Traditional Reviewer

Direction: Choose the correct answer. Indicate your answer by marking the appropriate parenthesis on
the answer sheet with an X.

1. In a policy where an irrevocable beneficiary has been designated the insured, without the
beneficiary’s permission, can
a. Avail of non-forfeiture option
b. Discontinue premium payments
c. Borrow minimal cash loan
d. Alter the dividend option presently in effect
2. Indicate which of the following is not a function of an application for life insurance policy
a. To give details pertaining to non-forfeiture option
b. To furnish information on which contact 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
3. Both endowment and term life insurance policies provide that
a. No cash value is available to the policy owner during the term of the policy
b. Renewal and conversion privilege are available
c. A benefit will be paid at the end of the period of coverage if the person insured is then alive
d. Insurance protection will be limited to specified period
4. A father has 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 sin 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
5. Which of the following is the least important reason for requiring that the insurance agents be
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
6. An insurance company generally has the right to rescind a life insurance policy if
a. Company discovers at any time that the policy owner was actually a minor at the time of
application
b. Insured person intentionally kills himself during the suicide exclusion period specified in the
policy
c. Insured person is killed in military action during the contestability period of the policy
 d. Company discovers during the contestability period that the application contains a material
statement
7. In the event that a policy owner elects the paid-up insurance option
a. The premiums stop and the policy continues for the full face amount until age 65
b. The insurance continues at a reduced amount and with a reduce premium
c. The policy will automatically terminate
d. The premiums cease and protection continues with a reduced amount of coverage
8. The company will allow a policy change from a higher premium to a lower premium provided
the insured
a. Buys a new plan altogether
b. Presents satisfactory evidence of insurability
c. Momentarily assigns the policy to the company
d. Obtains written consent from his or her spouse
9. What are the basic settlement options?
a. Policy loan, guaranteed insurability
b. Cash surrender values, automatic premium loans
c. Fixed amount, fixed period, life income, interest on deposit
d. Double indemnity, total and permanent disability waiver
10. Paid-up additions:
a. Affect both cash and loan value of the policy
b. Don’t affect the cash value of the policy
c. Don’t affect the loan or cash value of the policy
d. Only affect the cash value of the policy
11. In most life insurance application, the largest amount of information requested is data which
a. Identifies the applicant
b. Describes the type of insurance applied for
c. Relates to the insurability of the applicant
d. Describes the desired benefits and mode of the payment
12. The total life coverage of a permanent basic policy can be greatly increased through the use of
a. An accidental death benefit rider
b. An interim term rider
c. A supplemental term rider
d. None of the above
13. A policy which permits the policy holder to vary the level of premium or the sum insured, and
has its cash values dependent upon the investment performance and the level of premium paid
is known as __________ policy.
a. Participating whole life policy
b. Participating endowment
c. Universal life
d. None of the above
14. Which of the following statements about “Disability Waiver of Premium Rider” is false?
a. Disability must occur before a stated date
 b. The insured has to die while disabled
c. There is no a waiting period
d. It has to be attached to a life insurance policy
15. A man applied for a P20, 000 whole life policies and paid the full initial premium to the soliciting
agent. The agent issued receipt. Under such a receipt, the insurance company,
a. Offers permanent insurance coverage effective as of the date application
b. Promises that the insurance coverage will become effective as of the date the application is
approve
c. Guarantees that policy will be issued as applied for
d. Immediately provides interim insurance that remains in effect until the policy is issued or
the application is declined
16. In case of renewable term insurance, the policy owner may
a. Renew the coverage based on a higher premium
b. Change the life insured at renewal date
c. Renew providing the insurance company agrees to continue coverage
d. Renew at the same premium for further period of years
17. Life insurance companies make use of the laws of probability in order to
a. Estimate future death rates among members of a given group
b. Predict when an individual insured will die
c. Develop statistics of past death among the general population
d. Determine the experience death rate among the insured person
18. Endowment life insurance and term life insurance are similar in that both plans
a. Build up cash value rapidly in the early policy years
b. Provide for payment of the face amount if the insured alive at the end of specified period
c. Provide life insurance protection for only the period of time specified in the policy contract
d. Contain provisions for automatic continuation of the insurance protection at the end of a
specified period
19. A n agent who determine a prospect’s complete financial requirements preparatory to offering
him a policy using the correct selling approach known as
a. Counselor selling
b. Total needs selling
c. Planned selling
d. Multiple product selling
20. The conservation of a life insurance policy is dependent on all the following except:
a. The level of the first year commission
b. Agent’s service oriented attitude
c. Pressure selling
d. The use of effective needs selling
21. All of the following are sources of information to an insurance company pertaining to the
insurability of an applicant except:
a. The applicant’s personal appearance
b. Medical examination report
 c. Agent’s inspection report
d. Government tax records
22. Name the provision in a permanent life insurance policy under which premiums are
discontinued, full insurance will maintained for a specified period:
a. Extended term insurance
b. Paid-up insurance addition
c. Life income option person
d. Reduced paid-up insurance
23. The extent of medical evidence required is determined by
a. The age of the applicant and the proposed sum to be insured
b. Occupation of the applicant
c. Financial condition of the applicant
d. Date of the last medical examination
24. Notwithstanding various possible legal impediments, if the owner of an endowment at age 65
policy tells you that the maturity of the policy he wants to provide his church with a monthly
donation for as long as the church exists. Which option do you recommend?
a. Fixed income option
b. Periodic annuity option
c. Interest option
d. Life annuity option
25. The settlement option provision may provide all of the following except:
a. Payment of the proceeds for the life of the insured
b. Payment of the proceeds over a fixed period
c. Payment of the proceeds in fix amounts until exhausted
d. Proceeds held by the company, with interest payable to the beneficiary on request
26. If the applicant for life insurance fails to disclose or misrepresents a material fact, the contract is
a. Valid of the insurer issues a policy which is delivered to the applicant
b. Void from the beginning
c. Voidable by the insurer If it has been in force less than 2 years
d. Valid unless the insurer can prove fraud
27. In certain situations a company may file interpleaded actions with the Court of Law. This remedy
is used to
a. Determine if the cause of the insured’s death was an excluded risk
b. Decide conflicting on the same insurance proceeds
c. Resolve the question of insurable interest
d. Recommend the best settlement option for the beneficiary
28. Non- forfeiture provisions are included in a whole life and endowment policies to assure the
policy owner that certain minimum policy benefits shall remain with him even under certain
changed conditions. Non-forfeiture values guarantee to the policy owner that
a. No death claim will be denied for any misstatement on the application
b. Any guaranteed policy values will belong to the policy owner even if premium payments are
discounted
 c. The face amount of the policy will remain the same even if the insured’s health becomes
impaired
d. The premium on the policy will remain the same even when another beneficiary is added to
the policy
29. Purchasing a continuous-premium, whole life policy rather than a limited-payment, whole life
policy gives the policy owner the advantage of
a. Concentration of premium payments during the period of highest earnings
b. Liberal risk selection procedures
c. More insurance protection for the same annual premiums outlay
d. More rapid accumulation of cash values
30. Which of the following does not have a legitimate insurable interest?
a. An individual on the life of his mistress
b. An individual on his own life
c. An individual on the life of his spouse
d. A finance company on the life of its borrower
31. A non-forfeiture option would ordinarily be selected at the time a policy owner
a. Renews a term life policy
b. Converts a term policy to a whole life policy
c. Chooses a mode of settlement for the life proceeds
d. Discontinues premium payments for a whole life or endowment policy
32. Which of the following statements regarding insurance premiums is false?
a. Cash is required for all premiums paid in the grace period
b. A premium is the legal consideration needed to effectuate a life insurance policy
c. The grace period is usually 31 days
d. Premiums which are paid quarterly or semi-annually are higher than those paid annually
33. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
a. Demand full settlement of the loan
b. Terminate the contract
c. Refuse to grant future additional loans
d. Increase the present loan by the interest
34. The basic coverage provided by life insurance policies may be supplemented by separate
provision that provide coverage for additional amounts or of a different nature. Collectively
these provision are known as:
a. Riders
b. Deposit privileges
c. Dividends
d. Assignment
35. Which of the following statement is false?
a. The cash value of a whole life policy builds up at a slower rate than a 20 year endowment
b. The cash value in a permanent policy is guaranteed by the company
c. The cash value of an endowment builds up faster than that for a limited pay life policy of the
same duration
 d. Because of its very short duration the cash value of a yearly renewable term policy grows
very fast
36. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
a. Increase the present loan by interest
b. Terminate the contract
c. Refuse to grant future additional loan
d. Demand settlement of the loan
37. When you bought an insurance policy in your wife’s life, you were 27 and she was 26, but you
stated that you were 26 and she was 27. 5 years later your wife died. The insurer will pay
a. Slightly less than the face amount
b. The face amount
c. The face amount adjusted for misstatement of age
d. The sum of the premium pay
38. The incontestability clause
a. Gives the company the right to rescind a policy at any time
b. Permits the company to pay claims within 2 years
c. Makes it necessary for the beneficiary to present proof of death in the event of a death
claim
d. Prevents the company from denying a claim after the policy has been in force for 2 years
39. The insured named a primary and secondary revocable beneficiary for P20, 000 policies. Which
of the following is correct?
a. The designation of contingent beneficiary is subject to the primary beneficiary’s approval
b. The insured can add a third beneficiary at any time
c. Any policy loan or assignment will required the primary beneficiary’s signature
d. Upon the insured’s death the primary and secondary beneficiaries shall each receive
P10,000
40. A yearly renewable term life insurance policy generally specifies that
a. The policy owner may renew the policy only once
b. Premium shall increase every time that the policy is renewed
c. Evidence of insurability shall be required every renewal
d. Cash values will increase for as long as the policy is in force
 DIRECTION: Under Column A of your answer sheet, write T if the statement is TRUE and F if the
statement is FALSE

41. In the case misstatement of age, the amount of insurance is adjusted to the amount which the
premium paid at the correct age would have purchased.
42. In a case where the premium has not been paid and the cash value has been exhausted, the
policy can still avail of grace period.
43. A policy is not rendered void by reason of misstatement of the assureds’ death.
44. In a group insurance, it is assumed that every member of the group is insurable, provided that
every member of the group is working a minimum number (usually 50) each week.
45. A policy is still in force for the full face amount and will remain in force for a further period of 4
years of 118 days without the payment of any premiums has availed of paid-up insurance
option.
46. In most life insurance application, the largest amount of information requested is data which
identifies the applicant.
47. A policy that provides guaranteed cash value plus extra annual distribution and pays the insured
after a specified time is known as participating endowment.
48. An endowment at age 65 policy with premium payable for a limited period of 20 years pays the
full amount after 20 years.
49. Anti-selection occurs when persons in poor health wish to buy insurance.
50. According to the law of large numbers, events which happen seemingly by chance will actually
be found to follow a predictable pattern if enough such happenings are observed.
ANSWER’S KEY

1. B 26. C
2. D 27. B
3. D 28. B
4. B 29. C
5. D 30. A
6. D 31. D
7. D 32. A
8. B 33. D
9. C 34. A
10. A 35. D
11. C 36. A
12. C 37. C
13. B 38. D
14. B 39. B
15. D 40. B
16. A 41. T
17. A 42. T
18. C 43. F
19. B 44. F
20. C 45. F
21. D 46. T
22. A 47. T
23. A 48. F
24. D 49. T
25. D 50. T