1. The settlement option provisions may provide all of the loan secured against the risk of his death.

k of his death. What is the best

following except: economic arrangement that you can recommend?

a. Payment of the proceeds in fixed amounts until a. Yearly renewable term

exhausted b. Extended term
b. Payment of the proceeds for the life of the c. Interim term
insured d. Decreasing term
c. Proceeds held by the company, with interest
payable to the beneficiary on request 7. The only instance when a life insurance contract is treated
d. Payment of the proceeds over a fixed period primarily as an indemnity agreement is when a

2. Generally, a reinstatement application will be accepted a. Creditor insures the life of his debtors to protect
from the owner of a lapsed insurance policy himself
b. Person in a partnership insures the life of his
a. Only a premium due date or during the grace partner to protect the firm against loss due to the
period of an unpaid premium death of that partner
b. Anytime during the lifetime of the insured c. Person insures the life of his or her spouse to
c. Anytime within the extended term insurance protect against the loss of income earned by the
period regardless of its length spouse
d. Within a period of three or five years after the d. A person insures the life of a friend
date lapse as specified in the policy

3. Limited payment life policies are called such because those 8. Participating life insurance policies are policies which
policies
a. Permit beneficiaries to exercise certain
a. Limit the number of beneficiaries thereby ownership rights during the lifetime of the insured
minimizing problems of paying too many people b. Allow variation in the wording of certain
b. Limit the conditions under which the policies are provisions
payable c. Provide for the distribution of dividends to the
c. Limit the period during which the premiums are policy owner
payable d. Develop profit which must be paid to stock
d. Shorten the period when the beneficiaries may holders
be paid
9. When the death benefit of a policy is restricted in amount
4. The fundamental advantage of the use of life insurance as during the early years of the policy this restriction is known
a means of meeting economic losses is that through life as
insurance these losses are:
a. Subtractive cause
a. Spread over a large number of people b. A lien
b. Met as they arise through savings accumulated c. An increasing death benefit
on an assessment basis d. Rate adjustment
c. Deferred for a specified period of time
d. Reduced for the group as a whole through the 10. The basic purposes of a conditional premium receipt are to
multiplier effect acknowledge payment of the initial premium for life
insurance and to
5. In life insurance, the term “substandard rates” generally is
used to refer to: a. Guarantee that a policy will be issued as applied
for
a. Mortality rates that are lower than those expected b. Eliminate the need for acceptance of the offer in
by the company according to its mortality table forming the contract
b. Mortality rates that are lower than the rates c. Backdate the policy to save age
suggested by the regulatory authorities d. Provide insurance coverage earlier than the
c. Premiums charged to persons who are policy delivery date if certain requirements are
considered to higher-than-average risk met
categories
d. Premiums charge for policies with low amounts 11. A hazardous occupation could be defined as:

6. A business man has arranged for a development loan a. An occupation which exposes the insured to
which will be available 1year from now. Because he is social hazard
unable to wait until then he has arranged an interim loan b. An occupation in unhealthy working conditions
with his bank. The only problem is that the bank wants to exposing the insured to elements which can
cause sickness
 c. An occupation the duties of which expose the b.Retirement years
insured to a degree of sustaining injury c.Years immediately following the insured’s death
d. All of the above d.Years between the time the youngest child is 15
years old and the mother is 62 years old
12. Mr. Sam walked out of his house one night and was never
heard again. His wife wanted to make a claim of his life 17. Which of the following describes the convertible feature of a term
insurance policy as she believes that he is dead. Which of insurance policy?
the following statements is correct in this case?
a. It may be changed to another whole life policy
a. It would be seven years before the court could b. It may be changed to permanent insurance
declare him legally dead without evidence of insurability
b. It would be four years before the court could c. It may be changed for a guaranteed sum
declare him legally dead d. It may be changed to another term insurance
c. It would require six months before the court policy without evidence of insurability
declare him legally dead
d. The company would be immediately 18. A person wanting a greater coverage for the least amount of
premium has an option of attaching what rider in his permanent
13. Which of the following is false? life policy?

a. The job of an agent is squeeze as much money a.Accidental death rider

as possible out of making a new sale b.Guaranteed insurabilit
b. The primary job of an agent is to get people c.Term insurance rider
happily involved with the ownership of his policy d.Waiver of premium
c. When an agent meets a prospect for the first
time, he has to sale confidence in himself 19.. A risk is considered substandard base on any or all of the
d. When an agent makes a sales presentation he following criteria
has to sale confidence in the product
a.Death, occupation and moral character
14. If a policy holder changes his occupation without notifying b. Income, educational attainment and occupation
the company, might it affect the benefits under his policy? c.Death, income and educational attainment
d.Occupation, character and family health history
a. Yes, unless the policy specified otherwise, if he
engaged in a more hazardous occupation, his 20. Applicants for life insurance with moderate physical impairments
benefits maybe prorated are called sub-standard risk and
b. No benefits and premium may only be changed
at the renewal date of the policy a. May be insured at increased rates to compensate for extra hazard
c. No, benefits agreed upon at the inception of the b. Are issued policies without any non-forfeiture value
policy may not be changed c. Therefore cannot obtain life insurance in any company
d. None of the above d. Are required to pay premiums on an annual basis

15. Non-forfeiture provisions are included in whole life 21. Life insurance policy loans are limited to an amount which will not
endowment policies to assure the policies owner that exceed the
certain minimum policy benefits shall remain with him even
under certain changed condition. Non-forfeiture values a) Net amount at risk
guarantee the policy holder that b) Present value of future premiums
c) Cash value of the policy
a. The premiums on the policy will remain the same d) Total premium paid
even when another beneficiary is added to the
policy 22. Your client tells you that when his father died, he received P
b. The face amount of the policy will remain the 500,000 free of Estate Tax and he had even known that this
same even if the insured’s health becomes policy existed. Which of the following classifications did your
impaired client fall under?
c. No death claim will be denied for any
misstatement on the application a.Irrevocable primary beneficiary
d. Any guaranteed policy values will belong to the b.Revocable primary beneficiary
policy owner even if premiums payments are c.Collateral assignee
discounted d.Absolute assignee
.
16.“Critical years” in programming of life insurance means:

a.Period during which the children are small and

cannot provide for themselves
23. Which of the following statement is false? 29. Which of the following statements about Disability Waiver of
a.When a policy lapses, the agent loses all future Premium Rider is incorrect?
commissions on renewal premiums
b.Too many lapsed policies can cause an agent’s agreement to a.Disability must occur before a stated age
be cancelled b.It has to be attached to a life insurance policy
c.Agents with persistent business seldom stay long with one c.There is a “waiting period”
company d.The insured has to die while disabled
d.When a policy lapses, the agent loses all future commissions
on renewal premiums 30. The total life coverage of a permanent basic policy can greatly
increased through the use of
24.In practice, most claims for death benefits of life insurance policies are a.A supplemental term rider
a. Settled by interpleader proceedings b.An accidental death benefit rider
b. Paid on the first policy anniversary after death of the insured c.A cancer rider
c.Paid promptly as soon as properly completed claim forms are d.An interim term rider
received by the company
d.Investigated thoroughly for evidence of misrepresentation or 31.Life insurance guarantees cash benefits for all the following except
fraud before payment is made a.Mortgage
b.Clean-up fund
25. Life insurance companies practice risk selection primarily to c.Family dependency period income
a.Gather and test mortality statistics d.Educational fund
b.Establish dividend rates on participating policies
c.Guard against anti-selection 32. Under an endowment policy, if the person whose life is insured
d.Approval by the underwriters survives to the end of the period stated in the policy, the
a.Face amount of the policy will be paid
26. The following statements concerning insurable interest are correct, b.The extended term insurance option will go into
except: effect
a.Everyone has an insurable interest in his own life c.Policy will terminate without value
b.It is deemed to exist by virtue of a relationship by blood d.Policy will automatically be converted to paid-up
or marriage whole policy
c.It is deemed to exist if economic loss would occur at the
death of the insured 33.Life insurance contributes directly to the welfare and progress of
d.It is important for purposes of underwriting the risk the country by
a.Accumulating capital for investment in commerce
27. One requirement a policyowner must meet in order to reinstate a and industry
life insurance policy is to b.Partially relieving the community of the care of
dependents
a. Agree to apply future policy dividends toward the payment of c.Encouraging provision for the future
premium d.All of the above
b. Assign the policy collaterally to the insurance company for the
amount of the overdue premiums plus any outstanding 34. A yearly renewable term life insurance policy generally specifies that
policy loan a.Premiums shall increase every time the policy is
c.Pay future premiums at the rate for his or her attained age at renewed
the time of reinstatement b.Cash values will increase for as long as the policy is
d.Furnish evidence of insurability which is satisfactory to the in force
insurance company c.Evidence of insurability shall be required every
renewal
28.If the person whose life is insured dies during the grace period d.The policyowner may renew the policy only once
and the premium was not paid, the amount that the insurance
company will pay to the beneficiary is usually the 35.Which statement is false when the new owner borrows on a policy?
a.Dividend will be reduced by the amount of the current interest
a.Face amount of the policy minus the unpaid b.The proceeds of the policy will be reduced by the amount of
premium unpaid loan plus interest, if insured dies
b.Cash surrender value of the policy minus the unpaid c.The policy will lapse if, after reasonable notice the
premium indebtedness exceeds the cash value
c.Full face amount of the policy d.If a large loan is taken after the policy has been in force for
d.Total premiums paid to the date of birth plus interest some years, the interest cost may exceed the premium
36. All of the following are Standard Provision of a life insurance policy TRUE OR FALSE
except T 41. A person human economic value is defined as the total of the
a.A grace period clause assets and any future earnings derived there from
b.An entire contract clause
c.Am automatic premium loan clause F 42. In most Life Insurance applications the largest amount of
d.A misstatement of age clause information requested is the data which describes the type of
37. All of the following term policies can be sold as a basic policy Insurance applied for
contract except
F 43. Because the renewal of a term life insurance policy presents
a.Six months interim term an increased possibility of anti-selection it is customary for the
b.Decreasing term insurance company to require some evidence of insurability each
c.Ten year term time the policy is renewed.
d.Yearly renewable term
T 44. The commuted value of an insurance policy is the single sum
38. A housewife without a gainful occupation applies for a P 500,000 of money , which is equal in value to the discounted future payments.
life coverage. Which of the following should the agent do?
a.Tell her she no need for it T 45. A retirement annuity is a kind of regular annual savings
b.Examine the adequacy of the husband’s insurance arrangement to provide a pension for life with no life coverage.
coverage
c.Suggest she doubles the amount T 46. A Family income rider is specifically designed to provide an
d.Be grateful income for the adjustment period immediately following death.

39.A policy that is in force for less than the original sum assured with T 47. In Group Insurance it is assumed that every member of the
no indebtedness has availed of group is insurable provided that every member of the group is
working a minimum number of hours (usually 30 each week.
a.Grace Period
b.Paid-up insurance Option F 48. Group Life insurance covers death provided it is during
c.The Reinstatement Provision working hours and in the place of employment.
d.Cancellation
T 49. The Cash Value of an endowment builds up faster than that
40.In a Life Insurance Company, risk appraisal is necessary to for a limited pay life policy of the same duration.

a.Calculate the mortality rate for a given policy T 50.Life Insurance companies make use of the laws of probability
b.Collate mortality statistics in order to determined the experience death rate among insured
c.Project dividend rates for participating policies persons.
d.Prevent any anti selection