TRADITIONAL LIFE LICENSING MOCK EXAM (Set D)

NAME: _____________________________________________
BRANCH: ___________________________________________
SCORE: _____________________________________________

Instructions: Please encircle the correct answer.

1. 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

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 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

3. 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

4. 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

5. What are the basic settlement options?

a. Policy loan, guaranteed insurability
b. Cash surrender value, automatic premium loan
c. Fixed amount, fixed period, life income, interest on deposit
d. Double indemnity, total and permanent disability waiver

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

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 c. Insured person is killed in military action during the contestable period of the policy
d. Company discovers during the contestable period that the application contains a material
statement.

7. Which of the following is the least important reason for requiring that 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

8. 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 reduced premium
c. The policy will automatically terminate
d. The premiums cease and protection continues with a reduced amount of Coverage

9. 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

10. A policy which permits the policyholder to vary the level of premiums, 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

11. 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 a waiting period
d. It has to be attached to a life insurance policy

12. In most life insurance applications, 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 payment

13. 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

14. The total life coverage of a permanent basic policy can be greatly increased through the use of

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 a. An accidental death benefit rider
b. An interim term rider
c. A supplemental term rider
d. None of the above

15. 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 deaths among the general population
d. Determine the experienced death rate among the insured persons

16. In the 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. A man applied for a PhP 20,000 whole life policy and paid the full initial premium to the soliciting
agent. The agent issued a binding receipt. Under such a receipt, the insurance company
a. Offers permanent insurance coverage effective as of the date of the application
b. Promises that the insurance coverage will become effective as of the date the application is
approved
c. Guarantees the 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

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 is alive at the end of the 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. An agent who determines a prospect’s complete financial requirements preparatory to offering him a
policy using the correct selling approach knows as
a. Counselor selling
b. Total needs selling
c. Planned selling
d. Multiple products selling

20. Name the provision in a permanent life insurance policy under which premiums are discontinued, full
insurance will be maintained for a specified period:
a. Extended term insurance
b. Paid-up insurance additions
c. Life income option pension
d. Reduced paid-up insurance

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circulated, reproduced or distributed in whole or in part to any other person without the company’s prior
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 21. 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

22. 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

23. The conservation of a life insurance policy is dependent on all the following except
a. The level of first year commission
b. Agent’s service oriented attitude
c. Pressure selling
d. The use of effective needs selling

24. 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

25. If the applicant for life insurance fails to disclose or misrepresents material fact, the contract is
a. Valid if 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

26. The settlement options 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. Payments of the proceeds in fixed amounts until exhausted
d. Proceeds held by the company, with interest payable to the beneficiary on request

27. Non-forfeiture provisions are included in whole life and endowment policies to assure the
policyowner that certain minimum policy benefits shall remain with him even under certain changed
conditions. Non-forfeiture values guarantee to the policyowner 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

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 28. Purchasing a continuous-premium, whole life policy rather than a limited payment, whole life policy
gives the policyowner 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

29. In certain situations a company may file interpleader actions with a 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 claims on the same insurance proceeds
c. Resolve the question of insurable interest
d. Recommend the best settlement options for the beneficiary If the interest on a policy loan is not
paid at the policy anniversary the insurance

30. Which of the following statement is false?

a. The cash value of a whole life policy builds up at a slower rate than for 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

31. 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

32. The basic coverage provided by the life insurance policies may be supplemented by a separate
provision that provides coverage for accidental amounts or of a different nature. Collectively these
provisions are known as
a. riders
b. deposit privileges
c. dividends
d. assignment

33. 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 affectuate 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

34. A non-forfeiture option would ordinarily be selected at the time a policyowner

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

35. If the interest on a policy loan is not paid at the policy anniversary the insurance company may

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 a. Demand full settlement of the loan
b. Terminate the contract
c. Refuse to grant future additional loan
d. Increase the present loan by the interest

36. 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

37. The insured named a primary and secondary revocable beneficiary for PhP 20,000 policy. Which of
the following is correct?
a. The designation of a 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 assignment will require the primary beneficiary’s signature
d. Upon the insured’s death the primary and secondary beneficiaries shall each receive PhP 10,000

38. 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. 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 paid

39. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
a. Increase the present loan by the interest
b. Terminate the contract
c. Refuse to grant future additional loan
d. Demand full settlement of the loan

40. A yearly renewable term life insurance policy generally specifies that
a. The policyowner may renew the policy only once
b. Premiums shall increase every time 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: Write T if the statement is TRUE and F if the statement is FALSE.

1. In a case where the premium has not been paid and the cash values has been exhausted, the policy
can still avail of the grace period.

2. According to the law of large numbers, events which happen seemingly by chance will actually be
bound to follow a predictable pattern, if enough such happenings are observed.

3. Anti-selection occurs when persons in poor health wish to buy insurance.

4. A policy is still in force for the full face amount and will remain in force for a further period of four
years and 118 days, without the payment of any premiums has availed of paid up insurance option.

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circulated, reproduced or distributed in whole or in part to any other person without the company’s prior
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 5. In the case of misstatement of age, the amount of insurance is adjusted to the amount which the
premium paid at the correct age would have purchased.

6. A policy that provides guaranteed cash values plus extra annual distributions and pays the insured
after a specified time is known as a participating endowment.

7. 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 of (usually 50 hours) each week.

8. An endowment at age 65 policy with premium payable for a limited period of 20 years pays the full
amount after 20 years.

9. In most life insurance applications, the largest amount of information requested is data which
identifies the applicant.

10. A policy is not rendered void by reason of misstatement of the assured’s death.

MOCK 1 ANSWER KEY

Multiple choice: True or False

1. d 1. F
2. d 2. T
3. b 3. T
4. b 4. F
5. c 5. T
6. a 6. T
7. d 7. F
8. d 8. F
9. b 9. F
10. c 10. T
11. b
12. c
13. c
14. c
15. a
16. a
17. d
18. c
19. b
20. a
21. c
22. a
23. c
24. d
25. d
26. d

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circulated, reproduced or distributed in whole or in part to any other person without the company’s prior
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 27. b
28. c
29. b
30. d
31. a
32. a
33. a
34. d
35. d
36. d
37. b
38. c
39. a
40. b

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circulated, reproduced or distributed in whole or in part to any other person without the company’s prior
written consent. Page 8