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WorksheetsPage 1
Total questions: 150
Worksheet time: 1hrs 15mins
A single premium policy means a policy
under which only one premium payment is required
requiring only a single premium each year
on which no more than one premium can be paid in advance
only available to single individuals
A fixed amount added to the premium of a given policy regardless of policy size is known as
Policy values
Policy reserve
Extra premium
Policy fee
To be able to calculate the required premiums for a given policy, the agent must know the applicant’s
age
choice of plan
face amount desired
all of the above
To calculate premiums for the other modes of premium payment the annual premium is
multiplied by a constant conversion factor
multiplied by a conversion factor for the mode of payment desired
divided by a conversion factor for the mode of payment desired
divided by the desired number of premium payments
Benefits payable under health insurance policies cover
expense reimbursement benefits
disability income benefits
all of the above
accidental death and dismemberment benefits
With employer-employee groups, an employee does not fill out personal application for insurance. Instead he merely fills out
A certificate of insurance coverage
A salary deduction form
A registration card
An enrollment card
In the event an employee leaves the company in which he is a member of its group insurance policy, his group coverage can be changed to individual policy using the
Policy change form
Policy exchange facility
Conversion privilege
Change of plan provision
For a contract to be legal and binding
Parties to the contract must be legally competent
Parties to the contract must possess blood relationship
Parties to the contract must be members of the bar
Parties to the contract be above 21
Identify the role of a father who signs a life insurance contract on behalf of his child.
Applicant-owner
Insurer
Insured
Beneficiary
When must insurable interest exist for life insurance coverage to be valid?
At issue and possibly at loan time
Throughout the lifetime
Only at loan time
Only at policy inception
A life insurance contract does not take effect unless which condition is met?
Policy delivered to authorized party
At least two beneficiaries named
First premium paid to insurer
No insurability change between dates
Which group would generally NOT be practical to name as beneficiaries?
Children by former marriage
Someone to whom you owe money
Brothers and sisters
Someone who owes you money
Under law, who can be named irrevocable beneficiaries?
Only minor children
Only the wife
Wife and children only
Any person with insurable interest
If life insurance proceeds are left with the company to earn interest, which tax applies?
Income tax on proceeds
Donor’s tax on proceeds
Estate tax on proceeds
Income tax on interest earnings
A person has insurable interest in the life of whom?
Any person with pecuniary interest
A dependent providing support or education
His child or grandchild
All of the above
Choose the best description of 'beneficiary' in a life policy.
Entity paying the premiums
Company issuing the policy
Agent delivering the policy
Party receiving the proceeds
Select the scenario that most clearly shows insurable interest.
Purchasing on a debtor you rely on
Insuring a famous celebrity
Insuring someone you owe money to
Buying a policy on a stranger
Which action most directly activates a newly issued life insurance policy?
Paying the first premium
Changing the insurability date
Naming three beneficiaries
Filing a loan request
Anybody can be designated a beneficiary except
All of the above choices
Minors named on the policy
A creditor of the policyholder
Those prohibited by donation laws
The common practice for most life insurers is that life insurance goes into force
By legal stipulation in Insurance Code
When agent issues a binding receipt
When application is received at branch
When policy is delivered to applicant
The parties involved in a life insurance contract are the
Insurance company and agent
Insured and beneficiary only
Insurance company and insured
Agent and insured together
According to insurance law, a common‑law spouse cannot be designated a beneficiary
All of the above apply
Because common‑law is immoral
If a legal partner is still living
Because marriage brings no benefit
Which provision in a permanent life policy may lapse for non‑payment of premium?
Guaranteed insurability clause
Automatic premium loan feature
Reinstatement provision clause
Settlement options section
The convertible feature of a term policy provides the policy may be
Changed to permanent with evidence
Cashed for a guaranteed sum value
Changed to another insured life
Changed to permanent without evidence
Within two years of buying a policy, you are accidentally killed when your car hits a tree. In these circumstances the insurer will
Refund premiums as suicide case
Pay nothing at all
Pay the policy face amount
Pay double the face amount
A policyholder may obtain money from the insurance company and still remain insured by
Taking a policy loan
Taking the extended insurance option
Discontinuing payment of premium for some period
Surrendering the policy for its cash value
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 insurance company will pay
The face amount adjusted for misstatement of age
Slightly less than the face amount
The sum of the premium paid
The face amount
When explaining dividends, the following information must be supplied
That they are not guaranteed
The dividends paid up in the previous years
The anticipated dividends
The relation to the cost of the policy
If the insured dies during the grace period of an unpaid life insurance policy, the amount payable to the beneficiary is usually the
Cash surrender value of the policy minus the unpaid premiums
Full face amount
Total premiums paid plus interest
Face amount of the policy minus the unpaid premiums
The typical grace period provision in a life insurance policy obliges the life insurance company to
None of the above
Allow the policy owner a three-month extension beyond the due date to make the late premium payment without penalty
Keep the policy in force for the duration of any major disability suffered by the policyowner
Establish a policy loan to cover any premium which the policyowner fails to pay by due date
Automatic premium loan differs from other policy loans in that an automatic premium loan
Need not be repaid by the policy owner
Must be repaid during the policy year in which it is granted
Goes into effect requiring no separate action from the policy owner
Involves higher interest payments because of the greater cost of administration
When a policy is assigned absolutely
The assignee acquires all the rights and interests of the original policyholder
None of the above
The original policyholder still can exercise some of the rights
The original beneficiary is not changed
If a policy did not contain the name of a beneficiary, the beneficiary will be
The insured estate
The insured’s brothers and sisters
The children
The wife
If the policyowner does not pay a premium on the due date, the policy will immediately
Continue in full force for a grace period
Lapse
Be converted to a paid-up policy for a lesser amount
Go into automatic premium loan
If a policyowner whose wife is the irrevocable beneficiary wishes to cash in his policy, he must
Have the wife’s consent
Tell his wife what he is going to do
First take a loan on the policy
Have the check issued in the name of his wife
Choose the incorrect statement: The entire contract between the policyowner and the insurance company include
Any subsequent written amendments to the contract
Any document attached to the policy when issued
Any verbal statement made by the agent to the applicant
The application and the policy
If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be
Increased
Paid in a reduced rate
Suspended
Unaffected
Interest is charged on policy loans
For registered policies only
If the loan is outstanding for more than a year, a loan repaid within a year is interest free
To replace investment income the insurer cannot earn since a loan has been granted
For participating policies only
An insurance plan which offers both protection and savings is called
Non-participating plan
Participating plan
Permanent plan
Temporary plan
A man with moderate means can have maximum protection possible through
Whole life insurance
Term insurance
20 Yr. Endowment
Limited pay life
Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez?
Term insurance
Non-participating Plans
Participating plan
None of the above
Which of the following can give the longest protection?
Ordinary life
20 yr term
Endowment at 65
20 yr. Endowment
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
20 yr. Term
20 pay life
None of the above
20 yr. Endowment
In a 20 Life policy
Protection is for 20 years, payment of premiums until age 100
Protection is until age 100, payment of premium is for age 20 years
Protection is until age 100, payment of premiums until age 100
Protection is for 20 years, payment of premium is for 20 years
A participating plan entitles the policyowner to receive a return of excess premiums. Such is termed as:
Endowments
Dividends
Cash surrender value
Cash values
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:
Decreasing term
Limited Pay Life
Ordinary Life
Level Term
Two attractive features of a term insurance are:
Convertibility and renewability
Convertibility and cash values
Cash values and dividends
Protection and dividends
A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains ________ feature:
Convertibility
Both a & b
Dividend option
Renewability
A term policy only offers
Cash values
Protection
Savings
Dividends
The main difference between a term plan and a permanent plan is
Permanent plans can be converted and renewed while term plans cannot
All of the above
Permanent plans provide savings and dividends while term plans provide savings only
Permanent plans provide both protection and savings while term plans offer protection only
The savings element of permanent plans allows for the build up of
Death benefits
Cash values
Dividends
Maturity benefits
A term rider is
A term insurance added to a permanent plan
A renewable term policy
Another name for a convertible term policy
A term policy with a waiver of premium
An optional rider which can be attached to a policy stopping further premium payments in the event of disability is called
Total disability monthly income
Waiver of premium
Accidental death and dismemberment
Policyholder protection clause
Which statement best describes convertibility in term insurance?
Cancelling premiums after a disability occurs
Adding dividend options to a term contract
Renewing the same term for another fixed period
Changing to permanent coverage without medical evidence
Which feature allows a term policy to continue past its original expiry without a new medical exam?
Dividend option
Renewability
Waiver of premium
Cash value accumulation
In permanent life insurance, accumulated cash value most directly supports which benefit?
Higher accidental death payouts
Short-term premium holidays
Guaranteed renewable periods
Automatic term conversion fees
For the waiver of premium to be effective, which condition must be met?
Disability must be total
Disability must be permanent
Both total and permanent
Either total or permanent
If a policy with an accidental death rider becomes paid‑up, what happens to the rider?
The face amount is reduced
Nothing changes with the rider
Basic premiums stop but rider continues
The rider coverage ceases
Disability benefits are not paid under which circumstance?
For self‑inflicted injuries
If sickness was the only cause
If there is a policy loan
If all dividends were withdrawn
Mr. Pedro Cruz became paralyzed after attempting suicide. Under a disability income policy, what benefit would apply?
Total disability benefit and waiver
Partial disability benefits only
Waiver of premiums granted
No disability income or waiver
Which rider offers greater coverage for least premium on a permanent life policy?
Waiver of premium rider
Term insurance rider
Guaranteed insurability rider
Accidental death rider
A payor’s benefit rider is intended to do which of the following?
Return premiums to adult payor on minor’s death
Provide waiver of premium if payor dies or is disabled
Let insurer pay proceeds to equitable claimant
Assure adult payor’s vested interest at majority
Identify the key reason accidental death riders cease when the base policy becomes paid‑up.
Insurer cancels riders automatically
Face amount becomes insufficient
Riders require ongoing premium
Paid‑up policies prohibit riders
Why are self‑inflicted injuries excluded from disability benefits?
To comply with tax law
To equalize underwriting risk
To prevent moral hazard
To reduce administrative costs
Which situation most likely qualifies for waiver of premium under a disability rider?
Minor injury from hobby
Voluntary unemployment
Total disability from illness
Temporary partial disability
Which rider best protects a minor’s policy if the payor cannot pay premiums?
Dividend option rider
Accidental death rider
Guaranteed insurability rider
Payor’s benefit rider
If an insured is disabled and the life insurance policy continues in force through a waiver of premium, the dividends of the policy would
Cease
Continue but applied toward the waived premium
Continue at reduced rate
Continue as if the owner is paying the premium
A policy with a minor as the proposed insured is called
Substandard policy
Rated policy
Regular policy
Juvenile policy
Life insurance policies for which higher-than-standard premium rates are payable are said to be
Conditional policies
Non-participating policies
Contingent policies
Rated policies
Since purchasing life insurance is a voluntary choice, the individual must meet
Minimum income requirement
Certain standards of health and occupation
Comprehensive inspection report
All of the above
Which factor would have the least effect on the premium charged for life insurance?
Age
Income
All of the above
Occupation
Anti-selection occurs
When an agent thinks only of his own interest
When you buy bad stocks expecting improvement
When persons in poor health wish to buy insurance
When an insurer accepts more than a share of poor risks
In insurance, risk means
Chances of the beneficiary being paid
Chances of you being paid by the company
Hazard on people’s lives
None of the above
Which statement best explains why insurers use rated policies?
To guarantee dividends regardless of claims
To eliminate underwriting altogether
To cover applicants presenting higher-than-standard risk
To reward exceptionally healthy applicants
Why might income have less impact on premium than age or occupation?
Income directly changes mortality tables
Income legally mandates higher rates
Income poorly predicts claims probability
Income always increases insurer administrative costs
Choose the scenario that best illustrates anti-selection in a life insurance context.
Insurers promoting wellness discounts widely
Agents selling only to affluent neighborhoods
Smokers seeking coverage after recent diagnosis
Healthy runners buying basic term coverage
In an insurance application, what information must the applicant disclose?
Only what the agent wants to know
Only date and place of birth
Only family history
Every material fact within knowledge
Which source of information do insurance companies use when assessing an applicant?
Application form
Medical information bureau
Inspection report
All of the above
How are insurance risks commonly classified?
Standard, substandard, declined
Complete and incomplete
Regular and irregular
Unacceptable and acceptable
A risk may be considered substandard based on which criterion?
Income, educational attainment and occupation
Death, occupation and moral character
Death income and educational background
Occupation, moral character and family history
Which statement best defines a hazardous occupation?
Exposes insured to social hazards
Unhealthy work exposes to sickness
All of the above
Duties expose insured to injury danger
In application forms, statements are generally treated as what?
Guarantees
None of the above
Representation
Warranties
An applicant hospitalized for three years must provide which details with the application?
Date of confinement only
Doctor’s name, diagnosis, confinement dates
Bill and medicines
Doctor’s name only
Which pair correctly contrasts warranties and representations in insurance applications?
Neither has legal consequences
Warranties are beliefs; representations are promises
Warranties are absolute promises; representations are beliefs
Both are absolute guarantees
Select the most accurate reason an occupation might be deemed hazardous.
Access to employee wellness programs
Routine desk tasks with low strain
Exposure to elements causing sickness
Flexible hours with remote work
Which combination most likely leads to substandard risk classification?
Low-risk occupation and strong character
Nonhazardous duties and stable employment
High income and advanced education
Risky occupation and adverse family history
Insurance companies have a source of confidential medical information on applicants for life insurance. This is the
Agents confidential report bureau
Inspection reports bureau
Financial standing bureau
Medical impairment bureau
An agent is filling up the Agent’s Confidential Report. What information must be put in his report?
a & b only
Information about insured’s finances
Information about insured’s standing in the community
All information he knows which are material to the application for insurance
An annuity plan
offers life insurance protection
is a purchase of income
offers the waiver of premium benefit
is the same as an endowment plan
The person who purchases the annuity plan is called the
assignor
owner
annuitant
insured
A life insurance company earns income from two main sources
dividend income and interest income
premium income and investment income
mortgage income and dividend income
mortgage income and premium income
dividend income and premium income
Policy reserves are future obligations on the part of
the beneficiary
the insurance company
the policyowner
the insurance commission
Insurance companies which are owned by the policyowners are examples of
stock companies
family corporation
mutual companies
open-end companies
Which term best describes a company owned by individuals holding shares?
Policyowners hold collective rights
Stockholders own equity shares
Creditors hold debt claims
Government owns public firms
A sale of life insurance is completed when the application is signed and the first premium is paid. Which method aligns with acceptable settlement practices?
Premium must be paid fully in cash
Payment must be by promissory note
Applicant pays in full or part
Medical exam must occur first
Why is the completed application considered the basis of an insurance policy?
It allows accept or reject decisions
It guides future sales data
It has no legal relevance
It avoids contract necessity
Which statement about life insurance agents’ advertising is accurate?
All advertising is prohibited
Agents should push profitable policies
Client information must be confidential
Agents may not name their company
Which statement regarding life insurance applications is the exception?
Statements are warranties
Made part of policy contract
Misstatements could void policy
Must be signed by applicant
Before granting a license, what proof does the Insurance Commissioner require?
Clean employment record
Reasonable educational background
Agent’s character and reputation
All of the above
What is the maximum single-claim amount the Insurance Commissioner may adjudicate against companies?
50,000.00
100,000.00
250,000.00
1,000,000.00
Evaluate the sales completion scenario: the applicant signs and pays by cash partly, with a note for the balance. What outcome follows?
Medical exam required first
Sale is completed as specified
Sale remains incomplete
Policy must be issued first
When an agent advertises services to the press, which limitation applies?
Cannot mention company name
Cannot list office address
Cannot state licensing status
Cannot describe policy types
Which application-related misstep could void a policy during the contestable period?
Missing beneficiary details
Failure to attach riders
Misstatements of material facts
Unsigned application pages
Which statement about renewing an insurance agent’s license is correct?
A renewed license is valid only for one month after issuance
Renewal occurs when the commissioner is satisfied all requirements are met
Renewal happens upon receipt of application and fee by the commissioner
A license remains valid during the lifetime of the agent
Why is the insurance industry under government regulations?
It primarily functions as a charitable institution
It pays exceptionally high corporate taxes
It always and directly affects public interest
It must account for money spent in company operations
Which statement best describes agents sharing commissions?
Agents are not allowed to share commissions with any person
Sharing is allowed with another licensed agent or agents
Sharing is allowed on whole life policies but not term policies
Sharing with any other person is called twisting
Which statement about insurance practices is correct?
Premium rebating can only be authorized by the insurer’s head office
An agent may not identify the insurer’s name on personal letterhead
Agents may act for two insurers simultaneously under the same license
Rebating of premiums by an insurance agent is prohibited
Inducing a policyowner to surrender or lapse a policy and replace it with another company’s policy is called what?
Rebating
Twisting
Knocking
Discounting
What is the most accurate definition of rebating in insurance?
Providing false information to gain advantage
Dating the policy a month earlier than actual
Offering premium discrimination to policyholders
Giving back part of the premium as an incentive
An insurance agent’s license can be revoked for which reason?
Fraudulent practices in selling policies
Violating any provision of the insurance code
Misrepresentation in the license application
Any or all of these reasons
A company policy allowing agents to act for two insurers at the same time under one license would violate which rule?
Prohibition against rebating premiums
Restriction on identifying insurer on letterhead
Ban on twisting and knocking practices
Prohibition on dual representation under same license
If an agent offers to return part of the premium to secure a sale, what practice is this?
Knocking the competitor’s product
Discounting as a sales promotion
Twisting through misrepresentation
Rebating prohibited by regulation
When a policyowner is persuaded to drop coverage to buy a replacement policy elsewhere, which ethical concern is primary?
The act constitutes twisting rather than knocking
The surrender breaches lifetime license validity
The commissioner must pre-approve the surrender
The replacement may involve prohibited rebating
One example covered under ethical practices and procedures is
Keep all policyholders information confidential
Never drink in front of a client at lunch
Always recommend a will to each client
Always pick up the first premium with application
The term knocking means
Average years a person will live shown by table
Making derogatory remarks about competing underwriters
Promising two annuitants fixed income while both live
None of the above choices apply
Which of the following are unethical practices in solicitation and procurement of insurance except
Obtaining a license by fraud or misrepresentation
Misrepresenting terms or advantages of any policy
Inducing a policyholder to lapse or surrender a policy
Misleading estimates of dividends or surplus shares
Twisting is best described as
Paying a premium on one policy using another’s dividends
Attempt by insurer to secure services of agent from another
Replacing a policy in one company with another company
An offense which does not apply to variable concepts
The misstatement of facts by either party of insurance to the other, preliminary and in reference to making the contract, is
Twisting
Misrepresentation
Knocking
Overloading
Selling a person more insurance than warranted by his sources is called
Twisting
Overloading
Rebating
Knocking
An agent is prohibited from all of the following except
Refunding some of his commission to his client
Altering an application without prior written approval
Making complete comparisons of his and competing policies
Convincing a client to cancel a policy to buy another
Which action constitutes misrepresentation in insurance practice?
Providing accurate dividend projections with caveats
Comparing policy features side by side fairly
Using derogatory remarks to persuade a prospect
Stating false benefits or terms of a policy
Inducing a policyholder to lapse, forfeit, or surrender a policy he holds for another company is an example of
Knocking
Twisting
Rebating
Ethical solicitation
Keeping policyholder information confidential primarily addresses which ethical principle?
Justice
Beneficence
Privacy
Autonomy
Inducing an insured to lapse or forfeit his insurance
Is not allowed by the contract conditions
Is an offense in the great majority of cases
Is always to the policyholder’s advantage
Is entirely at the agent’s discretion
The suicide clause is in effect for
The first six months
The first year
The first eighteen months
The first two years
The three non‑forfeiture values in a permanent policy are
Waiver of premium, reinstatement, policy loan
Cash dividends, bonus additions, extended term
Cash surrender value, loan value, assignment
Cash surrender value, paid‑up value, extended term
If a policyholder elects the paid‑up insurance option, what happens?
Premiums stop and coverage continues to age sixty‑five
Premiums cease and protection continues with reduced coverage
Insurance continues with reduced amount and reduced premium
The policy will automatically terminate immediately
Which are the basic settlement options?
Extended term, paid‑up additions, accumulation at interest
Fixed amount, fixed period, interest, fixed period and life
Double indemnity, total disability, waiver of premium
Cash surrender value, automatic premium loan
In case of misstatement of age, what occurs?
Policy cancelled and a new one issued for correct age
The insured person can be changed to another person
Insurance amount adjusted to correct‑age premium would buy
Policy remains in force and the company cannot contest it
Which of the following is a settlement option?
Policy loan
Cash surrender value
Interest on insurance proceeds
Extended term insurance option
Electing paid‑up insurance primarily results in
Immediate policy termination without benefits
Continuation of coverage with reduced amount
Conversion to extended term without premiums
Higher premiums with unchanged coverage
Non‑forfeiture values are designed to
Provide benefits when premiums stop
Replace settlement options entirely
Eliminate all surrender penalties entirely
Increase death benefits automatically
A policy loan is best described as
An automatic extension of term
A settlement choice for beneficiaries
A dividend paid to the insured
A loan secured by cash value
Name the provision in a permanent life insurance policy under which, if the premium are discontinued, full insurance coverage will be maintained for a specified period
Paid-up insurance
Life income option
Paid-up additions
Extended term insurance
Which one of the following is not derived from the non-forfeiture values
Dividends
Paid-up insurance
Extended term insurance
Cash surrender value
Mr. Dela Cruz stated in his application that he was 30 years of age and a policy was issued to him on that basis. When he died twenty years later it was found out that, in fact, he was 34 years of age at the time of his application. In conformity with the Insurance Code, the company
Paid the amount of insurance payable to his beneficiary reduced in relation to his actual age at the time the contract was signed
Paid one-half of the face value of the policy
Need not pay the face value of the policy, but refund all premiums paid
Paid the full face value of the policy without any extra charges
In the event that the policyowner elects the paid-up insurance option
Premiums cease and protection continues for a reduced amount
Premiums stop and the policy continues for a full face amount until age 65
The policy will automatically terminate
Insurance continues at a reduced amount and with reduced premium
If a policyowner commits suicide within one year. What’s the company’s liability?
The company is not liable at all
The company would be liable for the payment of the premiums paid by the insured only
None of the above
The company would be liable for the payment of the face value of the policy
Which of the non-forfeiture option gives the largest amount of protection?
All of the above give equal protection
Fully paid insurance
Cash surrender value
Extended term insurance
Any policy which has lapsed can be reinstated subject to normal conditions of proof of insurability within
Three years
Six months
One year
Life insurance is best described as what type of plan?
A cooperative risk sharing plan
A speculative risk
Only available to a specific group
A luxury afforded by the rich
Who calculates principal elements to set life insurance premium rates?
Actuary
Insurance commissioner
Life agent
Senior statistician
Because buying life insurance is voluntary, which requirement must an individual meet?
A minimum income figure
A satisfactory medical examination
Certain standards of health and occupation
A comprehensive inspection
What is the fundamental advantage of using insurance to meet economic losses?
Spread over a large number of people
Deferred for a specified period of time
Reduced for the group as a whole through the multiplier effect
Met as they arise through savings accumulated on an assessment basis
In insurance, what does term loading mean?
Difference between gross and net premiums for overheads
Amount the company lends to the policyholder as security
Amount payable when a loss renders one unfit for insurance
None of the above
Life insurance contributes directly to national welfare primarily by which means?
Encouraging provisions for the future
Accumulating capital for investment
Partially relieving care of dependents
All of the above
Life insurance can provide money when income stops due to which cause?
All of the above
Disability
Death
Retirement
Which role focuses on assumptions and calculations for premiums rather than selling policies?
Life agent
Actuary
Insurance commissioner
Senior statistician
Which statement best captures how insurance handles individual losses?
Losses are spread among many people
Losses are met by personal savings
Losses are delayed for later payment
Losses are reduced by multiplier effects
Which component is included in term loading calculations?
Assessment basis savings
Policy loan amounts
Commissions and taxes
Disability payouts
