1.If a policyowner avails of a claim, what are his basic settlement options?

-Fixed amount, fixed period, life income, interest on deposit2. In which circumstance does an insurance company have
the right to rescind a policy?
-Company discovers during the contestable period that the application contains a material statement3. The following
are important reasons for requiring insurance agents to be licensed, except?
-To provide additional income to the government through license fees4. 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 a reduced amount of coverage5. The company usually allows a
policy change from a higher premium to a lower premium if the insured
-presents satisfactory evidence of insurability

6. What policy permits the policyholder to vary the level of premiums, the sum insured and has its cash values
dependent on the investment performance and the level of premiums paid?
-None of the above

7. Claire is considering to purchase either endowment or term life policy. What do these policies have in common?
- Insurance protection will be limited to a specified period

8. Your client George wants to apply for a life insurance policy. As his advisor, you would advise him to do all of the
following except
-To convey to the company the desire of the applicant to obtain insurance

9. 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 have to appoint his son to
achieve his desire and protect the son from Estate Tax Liability?
-a. Absolute Assignee

10. Which of the following can be done by a policyowner without the written consent of the irrevocable beneficiary/ies?
-Discontinue premium payments

11. If Phoebe wants to continue her renewable term insurance, she may
-renew the coverage based on a higher premium

12. 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, the insurance company.
-immediately provides interim insurance that remains in effect until the policy is issued or the application is declined

13. How are endowment life insurance and term life insurance the same?
- Provide life insurance protection for only the period of time specified in the policy contract

14. Which of the following sales practices determines a prospect’s complete financial requirement before offering a
policy?
-Total needs selling

15. A provision in the permanent life insurance policy that grants full coverage for a specified period even if premiums
are discontinued.
-Extended term insurance

16. The following statements about “Disability Waiver of Premium Rider” are true except:
-The insured has to die while disabled

17. Life insurance applications usually carry large amount of information that
-relates to the insurability of applicant.

18. Paid-up additions option is one of the features of a participating policy. Which of the following is TRUE about paid-up
additions?
- Don’t affect the loan or cash value of the policy

19. Which rider can increase the total life coverage of a permanent basic policy?
--A supplemental term rider

20. How does the law of probability help life insurance companies?
-- Develops statistics of past deaths among the general population

21. Margaux is the beneficiary of her dad’s insurance policy. When it was time for her to make a claim, she was offered
different options. Which of the following is not a settlement option?
--Payment of the proceeds over a fixed period

22. Neal and his wife have a whole life and endowment policies respectively, that is why they are both assured that
certain minimum policy benefits will remain with them even under certain changed conditions. Which 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
23. William chose a straight-premium whole life policy over a limited payment whole life policy. What is the advantage
of such purchase?
--More insurance protection for the same annual premium outlay

24. When does an interpleader come into play?

--a. To decide conflicting claims on the same insurance proceeds

25. Brandon advised his friend to get a policy that accumulates cash value because it is beneficial in the long run. Which
of the following is false about cash value?
--Because of its very short duration the cash value of a yearly renewable term policy

26. Setting aside possible legal impediments, which option would you recommend if an endowment policyowner at age
65 tells you that he wants to provide his church with a monthly donation for as long as the church exists?
--Life annuity option

27. The extent of medical evidence required is determined by

-- The age of the applicant and the proposed sum to be insured

28. The conservation of a life insurance policy is dependent on the following, except
-- Pressure selling

29. What source of information pertaining to client’s insurability will not be considered by an insurance company?
--Government tax records

30. If the applicant for life insurance fails to disclose or misrepresents material fact, the contract is
--Void from the beginning

31. What is the purpose of the incontestability clause?

--Prevents the company from denying a claim after the policy has been in force for 2 years

33. 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
--The face amount adjusted for misstatement of age

34. 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

35. Jared wants to update his yearly renewable term life insurance policy. Which applies to a yearly renewable term life
insurance?
--Premiums shall increase every time the policy is renewed

36. The following exhibits a legitimate insurable interest except

--An individual on the life of his mistress

37. Nicole wants to enhance her existing policy by purchasing a separate provision that provides coverage for a different
nature. What will you recommend to her?
--Riders --Deposit privileges, Dividends, Assignment

38. Which of the following is not true about insurance premiums?

-- The grace period is usually 31 days.

39. Helena owns a policy that is kept in force by paying the premiums on a semi-annual basis. If she elects the non-
forfeiture option, this means she
-- discontinues premium payments for a whole life or endowment policy

40. Harry made a policy loan to pay for the tuition fees of his children. After a year, he is still unable to pay for the loan.
What will the insurance company do?
--Increase the present loan by the interest

1. If the premium has not been paid and the cash values have been exhausted, the grace period provision still applies.
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 good health wish to buy insurance
4. If policy is still in force for the full face amount and will remain in force for a further period of four years and 117 days,
without the payment of any premiums, this implies that the owner has availed of the paid-up insurance option.
5. In the case of misstatement of age, the amount of insurance will not be adjusted to the amount which the premium
paid at the correct age would have purchased.
6. A participating endowment is a policy that provides guaranteed cash values plus extra annual distributions and pays
the insured after a specified time.
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 60 hours) each week.
8. An endowment at age 66 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.