a. The difference between the gross and net premiums for the purpose of paying the insurance overhead expenses including commissions and taxes

77
Q

Life insurance can provide money when income stops because of
a. Disability
b. Death
c. Retirement
d. All of the above

A

d. All of the above

78
Q

The three elements that make up a life insurance premium are

a. Mortality experience, investment earnings and operating expenses
b. Cash values, dividends and paid up values
c. Cash values, loan values and paid up values
d. Past dividend experience, present dividend and projected interest

A

a. Mortality experience, investment earnings and operating expenses

79
Q

The number of years that persons at a given age will live on the average as shown by the mortality table is called

a. Law of large numbers
b. Life income option
c. Life annuity
d. Life expectancy

A

d. Life expectancy

80
Q

Part of the premium paid by a policyholder is invested by the insurance company. In premium computation, this factor is known as:

a. Interest
b. Investment
c. Loading
d. Mortality

A

a. Interest

81
Q

Both endowment and term life policies provide that:

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

A

d. Insurance protection will be limited to a specified period

82
Q

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

a. To give details pertaining to non-forfeiture options
b. To furnish information on which the contract of life insurance may be written
c. To furnish initial information as to insurability
d. To convey to the company the desire of the applicant to obtain insurance

A

d. To convey to the company the desire of the applicant to obtain insurance

83
Q

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 Liability?

a. Irrevocable primary beneficiary
b. Absolute Assignee
c. Irrevocable secondary beneficiary
d. Revocable primary beneficiary

A

b. Absolute Assignee

84
Q

A policy where an irrevocable beneficiary has been designated the insured, without the beneficiary’s permission, can:

a. Avail of a non-forfeiture option
b. Discontinue premium payments
c. Borrow minimal cash loan
d. Alter the dividend option now in effect

A

b. Discontinue premium payments

85
Q

Which of the following is the least important reason for requiring that insurance agents is licensed?

a. To establish and maintain high professional 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

A

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

IC VUL & TRAD Reviewer 2024 (5 decks)

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