TRADITIONAL LIFE MOCK EXAl\l J

Indicate your answer on an answer she et by wri

Din:ction: Clloosc the best answer. ·ti'ng
the letter.

I. Both endowment and term life policies provide that

a. No cash value is avail_ablc t? �hei policy ow� cr during the term of the policy
b. Renewal and convcrs1on pnv1 egcs arc ava1 1ab1 e
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 inforniation 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
e. 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

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106 This material is solely for the information, use and private circulation of Pru Life UK and may not be published. circulated.
reproduced or distributed in whole or in part to any other person without the company's prior written consent.

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 5. What are the basic settlement options?
a. Policy loan, guaranteed insurability
b. C_ash surrender value, automatic premium loan
c. Fixed amount, fixed period ' life income, interest on .
. . dcposit
d. Double 111 dcmnity, total and permanent di'sab·11 ·1 1 y waiver

6. An insurance company generally has the right to rescind a 1·r. · rance poli.cy
lie msu
if

a. Company discovers at any time that the policy owner was actuaIIy a mmor
·
at the tune o f app 1·1cat1on
·
b. lnsu red pcr�on i�tentiona l!y kills himself during the suicide exclusion
period specified 111 the polrcy
c. Insured person is killed in military action during the contestable period of
the policy
d. Com pany 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
e. Momentarily assigns the policy to the company
d. Obtains written consent from his or her spouse

L This.,.,,,
aterial is
rePrOd SOieiy for the int?rmat,·on,
uced or dist fb
1 uted ,n Whole
or in part to any other person without the company's prior
·
use and private circulation of Pru Life UK and may not be pubhshed
written

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conse
· Ialed
, circu
nt. 107
 li. cy110 Id er to vary
the level of premiums, the sum
Io · A pol icy which penni·ts the po epl:m , 1 en t upon the investm ent pe,..,orm
.- ance and
· cas
insured and has its . h va l ues d •
. wn as----- policy
the l evel of premium paid is kno

a. Participating whole life p olic y

b. Participating endowment
c. Un iversal life
d. None of the above
. Disability Waiver of Premium Rider"
11. Which of the follow1ng statements about"
is false?
a. Disability must occur bef� rc a stated date
_
b. The insured has to di e while disabl ed
c. There is a waiting period
.
d. It has to be attached to a life insurance pol icy

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

a. Identifies the appli cant

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

I 3. Paid-up additions

a. Affect both cash and l oan val ue of the policy

b. Don't affect the c ash value of the pol ic y
c. Don't affect the loan or cash value of the polic y
d. Only affect the cash value of the polic y

14. The total life coverage of a permanent basic polic y can be greatl y increased
through the use of

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

law s of probability in order to
a. Esti�ate future �eat!1 ates mong me
� mbers of a given group
b. Predict when an rnd1v1dual �msured
will die
c. Dev�lo� statistics of past deaths
among the general population
d. Determme the experi_ enced death
rate among the insured persons

This material is solely for the information

;:rt
·
108 reproduced or distributed in who d nvate c,· culalion
.
of Pru Life UK and m n
le ·o��� f
0 any ot � er person with ay ot be published, circulated,
out the c ompany's prior written consent.

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 of renewable term insurance, the policy owner may
16_ In the case
a. Ren ew 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

a Ps. 20,000 whole life policy and paid the full initial premium
l 7. A man applie d for
to the soliciting agent. The agent issued a binding receipt. Under such a receipt,
the insurance company

a. Offers pennanent 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 specifi�d 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

This rna
ten. a1 1s sole ed.
. ly for th e .inf mation . ot be published ' circulat 109
reprOdur-o-< or . ' use and private circulation of Pru Life UK a nd ma y• n · written
""'-' or dist n·buted ·in whole cons en t•
or in part to an y other person without the com pany 5 pnor

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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

,
. ulated
,.o,�hoti ctrC

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 . . .
s v·
The se ttlement option pro ISIOll may provide all of the following cxccpl:
I proceeds ,or c the life. O f t he i. nsured
a. P ayment- o t• tie
ed
b. Paymcnt of t.he proce s over a fixed
. fi ' . period
.
c. Paymc nts o f t he ·
proc eed s m 1xed a1 ounts until exhausted
pan . � .
by the com y, wi h mtereSt payable to the benc fi1ciary
d. Pr oceeds he ld t

on request

1 e m . whole rri� 1 e and e n dowment poli·c ,cs · to

rfeiture· provisions are incIt d d
21. Non-fo po licyo wner tha t ccrtai·n •
minimum. po lie Y b enc fits shall remain with
assu re the .
. even under ccrtam changed conditions · Non-forfeiture va lues guarantee to
h1tn
that
the pol tcyow ncr
. . .
be de nie d for a ny miss t ateme nt o n the apphcat1on
im wi . ll
a. No deat h cla even if
. An y gu a rant eed poli c y values will beI ong to the policy owner
b · discounted
pren11um payments arc wi em ain the sa me. even
.
.
if
. red's
the msu
ou nt of the pol icy ll r
c. The face am impaired
health beco mes
he po licy will remain the
same even when another
em ium o n t
d. The p r . . d t o the p olicy
bene fi1c1ary 1 s adde
limite d
tin uou -p re mium , whole life policy rathe r than a
ng a con
s
advantage of
28. Pur chasi h ole life p ol tcy gives the policyowne r the
payment, w
paym ents during the
period of highest
on of pr miu m
a. Concent rati
e

Earnings oce dures

risk sel ection pr remiums outlay
b. L i beral
n for he sa m e ann ua l p
nce prote cti o t
c. More insura ulat i on of cash valu es
api d acc um
d. M ore r urt of Law
s with a Co
i t rp lead er action
ma y fil n e
ations a company
e

29. In certain situ d to

This remedy is use luded risk
d th w as an e xc
of the insu re d's ea
ine if the ca use on the sa me insurance proc ee
ds
a. Dete rm s
ting cl im
b. Decide c onflic
a

qu est io n of ins urable int

erest
th b e ne ficia r
y If the int erest
the fo r
leme nt options nni versary the insuranc e
e
c. Re solve
m end th e be st s ett
d. R om licy a
pa id at the po
ec
cy lo n is n ot
on a poli a

te m e nt is fals e? t a slower
rate th an for a
ing sta ild p
30. Which of the follow
a
life policy bu
s u

v l e of a whole y
a. The c ash the compan d
a u
ent b y
olicy is guara than that for a hmite
ed
20 year endowm n te
a per m a nen t p
b. The cash va lu e i n
m en t bu ild
s up faster
an e nd o w wabl e
c. The cash value of e duration f a year
! Y rene
the sa m lu o
pay life policy of the cash va
e
sh ort d u r ation
d. Because of its very
y fast
term policy grows ver

ed , o,a
,taled, 1 11
ot • poblish
e U K aod
m•Y o ,io, •""'° c0os
b e ol
. of p,u C,. ,oy's p
. ate ,1,culab< >" without the coniP
""'°"'
'"' mam ,od priv

------111111111
Malis so�ly fo, _the ,otonnalioa, u se rt any other person
e in whole o
r in pa to
ced or distribut d

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 · .,. does not have a legitimate insurable interest?
3 I. Which of the fo IIowing

a. An .tndiv,. •dua• l on the life of his mistress

b. An individual on his o_wn ltfe . _
An individual on the It fe of �1s sp?use
- A finance company on the hfc of its borrower
�
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32. The basic covera ge provided by the life insurance policie • s may be supp lem e
by a separate provision that prov1 ·d es coverage c
1or accidental amounts or nted
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 premiu

ms is false?
a. Cash is required for all premiums paid in the grace perio
d
b. A premium is the legal consideration needed to affectua
_ te a life insur ance
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 th e insurance
company may
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 . the
c. Makes it necessary for the benefic iary to present proof of death m
event of a death claim . c ha s been in
d. Prevents the company from denying a claim after the Poli Y
force for 2 years

ci(Ct.ilat ed.
m ay not be published, nI.
. . . UK and conse
This material is solely for the information, use and pnvate circulation°f Pru Life pn. or written
the company's
112 reproduced or distributed in whole or in part to any other person wi·thout

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 J7. The insured named a primary an 1 sec on a y e
_l cor <.1 r r vocable benefici•ary fior Ps. 20,
policy. Which of the follow ing 1s rect'! 000
a. The designation of a contingent benc .
. ·fricia .
bcnc_liciary·s approval ry 1s subject to the primar
y
b. The msurcd can add a thir d bencri c1ary
., at any time
c. Any po ricy Ioan assignment will requi. re tic
1 primary beneficiary's
signature
d. Upon the insured's death the primary an , d sccondary beneficiaries
each receive Ps. I 0,000 shall

38. When you bought an insurance policy on your Wir e s i·Ire,

·r,, r you were 27 and
she ,vas _6,
'? b .
11t you stated that you were 26 and s Iie was
. , 27· Five year s later
. . .
your wife. d1cd . Tl1c 111surcr 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. ff 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 tem1 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

..., ulated, 113

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 ...

. and F if the statement is FALSE.

. .
0n. \l:Vri tc T if the statement ,s TRUE
. cct1
D1r

m has not been paid and the cash values has been
I · In a case w\1ere the premiu. .
grace pen. od.
F ex 11austed, the po\icy can st,\\ avail of the

,
2_ According to the \aw of large numbers �vcn ts which h�ppen scemingly by chance
T wi\\ actually be bound to follow a pre ,eta \ e pattern, ,f enough such happenings
d b
are observed.

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

F 4. A policy is still in force for the fu\ \ face amount and wi \ \ remain in force for a
further period of four years and \ \ 8 days, without the payment of any premiums
has availed of paid up insurance option.

T 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.

T 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.

F 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.

F 8. An endowment at age 65 policy with premium payable for a limited period of 20

years pays the full amount after 20 years.

F 9. In most life insurance applications, the largest amount of information re quested is

data which identifies the applicant.

T l 0. A policy is not rendered void by reason of misstatement of the assured's dealh.

er
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