Traditional Review Exam Flashcards
Insurable interest is necessary when a person insures another ____.
a. So that the person being insured may be properly appraised
b. To establish that there is a genuine risk
c. Because interest on premiums must be entered
d. To make sure that he will pay the premiums
b. To establish that there is a genuine risk
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. Five years later, your wife died. Which of the following will the insurer pay?
a. The face amount adjusted for misstatement of age
b. Slightly less than the face amount
c. The sum of the premium paid
d. The face amount
a. The face amount adjusted for misstatement of age
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 of the following classifications did your client fall under?
a. Collateral assignee
b. Absolute assignee
c. Revocable primary beneficiary
d. Irrevocable primary beneficiary
d. Irrevocable primary beneficiary
Mr. Sy walked out of his house one night, and was never heard from since. His wife wanted to make a claim on his insurance policy, as she believes that he is dead. In this case, which of the following statements is correct?
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 will pay immediately.
d. It will require 6 months before the court could declare him dead.
b. It will take seven years before the court could declare him legally dead.
In life insurance, which of the following does the term “substandard rates” generally refer to?
a. Premiums charged for policies with low amounts
b. Premiums charged to persons who are considered to be higher-than-average risk categories
c. Mortality rates that are lower than the rates suggested by the regulatory authorities
d. Mortality rates that are lower than those expected by the company according to its mortality table
b. Premiums charged to persons who are considered to be higher-than-average risk categories
What are the basic settlement options?
a. Cash surrender value, automatic premium loan
b. Fixed amount, fixed period, interest, fixed period and for life
c. Double indemnity, total disability, waiver of premium
d. Policy loan, guaranteed insurability
b. Fixed amount, fixed period, interest, fixed period and for life
A businessman has arranged for a development loan that will available 1 year from now. Because he is unable to wait until then he has arranged an interim loan with his bank. The only problem is that the bank wants loan secured against the risk of his death. What is the best economic arrangement that you recommend?
a. Decreasing term
b. Interim term
c. Extended term
d. Yearly renewable term
d. Yearly renewable term
The following statements are true with respect to reinstatement process EXCEPT ____.
a. Assumption or repayment of any indebtedness
b. Written assurance of intent to keep the policy in force
c. Payment of back premiums with interest
d. An application for reinstatement
b. Written assurance of intent to keep the policy in force
An applicant wants a participating policy where the death benefit will be maximized. Which of the following should he choose?
a. Paid-up additions
b. Accumulated dividend
c. Extended term
d. Paid-up insurance (reduced insurance)
a. Paid-up additions
The following statements concerning insurable interest are correct, except:
a. It is deemed to exist if economic loss would occur at the death of the insured
b. It is deemed to exist by virtue of a relationship by blood or by marriage
c. It is important for purposes of underwriting the risk
d. Everyone has an insurable interest in his own life
c. It is important for purposes of underwriting the risk
For the waiver of premium to be effective
a. Disability must be total
b. Disability must be permanent
c. Both a and b
d. Either a and b
c. Both a and b
The following statements about “Disability Waiver of Premium Rider” are true, except:
a. There is a waiting period
b. Disability must occur before a stated date
c. The insured has to die while disabled
d. It has to be attached to a life insurance policy
c. The insured has to die while disabled
Under an endowment policy, if the person whose life is insured survives to the end of the period stated in the policy, the ___.
a. Policy will terminate without value
b. Face amount of the policy be paid
c. Policy will automatically be converted to paid-up whole policy
d. The extended term insurance will be brought into effect
b. Face amount of the policy be paid
“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. Years immediately following the insured’s death
d. Period during which the children are small, and cannot provide for themselves
d. Period during which the children are small, and cannot provide for themselves
Which rider could greatly increase the total life coverage of a permanent basic policy?
a. An accidental death benefit rider
b. A supplemental term rider
c. An interim term rider
d. None of the above
b. A supplemental term rider
Mr. Barrio has been insured under the employee group life insurance plan for several years. Which of the following will happen to Mr. Barrios’ group life insurance if he leaves this job?
a. Changed, upon the employer’s notice to the insurance company, to a permanent plan of insurance for the same amount
b. Continue to provide coverage of the same amount for a period of 31 days during which Mr. Barrio can convert to an individual policy
c. Cover him for a reduced amount of paid-up term insurance until the end of the current policy year
d. Coverage will stop at once
b. Continue to provide coverage of the same amount for a period of 31 days during which Mr. Barrio can convert to an individual policy
What is the purpose of the incontestability clause?
a. Permits that company to pay claims within two (2) years
b. Gives the company the right to rescind a policy at any time
c. Prevents the company from denying a claim after the policy has been in force for two (2) years
d. Makes it necessary for the beneficiary to present proof of death in the event of a death claim
c. Prevents the company from denying a claim after the policy has been in force for two (2) years
Clark applied for a Ps. 20,000 whole life policy, and paid the full initial premium to his agent, who issued a binding receipt. Under such scenario, what does the insurance company do?
a. Guarantee the policy will be issued as applied for
b. Offer permanent insurance coverage effective as of the date of the application
c. Immediately provides interim insurance that remains in effect until the policy is issued or the application is declined
d. Promise that the insurance coverage will become effective as of the date of the application is approved
c. Immediately provides interim insurance that remains in effect until the policy is issued or the application is declined
The widow of your policyholder tells that she does not want a lump sum payment, but she prefers to receive monthly allowance for the rest of her natural life. Which option do you recommend?
a. Periodic annuity option
b. Life annuity option
c. Fixed period option
d. Fixed income option
b. Life annuity option
Which of the following statement is correct?
a. Orphan policy owners hardly need an agent’s services
b. Orphan policy owners will only deal with their original agents
c. New agents should stay away from orphan policy owners
d. Orphan policy owners are good sources of prospect and new sales
d. Orphan policy owners are good sources of prospect and new sales
