TRAD EXAM REVIEWER

1. 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

2. The contestability 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

3. 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

4. A yearly renewable term life insurance policy generally specifies that

a. The policy owner 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

5. A man applied for a P20,000 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 that 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

6. 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
7. The insured named a primary and secondary revocable beneficiary for P20,000 policy. Which of the
following is correct?

a. The designation of a contingent beneficiary is subject to the primary beneficiary approval

b. The insured can add a third beneficiary at any time
c. Any policy loan or assignment will require the primary beneficiary's signature
d. Upon the insured's death 'the primary and secondary beneficiaries shall each receive P10,000

8. In 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 divided option presently in effect

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 he have to appoint 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

10. 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

11. 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

12. A policy which permits the policy owner to vary the level of premium or 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
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. Indicate which of the following is not a function of an application for life insurance policy

a. To give details pertaining to non-forfeiture option

b. To furnish information on which 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

15. Both endowment and term life insurance 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 insured is then alive
d. Insurance protection will be limited to a specified period

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

17. 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
c. Insured person is killed in military action during the contestable period of the policy
d. Company discovers during the contestable periods that the application contains a material
statement

18. What are the basic settlement options?

a. Policy loan, guaranteed insurability

b. Cash surrender values, automatic premium loans
c. fixed period, life income, interest on deposit
d. Double indemnity, total and permanent disability waiver

19. 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

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

a. An accident death benefit rider

b. An interim term rider
c. A supplementary term rider
d. None of the above

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. In 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

24. Endowment life insurance and term life insurance are similar in that both plans

a. Build up cash value rapidly in the early policy year

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. Contains provisions for automatic continuation of the insurance protection at the end of a
specified period
25. An agent who determine a prospect's complete financial requirements preparatory to offering him a
policy using the correct selling approach known as

a. Counselor selling
b. Total needs selling
c. Planned selling
d. Multiple products selling

26. 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

27. 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

28. 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

35. Non- forfeiture provision are included in a whole life and endowment policies to assure the policy
owner that certain minimum policy benefits shall remain with him even under certain changed
condition. Non-forfeiture values guarantee to the policy owner 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 become
impaired.
d. The premium on the policy will remain the same even when another beneficiary is added to
the policy

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

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

a. Demand full settlement of the loan

b. Terminate the contract
c. Refuse to grant future additional loans
d. Increase the present loan by the interest

38. Which of the following statements regarding premiums is false?

a. Cash is required for all premiums paid in the grace period

b. A premium is the legal consideration needed to effectuate a life insurance policy
c. The grace period is usually 31 days
d. Premiums which are paid quarterly or semiannually are higher than those paid annually.

39. Which of the following does not have a legitimate insurability interest?

a. An individual on the life of his mistress

b. An individual on his own life
c. On individual on the life of his spouse
d. A finance company on the life of its borrower

40. A non-forfeiture option would ordinarily be selected at the time a policy owner

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

TRUE OR FALSE

__________41. An endowment at age 65 policy with premium payable for a limited period of 20 years
pays the full amount after 20 years

__________42. A policy that provides guaranteed cash value plus extra annual distributions and pays
the insured after a specified time is known as participating endowment.

__________43. 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. TRUE

__________44. In the case where the premium has not been paid and the cash value has been
exhausted, the policy can still avail of the grace period.
__________45. Anti-selection occurs when persons in poor health wish to buy insurance. TRUE

__________46. According to the law of large numbers, events which happen seemingly by chance will
actually be found to follow a predictable pattern if enough such happenings are observed

__________47. In most life insurance application, the largest amount of information requested is data
which identifies the applicant.

__________48. A policy is not rendered void by reason of misstatement of the assured's death.

__________49. 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 ) each
week.

__________50. 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.

1. A
2. D
3. C
4. B
5. D
6. D
7. B
8. B
9. A
10. D
11.
12. C
13. C
14. A
15. D
16. D
17. A
18. C
19. C
20. C
21. D
22. A
23. B
24. C
25. B
26. B
27. A
28. D

35.
36.
37. D
38. A
39. A
40.
41. F
42. T
43. T
44. F
45. T
46. T
47. T
48.
49.
50. F