Traditional Flashcards
A life insurance agent is permitted to
Prepare routine proposals for life insurance coverage
What does endowment and term life policy have in common
Insurance protection will be limited to a specified period
A client tells you that his bank wants him to use his insurance policy so that his bank loan will be paid off if he dies. What will you recommend?
He makes a collateral assignment
If premiums are being waived under a waiver of premiums benefit and the insured dies, which of the following with the proceeds be?
Face amount
What is a living benefit in an insurance policy?
Cash surrender value
Insurable interest is necessary when a person insures another…
To establish that there is a genuine risk
Your client george wants to apply for a life insurance policy. As his advisor, you would advice him to do what?
A. Furnish initial info as to insurability
B. Give details pertaining to non-forfeiture options
C. To furnish information on which the contract of life insurance may be written
What does a limited pay life policy provides?
Protection for the life of the policyholder with premiums payable for a limited term of years.
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 2. Five years later, your wide died. What will the insurer pay?
Slightly less than the face amount
Group life insurance covers
Death of the employee regardless of the cause except suicide during the first year (sometimes 2 years)
Your client tells you that when his father died, he received P500, 000 free of Estate tax, and that he had not even known that his policy existed. Which classification did your client fall under?
Irrevocable primary benefeciary
Mr. Sy walked out of his house one night, and was never heard from since. His wife wanted to make claim on his insurance policy, as she believes that he is dead. In this case, what statement would be correct?
It would take 7 years before the court could declare him legally dead.
In life insurance, which of the following does the term substandard rates generally refer to?
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…
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?
Avail of non-forfeiture option
The fundamental advantage of the use of life insurance means of meeting economic losses is that through life insurance, these losses are…
Spread over a large number of people
A job agent…
A. Makes a sales presentation, he has to sell confidence in the product.
B. Meets a new prospect for the first time, he has to sell confidence to himself
C. His primary job is to get people happily involved with the ownership of his policy.
What will happen if the insured fails to pay the interest on a policy loan during its policy anniversary?
Increase the present loan by the interest
If the policyholder changes his occupation without notifying the company, would it affect the benefits under his policy?
No, benefits agreed upon the inception of the policy may not be charged
If a policy owner avails, of a claim, what are his basic settlement options?
A. Fixed amount.
B. Fixed period
C. Life income
D. Interest on deposit
A businessman has arranged for a development loan that will available 1 year from now. Because he is unable to wait until he has arranged an interim loan with his bank. The only problem is that the bank wants to loan secured against the risk of his death. What is the best economic arrangement that could be recommended?
Yearly renewable term
What circumstance does an insurance company have the right to rescind a policy?
Company discovers that 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 aged 65, but he does not want to pay more than the minimum possible level of premiums. What could you offer him?
Term policy
An applicant want to get a participating policy that will have the maximum cash available for emergencies
Accumulated dividends
Statements that are true with respect to reinstatement process
A. Assumption or repayment of any indebtedness
B. Payment of back premiums with interest
C. An application for reinstatement
If a person, whose life insured, dies during the grace period, and the premium was not paid, what amount of which will the insurance company usually pay to the beneficiary?
Face amount of the policy minus the unpaid premium
What best describes a person’s human economic value?
Total value of the assets and any future earnings derived therefrom
The basic purpose of a conditional premium receipt are to acknowledge payment of initial premium for life insurance and to…
Provide insurance coverage earlier than the policy delivery date if certain requirements are met.
What statement best described a pure endowment policy?
It pays proceeds to the insured only if he lives to the end of a specified period
What consideration is required by the life insurance company to make the insurance coverage effective?
Payment of the initial premium
Gwen is thinking of electing the paid-up insurance option, what will happen to her policy if she does?
The premiums cease and protection continues with the reduced amount of coverage
The company usually allows a policy change from a higher premium to a lower premium if the insured…
Presents satisfactory evidence of insuranbility
An applicant wants a participating policy where the death benefit will be maximized. What should he choose?
Paid-up additions
What statement is false when the new owner borrows a policy?
Dividend will be reduced by the amount of current interest.
What does a whole life provide?
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 death benefits of life insurance policies are…
Paid promptly as soon as properly completed claim forms are received by the company
What statement concerning insurable interest is correct?
A. It is deemed to exist if economic loss would occur at the death of the insured
B. It is deemed exist by virtue of the relationship by blood or marriage.
C. Everyone has an insurable interest in his own life.
What policy permits the policyholder to vary the level of premiums, sum insured, and has its cash values dependent on the investment performance, and the level of premiums paid?
Universal life
How does life insurance contribute to the welfare and progress of the country?
A. By partially relieving the community of the care of the dependents.
B. By encouraging provision for the future
C. By accumulating capital investment in commerce and industry.
When is waiver of premium in effect?
A. Disability must be total
B. Disability must be permanent
In a life insurance company, rick appraisal is necessary to…
Prevent anti-selection
Limited payment life policies are called as such because policies…
Limit the period during which premiums are payable
What is a settlement option?
Interest in insurance proceeds
The following statements are true about “disability waiver of premium rider”
A. There is a waiting period
B. Disability must occur before a stated date
C. It has to be attached to a life insurance policy
Too many lapsed policies can cause an agent’s agreement to be…
Cancelledt
When the policy lapses, the agent loses a valuable source of…
Prospect
When a policy lapses, the agent loses all future commissions on…
Renewal premiums
Under an endowment policy, if the person whose life is insured survives to the end of the period stated in the policy, the..
Face amount of the policy will be paid
Critical years of programming of life insurance means
Period during which the children are small , and cannot provide for themselves
Jared wants to update his yearly renewable term life policy. What applies to a yearly renewable term life insurance?
Premiums shall increase every time the policy is renewed.
The insurance commissioner has the power to revoke or refuse an agent’s license in all of the following instances
A. When the applicant for license has increased intentionally withheld info concerning his conviction of crime involving moral turpitude
B. When the agent has diverted any premium collection for his personal use
Life insurance application usually carry large amount of info that…
Relates to the insurability of the applicant
What rider could greatly increase the total life coverage of a basic policy?
Supplemental term rider
When does an interpleader come into play
To decide conflicting claims on the same insurance proceeds
When does insurable interest must exceed?
At the inception of the policy
How does law of probability help life insurance companies?
Estimate future death rates among members of a given group
If phoebe wants to continue her renewable term insurance, what she may do?
Renew the coverage based on higher premium
Mr. Barrio has been insured under the employee group life insurance for several years. What will happen to his group life insurance if he leaves the job?
Continue to provide coverage of the same amount for a period of 31 days during which Mr. Barrios can convert to an individual policy
A whole life policy with an initial premium rate that applies to the first five years of the policy and a higher premium rate that applies to the remainder of the premium-payment period is known as…
A modified policy
Purpose of incontestable clause
Prevents the company from denying claim after the policy has been in force for 2 years
In life insurance, there is always “agency” relationship between
Soliciting agent and insurance company
Clark applied for a Ps. 20 000 whole life policy, and paid full initial premium to his agent, whose issued a binding receipt. Under such scenario, what does the insurance company do?
Immediately provides interim insurance that remains in effect until the policy is issued or the application is declined
Good sources of prospect and new sales
Orphan policy
The widow of your policyholder tells that she want a lump sum payment, but she would like to receive monthly allowance for the rest of her natural life. What option should you recmmend
Life annuity option
A risk is considered substandard based on any or all of the following criteria
- Occupation
- Character
- Family health history
How are endowment life insurance and term life insurance the same?
Provide life insurance protection for only a period of time specified in the policy contrac
Some insurance companies charge females a lower premium rate the males. Which of the following justifies the practice?
Women have longer life expectancy than men
Women’s life expectancy
After age 54
At the end of 25 years, which statement is true for a 25-year life policy and is not for a 25-year endowment
The insurance remains in force
What sales practice determines a prospect’s complete financial requirement before offering a policy?
Total needs selling
Insurance provides protection against economic loss by enabling the policy owner to…
Share the loss with others exposed to similar risk
When Is the only instance a life insurance contract is treated primarily as an indemnity agreement?
Creditor insures the life of his debtor to protect himself
What describes the convertible features of a term insurance policy?
It may be changed to permanent insurance without evidence of insurability
Will chose a straight-premium whole life policy. What is the advantage of such purchase?
More insurance protection for the same annual premiums outlay
Life insurance guarantees cash benefits for…
A. Clean up fund
B. Educational Fund
C. Mortgage
Have legitimate insurable interest
A. An individual on his own life
B. An individual on the life of his spouse
C. A finance company on the life of his borrower
What is a participating life policy?
Provide the distribution of dividends to the policy owner
What is the commute value of an insurance policy?
The single sum of money which is equal in value to the discounted future payments
What is the policy that affords coverage for two or more persons simultaneously with the face amount of the policy payable when any of the insured dies at which time the policy terminates automatically?
Joint life policy
What is a provision in the permanent life insurance policy that grants full coverage for specified period even if premiums are discontinued?
Extended term insurance
Which of the following does the savings element of permanent plans build up?
Cash value
To waive life insurance premiums under a typical waiver of premium for disability clause, the disability of the insured person must be total, which other condition?
It has continued for a specified period, such ad six months
When are disability benefits not paid?
For self inflicted injuries
Setting aside possible legal impediments, what option would you recommend if an endowment policy owner, at age 65, tells you that he wants to provide his church with a monthly donation for as long as the church exists
Interest option
A family income rider is specifically designed to..
Provide a monthly income from the date ot the death of the insured to some future date specified in the contract
Nicole want to enhance her exiting policy by purchasing a separate provision coverage for a different nature. What would you her?
Riders
Applicants for life insurance with moderate physical impairments are called sub-standard risks and…
May be insured at increased rates to compensate for the extra hazard
Life insurance companies practice risk selection primarily to…
Guard against anti-selection
What is the legal consideration for the promise made by the insurance company in a life insurance contract?
Payment of initial premium
Description of a hazardous occupation
A. An occupation in which duties expose the insured to a degree of sustaining injury.
B. An occupation in unhealthy working conditions exposing the insured to elements which can cause sickness.
C. An occupation which exposes the insured to social hazards
How long is the grace period for insurance premiums?
31 days
The legal consideration needed to effectuate a life insurance policy
Premium
Premiums which are paid quarterly or semi annually are higher than those paid annually
True
What determines the extent of medical evidence required?
The age of the applicant and the proposed sum to be insured
What satisfies the requirement that the beneficiary should have an insurable interest?
The insured is financially indebted to the beneficiary
Most life insurance agents are expressly authorized to perform the following functions:
A. Solicit application for insurance
B. Accept the initial premium
C. Issue a receipt on behalf of the insurance company
Helena owns a policy that is kept in force by paying the premiums on semi-annual basis. If she elected the non-forfeiture option. This means she…
Discontinues premium payments for a whole life or endowment policy
In order for an assignment of a life insurance policy to be binding upon the company,
It must be made in writing and filed with the company
Mr. Lorenzo and his primary beneficiary died in a common accident. It was established that the primary beneficiary died before Mr. Lorenzo, there are no contingent beneficiaries named. To whom will the proceeds of Mr. Lorenzo’s life insurance policy be paid?
The estate of the insured
The insurance business relies on the followinb:
A. Level of first year commission
B. The use of effective needs selling
C. Agent’s service oriented attitude
Requirements in reinstating a policy after it has lapsed for non-payment of premiums?
A. Payment of all overdue premiums
B. Application for reinstatement within the specified time
C. Evidence of insurability and payment of interest on overdue premiums
What source of information will an insurance company not consider from a client pertaining to insurability?
Government tax records
The grace period provision in life insurance policies are designed to…
Give the insured more time to pay the premiums while coverage remains in-force
In most cases, what will happen to a policy loan that has not been repaid at the time of the insured’s death?
It will be deducted from the proceeds of the policy when the death claim is paid
The insurance code specifies that the contract does not take effect unless
Payment of the first premium is made to the insurer or its authorized agent
In personal accidents and/or sickness contracts, what does “blanket policies” refer to?
Insurance covering all hazards
A man is about to retire. He has Ps. 100 000, which he wishes to use provide income for himself as long as he lives, which would continue to his wife, as live as she lives after his death. What will you sell him?
Joint and survivorship annuity
Group insurance are…
A. A covered employee who terminates his employment continues to be covered for 31 days after termination date.
B. In a non-contributory plan, 100% of group members must be included.
C. Most group policies pay dividends to employer.
Daniel failed to disclose that he is already a high-risk candidate for high blood pressure during the initial years of the policy. How will his contract be affected by such info?
Voidable by the insurer if it has been in force less than 2 years.
In developing a life insurance policy, the company must accumulate from premium payments a fund required to meet the contract obligations. What is this fund?
Policy reserv
A kind of regular annual savings arrangement to provide a pension for life with no life coverage
Retirement annuity
What insurance company is owned and controlled by the policy owners who are also share in the earnings to the insurance company in the form of dividends?
Mutual company
An agent is prohibited from doing:
A. Alter an application without the applicant’s prior written approval
B. Convince a prospect to cancel his policy in one insurance company to buy a policy from the insurance company represented by the agent.
C. Refund some of his commission to his client.
Margo is a beneficiary of her dad’s insurance policy. When it was time for her to make a claim, she was offered different options which are:
A. Payment of the proceeds over a fixed period
B. Payment of the proceeds for the life of the insured
C. Payment of the proceeds in fixed amounts until exhausted.
Neal and his wife have a whole life and endowment policies respectively, this is why they are both assured that certain minimum policy benefits will remain with them even under certain changed conditions. What non-forfeiture provision holds true with the given situation?
Any guaranteed policy values will belong to the policy owner even if premium payments are discontinued
In determining the number of people dying or living at a particular age within a given period, which principle do we use?
Probability
Simon named his mother as primary beneficiary and his brother as secondary beneficiary revocable beneficiary for his Ps. 20 000 policy. What applies to this situation?
The insured can add a third beneficiary at any time
What is the restriction when the death benefit of the policy is restricted in amount during the early years of the policy
Rate adjustment
When does the insured person receive the full face amount himself?
On the date of maturity in the case of endowment policy
Life insurance application:
A. Misstatement of material facts could void the policy during the contestable period
B. It must be signed by the applicant
C. Usually, it will be made a part of the policy.
Standard provision of a life insurance policy
A. Misstatement of age clause
B. Grace period clause
C. An automatic premium loan clause
If a policyholder wants to get a maximum immediate value from non-participating policy by surrendering it, which of the followinb would he get?
Cash value
The premium on a participating life insurance policy is…
Higher than a non-participating life policy
In a case where the premium has not been paid and the cash value has been exhausted, which of the following can the policy still avail off?
Reinstatement provision
A prospect tells you that he wants to be insured for life at the least annual cost until he dies. What would you offer him?
A whole life policy
You visit a prospect who tells you that he does not believe in life insurance because, when his mother died, he was the beneficiary under her life policy, mots of the money when to pay Estate Taxes because her agent made a mistake. Only this man and his sister were named in the policy. What did they fall under?
Revocable secondary beneficiary
Beneficiary provision
A. Irrevocable beneficiary’s interest is very similar to that of an absolute assignee
B. The beneficiary can only receive the policy proceeds if he’s alive at the time of the insured’s death
C. The interest of a contingent beneficiary remains inoperative during the lifetime of the insured
In theory, endowment insurance is a combination of what?
Level term and pure endowment
Pad-up additions options is one of the ff. feature available in a participating policy. What is true about paid-up additions?
Affect both cash and loan value of the policy
