Summary IC MOCK EXAM 1 & 2 / INSURANCE COMMISSION TRADITIONAL LIFE MOCK EXAMS_ 2023.

(IC) INSURANCE COMMISSION TRADITIONAL LIFE MOCK EXAMS_ 2023. USE Ctrl + f or search terms - Life insurance is a. Only available to a specific group b. A speculative risk c. A cooperative risk-sharing plan d. Paid-up insurance (reduced insurance) - The fundamental advantage of the use of life insurance as a means of meeting economic losses is that through life insurance these losses are a. Reduced for the group as a whole through the multiplier effect b. Deferred for a specified period of time c. Met as they arise through savings accumulated on an assessment bases d. Spread over a large number of people *A basic principle of insurance is sharing the financial consequences of events that are unlikely to occur like death of a breadwinner. With life insurance, economic loss that may be experienced by one individual can be shared with other people thus the concept of risk sharing. - Insurance provides protection against economic loss by enabling the policy owner to a. Transfer responsibility for the loss to others b. Take speculative risk to compensate for the loss c. Reduce the possibility of the occurrence of the event causing the loss d. Share the loss with others exposed to a similar risk *This refers to the concept of risk-sharing whereby a group of people pool funds and resources together in preparation for life's many risks, notably death. It enables a group of people, with the similar circumstances, to spread the risk to a large number of people through cooperative risk-sharing. - A person's human economic value is defined as the a. Total value of the individual's tax contribution to the national economy b. Total value of his physical assets c. The amount of capital required to replace family income needs d. Total value of the assets and any future earnings derived there from *A person's human life value is a measure of what has been able to accumulate and what he can reasonably expect to earn in the future. - "Critical years" in the programming of life insurance means a. Retirement years b. Years between the time the youngest child is 15 years old and the mother is 62 years old c. Years immediately following the insured's death d. Period during which the children are small and cannot provide for themselves - A single premium policy means a policy a. requiring only a single premium each year b. under which only one premium payment is required c. only available to single individuals d. under which one premium a month is required *Single premium policy only requires one premium payment(lump sum). - The commuted value of an insurance policy is a. The cash value of basic addition b. The single sum of money which is equal in value to the discounted future payments c. The cash value of the policy after the loan has been deducted d. The paid-up value of the policy - 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 insured persons * The law of Probability is used to determine the average number of people of a particular age who will live or die within a given period. For example, it predicts the chances or possibility that a 40-year old person will still be alive after 20 years, or even after 25 years. - Life insurance guarantees cash benefits for all of the following except a. Clean-up fund b. Family dependency period income c. education fund d. mortgage fund - Life insurance contributes directly to the welfare and progress of the country by a. Partially relieving the community of the care of dependents b. Encouraging provision for the future c. Accumulating capital for investment in commerce and industry d. All of the above - A term policy provides: a The highest level of savings for the insured within a specified term of years. b Protection for the policyholder with premiums payable for a limited term of years. c Low cost protection only for a limited term of years with no savings. d Protection with premiums payable for life and a low level of savings as an alternative to continued protection in old age. - A yearly renewable term life insurance policy generally specifies that a. The policy owner may renew the policy only once b. Evidence of insurability shall be required every renewal c. Premiums shall increase every time the policy is renewed d. Cash values will increase for as long as the policy is in force *Premiums shall increase every time the policy is renewed to compensate with the increase in age of the insured. - Which of the following describes the convertible feature of a term insurance policy? a. It may be changed to another term insurance policy without evidence of insurability b. It may be changed for a guaranteed sum c. It may be changed to another whole life policy d. It may be changed to a permanent insurance without evidence of insurability - A whole life policy provides: a. The highest level of savings for the insured within a specified term of years. b. Protection for the life of the policyholder with premiums payable for a limited term of years. c. Low cost protection only for a limited term of years with no savings. d. Protection with premiums payable for life and a low level of savings as an alternative to continued protection in old age. - A limited pay life policy provides: a. The highest level of savings for the insured within a specified term of years. b. Protection for the life of the policyholder with premiums payable for a limited term of years. c. Low cost protection only for a limited term of years with no savings. d. Protection with premiums payable for life and a low level of savings as an alternative to continue protection in old age. - An endowment policy provides: a. The highest level of savings for the insured within a specified term of years. b. Protection for the life of the policyholder with premiums payable for a limited term of years. c. Low cost protection only for a limited term of years with no savings. d. Protection with premiums payable for life and low level of savings as an alternative to continued protection in old age. - The full face amount is received by the insured person himself a. When he becomes 65 years of age in the case of a whole life policy b. On the date of maturity in the case of endowment policy c. Only if he lives to 100 years of age in the case of an endowment d. When he becomes 65 years of age in the case of limited pay life - A businessman has arranged for a development loan which will be available one year from now. Because he is unable to wait until then, he has arranged an interim loan with his bank. The only problem is that the bank wants the loan secured against the risk of his death. What is the best economic arrangement that you can recommend? a. Decreasing term b. Interim term c. Extended Term d. Yearly renewable term - All of the following term policies can be sold as a basic policy contract except a. Yearly renewable term b. Ten Year Term c. Decreasing Term d. Six months interim term - Under an endowment policy, if the person whose life is insured survives to the end of the period stated in the policy, a. The policy will terminate without value b. The face amount of the policy will be paid c. The policy will automatically be converted to paid-up whole policy d. The extended term insurance option will go into effect - Limited payment life policies are called such because those policies a. Shorten the period when the benefits may be paid b. Limit the period during which the premiums are payable c. Limit the conditions under which the policies are payable d. Limit the number of beneficiaries thereby minimizing problems of paying too many people *Limited payment life policies provide protection up to age 100 and have limited premium paying period. - A prospect tells you that he wants the maximum possible provision for his retirement with no life coverage. What would you offer him? a. Whole life policy b. Life paid-up at 65 policy c. a 20 pay life policy d. none of the above - An applicant wants a participating policy where the death benefit will be maximized. Which of the following should he choose? a. Paid-up additions b. Accumulated dividends c. Extended term d. Paid-up insurance (reduced amount) - Participating life insurance policies are policies which a. Allow variation in the wording of certain provisions b. Provide for the distribution of dividends to the policy owner c. Develop profit which must be paid to stockholders d. Permit beneficiaries to exercise certain ownership rights during the lifetime of the insured - A man is about to retire. He has P500,000 which he wishes to provide income for himself as long as he lives and which would continue to his wife as long as she lives after his death. What would you offer him? a. Retirement income endowment b. Straight life annuity c. cash refund policy d. joint and survivorship annuity - A Retirement Annuity is a. An arrangement where a person can pay a Life Insurance Company a sum of money in return for a pension for life b. A special kind of medical examination that has to be repeated every year c. A kind of regular annual savings arrangement to provide a pension for life with no life coverage d. A one-time payment for a pension to start at a predetermined date - All of the following statements about Group Insurance are true except: a. A covered employee who terminates his employment continues to be covered for 31 days after termination date b. In a non-contributory plan, 100% of the group members must be included c. It provides low cost insurance because of its low administrative costs d. Each covered employee receives a policy - In group insurance it is assumed that every member of the group is insurable provided that a. Every member of the group can pass a medical examination b. Every member of the group is working a minimum number of hours (usually 30) each week c. Every member of the group is working a minimum number of hours (usually 8) each week d. Every member of the group is working a minimum number of hours (usually 50) each week - Group life insurance covers a. Death provided it is during working hours and in the place of employment b. Death of the employee regardless of cause except suicide during the first year (sometimes two years) c. Accidental death only d. Only death by heart attack, pneumonia or cancer - Mr. Barrio has been insured under the employee group life insurance plan for several years. If he leaves this job, Mr. Barrio's group life insurance will a. Terminate as of the date he leaves b. Be changed, upon the employer's notice to the insurance company, to a permanent plan of insurance for the same amount c. Continue to provide coverage of the same amount of a period of 31 days during which Mr. Barrio can convert to an individual policy d. Cover him for a reduced amount of paid-up term insurance until the end of the current policy year - The basic coverage provided by life insurance policies may be supplemented by separate provisions that provide coverage for additional amounts or of a different nature. Collectively these provisions are known as a. Assignments b. deposit privileges c. riders d. dividends *Riders are supplementary contracts that provide coverage for additional premium. - One supplementary benefit offered is a Payor's benefit which is intended to a. Provide a waiver of premium benefit in the event of death or disability of the person paying the premiums b. Provide for the return of premiums to an adult payor in the event that a minor insured dies c. Assure that the adult payor will retain a vested interest in the policy when the insured reaches the age of majority d. Allow the insurance company to pay the policy's proceeds to the person who seems equitably entitled to the proceeds *The payor's benefit waives the premium when the Payor-Owner dies or becomes disabled. Premiums are waived up to policy maturity or until child reaches age 25, whichever comes first. - For waiver of premium to be effective, a. Disability must be total b. Disability must be permanent c. Disability must be total and permanent d. Either total or permanent *For a waiver of premium to be effective, disability must be both total and permanent. - The total life coverage of a permanent basic policy can be greatly increased through the use of a. An accidental death benefit rider b. A cancer rider c. An interim rider d. A supplemental term rider - Mr. Alvarez bought a P500,000 policy with a 20-year reducing term rider. He died 5 years after the policy issue date. After his death, his wife received P500,000 and a monthly income thereafter for 15 years. This policy definitely has a. Family Maintenance rider b. Family Income rider c. Straight Family Policy d. Combination of Whole life and Level Term - A rider that states that if death is a result of an accident, the proceeds will be increased to an amount usually equivalent to the face amount is a. Accidental death benefit rider b. Accident and dismemberment rider c. Special accident rider d. Dismemberment rider - A family income rider is specifically designed to a. Pay twice the face amount of the policy in the event of death b. Provide a monthly income from the date of death of the insured to some future date specified in the contract c. Provide an income for the adjustment period immediately following death d. Provide a retirement for the insured and his spouse - Mr. Lim's participating whole life insurance policy includes a waiver of premium for disability benefit. During the period when premium payments are being waived under this provision, the cash value of this policy will a. Increase and Mr. Lim will continue to receive policy dividends b. Decrease but Mr. Lim will continue to receive policy dividends c. Remain the same and Mr. Lim will continue to receive policy dividends d. Stop increasing for the term of the rider *when premiums of s permanent life insurance policy is waived, living benefits like cash value and dividends continue to build up as if premiums are still paid by the payor. - A person wanting a greater coverage for the least amount of premium has an option of attaching what rider in his permanent life policy? a. Waiver of premium b. Term insurance rider c. guaranteed insurability rider d. accidental death rider *Term insurance rider provides added insurance protection to permanent plans for periods when increased protection is needed. - Which of the following statements about Disability Waiver of Premium rider is incorrect? a. There is a waiting period b. Disability must occur before a stated age c. The insured has to die while disabled d. It has to be attached to a life insurance policy - In most life insurance applications, the largest amount of information requested is data which a. Describes the desired benefits and mode of payment b. Identifies the applicant c. Describes the type of insurance applied for d. Relates to the insurability of the applicant *Information about the applicant's insurability is the largest amount of information that an insurer is requesting. This covers to the different risk factors (POFMAR) or the applicant - physical, occupation, financial, moral, aviation, and residence and travel. - In a life insurance company, risk appraisal is necessary to a. Prevent anti-selection b. Project dividend rates for participating policies c. Collate mortality statistics d. Calculate the mortality rate for a given policy - Anti-selection refers to a general tendency on the part of a. Applicants for life insurance to opt for inexpensive plans of insurance b. Persons with impaired insurability to be more keen in obtaining insurance coverage than those persons who are in good health c. Agents to call only those prospects who state no objection to life insurance d. Agency manages to discriminate between loyal agents and disloyal agents *Anti-selection refers to the tendency of persons with health impairments or hazardous occupations to apply for life insurance than those persons who in good health. Insurers are always on the lookout for these kinds of applicants as they tend to provide false or misleading information just so to get insurance. - The company will allow a policy change from a lower to a higher premium plan, provided the insured a. Obtains written consent from his or her spouse b. Buys a new plan altogether c. Presents satisfactory evidence of insurability d. Momentarily assigns the policy to the company - In life insurance, the term "substandard rates" generally is used to refer to a. Premiums charged for policies with low amounts b. Premiums charged to persons who are considered to be higher-than-average risk categories c. Mortality rates that are lower than the rates suggested by the regulatory authorities d. Mortality rates that are lower than those expected by the company according to its mortality table - A housewife without gainful employment applies for a P1,000,000 life coverage. Which of the following should the agent do? a. Suggest she doubles the amount b. Tell her she has no need for it c. Be grateful d. Examine the adequacy of the husband's insurance coverage - Because the renewal of a term life insurance policy presents an increased possibility of anti-selection, it is customary for the insurance company to a. Require some evidence of insurability each time the policy is renewed b. Charge higher premium rates for term policies that are renewable than for those that are not renewable c. Restrict the policy owner's right to change the beneficiary of a renewable term policy d. Define insurable interest more strictly for term policies than for other policies - All of the following are sources of underwriting information except a. Medical examination report b. Agent's confidential report c. Government tax records d. applicant's personal appearance *The government tax records of an applicant are not required for a routine underwriting process. - Applicant's for life insurance with moderate physical impairments are called substandard risks and a. Therefore cannot obtain life insurance in any company b. May be insured at increased rates to compensate for the extra hazard c. Are issued policies without any non-forfeiture values d. Are required to pay premiums on an annual basis - When the death benefit of a policy is restricted in amount during the early years of the policy this restriction is known as a. Rate adjustment b. An increasing death benefit c. a lien d. a subtractive clause - In the Philippines, an insurance company's right to rescind a life insurance is generally limited to the first 2 years following policy issue date or date of approval of last reinstatement. The provision is embodied in a. incontestability clause b. lifetime clause c. omnibus clause d. no-exclusion clause - An insurance company generally has the right to rescind a life insurance policy if the 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 contestable period of the policy d. Company discovers during the contestable period of the policy that the application contains a material misstatement - An insured misstated his age by 3 years in the application indicating that he was younger than his actual age. If he dies 10 months later, the insurance company will a. Pay the full face amount b. Not pay any of the benefits c. Refund the premium paid plus interest d. Pay the benefits that the premium would have purchased at the correct age - The grace period provision in life insurance policies is designed to a. Compel the insured to pay premiums more promptly b. Permit the company to extract extra charges c. Give the insured more time to pay the premium while coverage remains in force d. Terminate the contract of insurance automatically - If the person whose life is insured dies during the grace period and the premium was not paid, the amount that the insurance company will pay to the beneficiary is usually the a. Cash surrender value of the policy minus the unpaid premium b. Full face amount of the policy c. Total premiums paid up to the date of birth plus interest d. Face amount of the policy minus the unpaid premium - Which of the following statement best describes the Automatic Premium Loan Provision? a. A provision whereby the company automatically pays the premium out of the loan value and charges it as a loan to the insured, if said premium due is not paid within the grace period b. A provision whereby one life insurance company will guarantee payment of the premium to another life insurance company c. A provision whereby a loan up to the amount of the annual premium is automatic d. A provision whereby the company lends the insured the amount of a premium to assure that the non-forfeiture options will be paid - Life insurance policy loans are limited to an amount which with interest will not exceed the a. Cash value of the policy b. Total premiums paid c. Net amount at risk d. Present value of future premiums - If the interest on a policy loan is not paid at the policy anniversary, the insurance company may a. Terminate the contract b. Demand full settlement of the loan c. Refuse to grant future additional loans d. Increase the present loan by the interest *Unpaid loan interest will add up to the outstanding loan, thus, increasing the total amount of loan. Loan interests are computed compoundedly. - The guaranteed cash value is a. The amount that the company will pay if a permanent policy is surrendered b. The amount which can be borrowed from a term policy at any one time c. The paid-up value of the policy d. The face amount - All of the following are true except a. Non-forfeiture values are guaranteed b. Non-forfeiture values are present in all permanent forms of life insurance. c. The cash value may be more than the face amount of a policy. d. There is no automatic non-forfeiture provision in life insurance policies. - A policy holder with a whole life policy has reached the age of 65 and he does not want to go on paying premiums but he does want to remain insured for life. Which of the following would he take? a. Extended term insurance b. Accumulated dividend c. Paid-up additions d. Paid-up insurance (reduced amount) - If a policyholder elects to take the Extended Term Insurance option on a 20year endowment policy where the cash value is more than sufficient to provide the term coverage to maturity, in which of the following ways would the excess fund be used? a. To provide a pure endowment policy at maturity b. To increase the period coverage c. To be forfeited d. To make an immediate cash payment equal to maturity amount of the pure endowment - A policy that is in force for less than the original sum assured with no indebtedness has availed of a. Paid-Up insurance option b. Cancellation c. Grace period d. The Reinstatement provision - Non-forfeiture provisions are included in 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 value guarantee the policyholder that a. The face amount of the policy will remain the same even if the insured's health becomes impaired b. The premiums on the policy will remain the same even when another beneficiary is added to the policy c. Any guaranteed policy values will belong to the policy owner even if premium payments are discounted d. No death claim will be denied for any misstatement on the application - If a policyholder changes his occupation without notifying the company, might it affect the benefits under his policy? a. No, benefits and premiums may only be changed at the renewal date of the policy b. Yes, unless the policy specified otherwise, if he engaged in a more hazardous occupation, his benefits may be pro-rated. c. No, benefits agreed upon at the inception of the policy may not be changed d. None of the above *Benefits in an in-force policy are said to be final and cannot be affected by change in occupation after it has become effective. - Instead of taking a lump sum settlement under a policy, the insured or the beneficiary usually can elect to take a a. Reinstated policy b. Settlement option c. Government bond d. New single premium life insurance policy - Which of the following statements is false? a. When a policy lapses, the company is unable to maximize its objective which is the formation of a long term capital for national development b. The company loses income from lapsed policies and therefore, it does not sufficiently cover the selling costs c. When a policy lapses, the company neither gains nor loses since it ceases to carry the risk of covering the insured d. The company with low persistency rate is unable to maintain competitive premium rates - Generally, a reinstatement application will be accepted from the owner of a lapsed insurance policy a. Any time during the lifetime of the insured b. Within a period of three years after the date of lapse as specified in the policy c. Any time within the extended term insurance period regardless of its length d. Only on a premium due date or during the grace period of an unpaid premium - Which of the following are requirements in reinstating a policy after it has lapsed for non-payment of premium? a. Payment of all overdue premiums b. Application for reinstate within the specified time c. Evidence of insurability and payment of interest on overdue premiums d. All of the above - 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 designation will he have to appoint his son to in order to achieve his desire and protect the son from Estate Tax? a. Collateral assignee b. Irrevocable primary beneficiary c. revocable primary beneficiary d. absolute assignee - The beneficiary, a widow, wishes to pay off the remaining balance of a 15-year mortgage. Which of the following options do you recommend? a. Fixed income option b. Periodic annuity option c. interest option d. none of the above - The widow of your policyholder tells you that she does not want a lump sum payment but she would like to receive monthly allowances for the rest of her natural life. Which option do you recommend? a. Periodic annuity option b. Life annuity option c. fixed period option d. fixed income option - Which statement is false when the new owner borrows on a policy? a. If a large loan is taken after the policy has been in force for some years, the interest cost may exceed the premium b. Dividend will be reduced by the amount of the current interest c. The policy will lapse if, after reasonable notice the indebtedness exceeds the cash value d. The proceeds of the policy will be reduced by the amount of unpaid loan plus interest, if insured dies - 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. Payment of the proceeds in fixed amounts until exhausted d. Proceeds held by the company, with interest payable to the beneficiary on request - A non-forfeiture option would ordinarily be selected at the time a policyowner a. Discontinues premium payments for a whole life or endowment policy b. Chooses a mode of settlement for the policy proceeds c. Converts a term policy to a whole life policy d. Renews a term policy - Mr. Jesus Gonzales, 61 years of age, carried a P500,000 Whole life policy for 25 years, never borrowed from it, but forgot to pay premiums before leaving for a four-month vacation to the U.S.A. On his return trip, he was killed in a plane crash. As his estate executor, you saw the lapse notice received from the insurance company for this Whole life policy. What action should you take? a. None. Since the policy has lapsed for non-payment of premium and benefits are not paid. b. Investigate to see if the insured elected premium loan as non-forfeiture option c. Apply for the face amount if the policy is be paid to the beneficiary since coverage would have been afforded under the Extended Term Insurance non-forfeiture option d. Apply for the cash value of the policy under the non-forfeiture options - A client tells you that his bank wants him to use his life insurance policy so that his bank loan will be paid off if he dies. You recommend that he a. Appoints an irrevocable beneficiary b. Makes an absolute assignment c. Makes a collateral assignment d. None of the above - All of the following statements regarding "Absolute Assignment" are true, except: a. It is the transfer of the legal right or interest in a policy to another party b. The policyholder may discontinue premium payments c. The insurer must agree to an absolute assignment d. An irrevocable beneficiary must agree to an absolute assignment - In order for an assignment of a life insurance policy to be binding upon the company a. It must be made in writing and filed with the company b. It must be of the limited type c. The company must be satisfied that it is justified d. The company must certify to its validity *When assigning a policy, whether temporarily or permanently, it must be made in writing and filed with the company. - A misrepresentation in the application form is considered to be material if a. The insurance company would have altered its risk appraisal decision had the truth been known b. The Insurance Commission is disregarded the misrepresentation c. The insured died during the contestable period d. The misrepresentation is subsequently discovered by the insurance company - You visit a prospect who tells you that he does not believe in life insurance because when his mother died, he was beneficiary under her life policy and most of the money went to pay Estate taxes because her agent made a mistake. Only this man and his sister were named in the policy. Which of the following did they fall under? a. Absolute assignee b. Irrevocable primary beneficiary c. revocable secondary beneficiary d. revocable primary beneficiary - Amy is designated as the revocable beneficiary of an insurance policy on her husband Romy's life. While Romy is alive, Amy a. Has a mere expectancy with relation to the insurance proceeds b. Must give her consent to any change in the settlement arrangements c. Holds a vested interest in the policy proceeds d. Has veto power over Romy's exercise of ownership rights - Your client tells you that when his father died, he received P500,000 free of Estate Tax and that he had not even known that this policy existed. Which of the following classifications did your client fall under? a. Collateral assignee b. Absolute assignee c. revocable primary beneficiary d. irrevocable primary beneficiary - The only instance when a life insurance contract is treated primarily as an indemnity agreement is when a. A person insures the life of a friend b. A creditor insures the life of his debtor to protect himself c. A person insures the life of his or her spouse to protect against the loss of income earned by the spouse d. A person in a partnership insures the life of his partner to protect the firm against loss due to the death of that partner - Which of the following is the least important reason for requiring that insurance agents be licensed? a. To provide additional income to the government through license fees b. To protect the public c. To establish and maintain high professional and ethical standards d. To give the government adequate control over the conduct of agents - The basic purpose of a conditional premium receipt are to acknowledge payment of the initial premium for life insurance and to a. Eliminate the need for acceptance of the offer in forming the contract b. Provide insurance coverage earlier than the policy delivery date if certain requirements are met c. Guarantee that a policy will be issued as applied for d. Backdate the policy to save on age - Most life insurance agents are expressly authorized to perform the following functions: a. Solicit applications for insurance, accept the initial premium and issue a receipt on behalf of the insurance company b. Solicit and approve the applications of the proposed insured c. Accept initial premium and waive the insurable interest requirement d. Appraise applicants and decide on a standard or substandard rating - In practice, most claims for the death benefits of life insurance policies are a. Investigated thoroughly for evidence of misrepresentation or fraud before payment is made b. Paid on the first policy anniversary after the death of the insured c. Settled by interpleader proceedings d. Paid promptly as soon as properly completed claim forms are received by the company - Which of the following statements is false? a. Too many lapsed policies can cause an agent's agreement to be cancelled b. When a policy lapses, the agent loses a valuable source of prospect c. When a policy lapses, the agent loses all future commissions on renewal premiums d. Agents with persistent business seldom stay long with one company - Most binding receipts have the following provision except a. An acknowledgement of the receipt of the initial contractual premium b. A minimum amount of coverage applied for c. The right of the company to terminate the initial coverage if the application is disapproved by the company d. None of the above - Ms. Sally Sy walked out of her house one night and was never heard of again. Her husband wanted to make a claim on his life insurance policy as he believes that she is dead. Which of the following is correct in this case? a. It would be four years before the court could declare her legally dead b. It would be seven years before the court could declare her legally dead c. The company would pay immediately d. It would require 6 months before the court could declare her dead - If a policyholder changes his occupation without notifying the company, might it affect the benefits under his policy? a. No, benefits and premiums may only be changed at the renewal date of the policy b. Yes, unless the policy specified otherwise, if he engaged in a more hazardous occupation, his benefits may be prorated c. No, benefits agreed upon at the inception of the policy may not be changed d. None of the above - Mr. Lorenzo and his primary beneficiary died in a common accident. It is established that the primary beneficiary died ahead of Mr. Lorenzo and there were no contingent beneficiaries named. The proceeds of Mr. Lorenzo's life insurance policy will be paid to a. The estate of the primary beneficiary b. The estate of the insured c. Both the estates of the insured and the primary beneficiary on a 50/50 percent basis d. A court of law - Which of the following statements is false? a. The cash value in a permanent policy is guaranteed by the company b. The cash value of whole life policy builds up at a slower rate than for a 20 year endowment 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 - The following statements concerning insurable interest are correct, except: a. It is deemed to exist if economic loss would occur at the death of the insured b. It is deemed to exist by virtue of a relationship by blood or by marriage c. It is not important for purposes of underwriting the risk d. Everyone has an insurable interest in his own life - The conservation of a life insurance policy is dependent on all of the following except a. Quality of agent's prospecting habits b. The level of first year commission c. The use of effective needs selling d. Agent's service-oriented attitude - Which of the following is correct with respect to the due date of a policy loan? a. Five (5) years from the date of the loan b. There is no specific repayment date c. On the policy anniversary following the fifth anniversary of the policy loan d. 2 years from the date of the loan - Life insurance policy loans are limited to an amount which will not exceed the a. Cash value of the policy b. Total premium paid c. net amount of risk d. present value of future premiums - Which of the following statements regarding insurance premiums is false? a. The grace period is usually 30 days b. Cash is required for all premiums paid during the grace period c. A premium is the legal consideration needed to effect a life insurance policy d. Premiums which are paid quarterly or semi-annually are higher than those paid annually - Which of the following is false? a. When an agent makes a sales presentation, he has to sell confidence in the product b. When an agent meets a prospect for the first time, he has to sell confidence in himself c. The primary job of an agent is to get people happily involved with the ownership of his policy d. The job of an agent is to squeeze as much money as possible our of making a new sale (correct Ans):