Mock 1

Question 1

The three elements that make up a life insurance premium are

Answer 1

mortality experience, investment earnings and operating expenses

Question 2

Life insurance can provide money when income stops because of


Answer 2

a. disability
b. death
c. retirement
d. all of the above

Question 3

The term loading means

Answer 3

the difference between the gross and net premiums for the purpose of paying the insurance overhead expenses including commissions and taxes

Question 4

The official who makes the necessary assumption and calculation with respect to the principal elements of life insurance premium in order to arrive at the premium rates to be charged is the

Answer 4

Actuary

Question 5

A life insurance company ears income from two main sources

Answer 5

premium income and investment income

Question 6

Life insurance is

Answer 6

a cooperative risk-sharing plan

Question 7

Choose the incorrect statement

Answer 7

any verbal statement made by the agent to the application

Question 8

Which one of the following statements is correct?

Answer 8

all information about a client or a prospective client has to be treated as confidential

Question 9

Why is it important that the application is the basis of the policy?

Answer 9

because the completed application is the basis of the policy contract and the company may accept or reject an application based on the information given in the application

Question 10

Stock companies are owned by

Answer 10

stockholders

Question 11

Insurance companies which are owned by the policyowners are examples of

Answer 11

mutual companies

Question 12

Insurance companies have a source of confidential medical information on applicants for life insurance. This is the

Answer 12

medical impairment bureau

Question 13

Mr. Roel Reyes has been confined in a hospital 3 years prior to his application for insurance. He, therefore, needs to give the following information

Answer 13

name of attending doctor, diagnosis, date of confinement

Question 14

An agent is filling up the Agent’s Confidential Report. What information must he put in his report?

Answer 14

all information he knows which are material to the application for insurance

Question 15

Statements in the application forms are

Answer 15

representations

Question 16

A hazardous occupation could be defined

Answer 16

a. an occupation the duties of which expose the insured to a degree of danger of sustaining injury
b. an occupation in an unhealthy working condition exposing the insured to elements which
can cause sickness
c. an occupation which exposes the insured to social hazards
d. all of the above

Question 17

A risk is considered substandard based on any or all of the following criteria

Answer 17

occupation, moral character and family health history

Question 18

In insurance risks are classified as

Answer 18

standard, substandard and declined

Question 19

In an application, the information that must be disclosed include

Answer 19

every fact in his knowledge that is material to the insurance

Question 20

In insurance, risk means

Answer 20

hazard on people’s lives

Question 21

Which of the following factors would have the least effect on the premium charged for life insurance

Answer 21

income

Question 22

Insurance Companies have various sources of information about the insured. These are

Answer 22

a. application form
b. medical information bureau
c. inspection report
d. all of the above

Question 23

Anti-selection occurs

Answer 23

when persons in poor health wish to buy insurance

Question 24

Since the purchase of life insurance is a voluntary choice, the individual must meet

Answer 24

certain standards of health and occupation

Question 25

A policy with a minor as the proposed insured is called

Answer 25

juvenile policy

Question 25

Life insurance policies for which higher than standard premium rates are payable are said to be

Answer 25

rated policies

Question 26

If an insured is disabled and his life insurance policy is being continued in force through the waiver of premium, the dividends of the policy would

Answer 26

continue as if the owner is paying the premium

Question 27

One supplementary benefit offered is a payor's benefit which is intended to

Answer 27

provide a waiver of premium benefit in the event of death or disability of the person paying the premium

Question 28

A person wanting a greater coverage for the least amount of premium has an option of attaching what rider in his permanent life policy?

Answer 28

term insurance rider

Question 29

Mr. Pedro Cruz became paralyzed as a result of jumping out of the window in an attempt to commit suicide. Under the usual provisions of a disability income policy, he would be entitled to

Answer 29

receive neither disability income nor waiver of premiums

Question 30

Disability benefits are not paid

Answer 30

for self-inflicted injuries

Question 31

For the waiver of premium to be effective

Answer 31

A) disability must be total B) disability must be permanent both a & b

Question 32

An optional rider which can be attached to a policy stopping further premium payment in the event of disability is called

Answer 32

waiver of premium

Question 33

A term rider is

Answer 33

a term insurance added to a permanent plan

Question 34

The savings element of permanent plans allows for the build up of

Answer 34

cash values

Question 35

The main difference between a term plan and a permanent plan is

Answer 35

permanent plan provides both protection and savings while term plans offer protection only

Question 36

A term policy only offers

Answer 36

Protection

Question 37

A term insurance which allows policyowners to convert it to permanent insurance within a specified period without evidence of insurability contains convertibility features

Answer 37

convertibility

Question 38

Two attractive features of a Term insurance are:

Answer 38

convertibility and renewability

Question 39

Mrs. Rose Cortez owns a policy which does not provide for the build up of cash values and whose premiums remain level. Mrs. Cortez owns:

Answer 39

Level Term

Question 40

A participating plan entitles the policy owner to receive a return of excess premium. Such is termed as:

Answer 40

dividends

Question 41

A participating plan entitles the policy owner to receive a return of excess premium. Such is termed as:

Answer 41

dividends

Question 42

In a 20 Life policy

Answer 42

protection is until age 100, payment of premium is for 20 years

Question 43

An individual, at age 35, purchases a policy under which he will in 20 years receive the face amount of the policy himself if he is still alive at that date. This policy is obviously a

Answer 43

20 Yr. Endowment

Question 44

Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez?

Answer 44

Participating

Question 44

Which of the following can give longest protection?

Answer 44

Ordinary Life

Question 45

A man with moderate means can have maximum protection possible through

Answer 45

Term Insurance

Question 46

An insurance plan which offers both protection and savings is called

Answer 46

Permanent plan

Question 47

The number of years that persons at a given age will live on the average as shown by the mortality table is called

Answer 47

life expentency

Question 48

The fundamental advantage of the use of insurance as a means of meeting economic losses is that through insurance these losses are

Answer 48

spread over a large number of people

Question 49

Life insurance contributes directly to the welfare and progress of the country by

Answer 49

a. accumulating capital for investment in commerce and industry b. partially relieving the community of the care of dependents c. encouraging provisions for the future d. all of the above

Question 50

The parties involved in life insurance contract are the

Answer 50

insurance company and insured

Question 51

When the explaining dividends, the following information must be supplied

Answer 51

That they are not guaranteed

Question 51

Part of the premium paid by a policy holder is invested by the insurance company. In premium computation, this factor known as

Answer 51

interest

Question 52

The convertible feature of a term insurance policy provides that the policy may be

Answer 52

changed to a permanent insurance policy without evidence of insurability

Question 52

Within two years of buying a life insurance policy, you are accidentally killed when your car hits a tree. In these circumstances the insurance company will

Answer 52

pay the face amount

Question 53

A father enters into a life insurance contract on behalf of his child. In this case, the father is the

Answer 53

applicant-owner

Question 54

To be able to calculate the required premiums for a given policy, the agent must know the applicant's

Answer 54

a. Age b. choice of plan c. face amount desired d. all of the above

Question 54

To calculate premiums for the other modes of premium payment, the annual premium is

Answer 54

multiplied by a conversion factor for the mode of payment desired

Question 55

A single premium policy means a policy

Answer 55

under which only one premium payment is required