Trad Insurance Quiz
Trad Insurance Quiz
Test your knowledge of insurance concepts with our comprehensive Trad Insurance Quiz! With 122 carefully curated questions, you will have the opportunity to dive deep into various aspects of insurance.
Get ready to explore:
- Life insurance policies
- Health insurance benefits
- Group insurance specifics
- Legal provisions of insurance
A single premium policy means a policy
Requiring only a single premium each year
Under which only one premium payment is required
Only available in to single individual
On which no more than one premium can be paid in advance
A fixed amount added to the premium of a given policy regardless of policy size is known asA fixed amount added to the premium of a given policy regardless of policy size is known as
Policy fee
Policy reserve
Policy values
Extra premium
To be able to calculate the required premiums for a given policy, the agent must know theapplicant’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
Divided by the desired number of premium payments
Divided by a conversion factor for the mode of payment desired
Multiplied by a conversion factor for the mode of payment desired
Multiplied by a constant conversion factor
Benefits payable under health insurance policies cover
Accidental death and dismemberment benefits
Expense reimbursement benefits
Disability income benefits
All of the above
With employer – employee groups, an employee does not fill out a personal application for insurance. Instead he merely fills out.
An enrollment card
A registration card
A certificate of insurance coverage
A salary deduction form
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 an individual policy using the
Policy exchange facility
Conversation privilege
Change of plan provision
Policy change form
For a contract to be legal and binding
Parties to the contract must be members of the bar
Parties to the contract must be legally competent
Parties to the contract must be above 21
Parties to the contract must possess blood relationship
A father enters into a life insurance contract on behalf of his child. In this case, the father is the
Insured
Beneficiary
Insurer
Applicant-owner
For life insurance coverage to be valid, insurable interest must exist
Only at the inception of the policy
Only at the time of the loan
Throughout the entire lifetime of the policy
Both at the time of the policy issue and at the time of the loan but not necessarily throughout the lifetime of the policy
The insurance code specifies that a contract does not take effect unless.
The policy is delivered to an insured, his assignee or agent, or to a beneficiary
Payment of the first premium is made to the insurer or its authorized agent
No change has taken place in the insurability of the life to be insured between the time of the application was completed and the time the policy was delivered
The insured has named in the policy no fewer than two beneficiaries
All of the following would be practicable to become beneficiaries except
Children by former marriage
Brothers and sisters
Someone who owes you money
Someone to whom you owe money
Under the law pertaining to life insurance
Only minor children can be named irrevocable beneficiaries
Only the wife can be named irrevocable beneficiary
Only the wife and the children can be named irrevocable beneficiaries
Any person with insurable interest can be named irrevocable beneficiaries
When the proceeds of a life insurance policy are left with the company to earn interest
Income tax is levied on the proceeds
Income tax is levied on the interest earnings of the proceeds
Estate tax is levied on the proceeds
Donor’s tax is levied on the proceeds
A person has insurable interest in the life of
His child or grandchild
Any person upon whom he is wholly or in part dependent on, or from whom, he is receiving support or education
Any person in whom he has pecuniary interest
All of the above
Anybody can be designated a beneficiary except
A creditor
Minors
Those expressly prohibited by law to receive donations
All of the above
The common practice of most life insures is that the life insurance goes into force
When the application is received by the branch office
When the policy is delivered to the applicant
In accordance with the legal stipulation of the insurance code
When the agent gives a binding receipt
The parties involved in life insurance contract are the
Insurance company and agent
Insurance company and insured
Agent and insured
Insured and beneficiary
According to insurance law, a common-law spouse cannot be designated a beneficiary
Since there is no benefit of marriage in the relationship
If his/her legal partner is still living and the previous marriage has not been legally dissolved
Since the common-law relationship is an immoral relationship
All of the above
Which one of the following provisions in a permanent life insurance policy may lapse for non-payment of premium?
Guaranteed insurability
Automatic premium loan
Settlement options
Reinstatement provision
The convertible feature of a term insurance policy provides that the policy may be
Changed to a permanent insurance policy without evidence of insurability
Changed to another life
Cashed for a guaranteed sum
Changed to permanent insurance with evidence of insurability
Within two years of buying a life insurance policy, you are accidentally killed when you car hits a tree. In these circumstances the insurance company will
Refund premiums because it is suicide
Pay double the face amount
Pay the face amount
Pay nothing
A policyholder may obtain money from the insurance company and still remain insured by
Surrendering the policy for its cash value
Discontinuing payment of premium for some period
Taking a policy loan
Taking the extended insurance option
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
The face amount adjusted for misstatement of age
The sum of the premium paid
Slightly less than 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
Total premiums paid plus interest
Cash surrender value of the policy minus the unpaid premiums
Face amount of the policy minus the unpaid premiums
Full face amount
The typical grace period provision in a life insurance policy obliges the life insurance company to
Establish a policy loan to cover any premium which the policyowner fails to pay by due date
Keep the policy in force for the duration of any major disability suffered by the policyowner
Allow the policyowner a three-month extension beyond the due date to make the late premium payment without penalty
None of the above
An automatic premium loan differs from the other policy loans in that an automatic premium loan
Need not be repaid by the policyowner
Must be repaid during the policy year in which it is granted
Goes into effect requiring no separate action from the policyowner
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
The original policyholder still can exercise some of the rights
The original beneficiary is not changed
None of the above
If a policy did not contain the name of a beneficiary the beneficiary will be
The wife
The children
The insured’s brothers and sisters
The insured estate
If a policyowner does not pay a premium on the due date, the policy will immediately
Lapse
Be converted to a paid up policy for a lesser amount
Go into automatic premium loan
Continue in full force for a period of grace
If a policyowner whose wife is the irrevocable beneficiary wishes to cash in his policy, he must
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
Have the wife’s consent
Choose the correct statement. The entire contract between the policyowner and the insurance company include
The application and the policy
Any verbal statement made by the agent to the applicant
Any document attached to the policy when issued
Any subsequent written amendments to the contract
If a loan is taken on a participating policy , dividends for that policy while there is a loan against the policy will be
Suspended
Paid a reduced rate
Unaffected
Increased
Interest is charged on policy loans
For registered policies only
If the loans 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 saving is called
Temporary plan
Participating Plan
Permanent plan
Non Participating plan
A man with moderate means can have maximum protection possible through
20 Yr. Endowment
Term Insurance
Limited Pay Life
Whole life insurance
Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez?
Participating Plans
Term Insurance
Non – Participating Plans
None of the above
Which of the following can give the longest protection?
20 Yr. Endowment
Ordinary Life
Endowment at 65
20 Yr. Term
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. The policy is obviously a
20 Yr. Endowment
20 Yr. Term
20 Pay Life
None of the above
In a 20 Life policy
Protection is until age 100, payment of premium is for 20 years
Protection is until age 100, payment of premiums until age 100
Protection is for 20 years, payment of premium is for 20 year
Protection is for 20 years, payment of premiums until age 100
A participating plan entitles the policyowner to receive a return of excess premiums. Such is termed as:
Endowments
Cash values
Dividends
Cash surrender value
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:
Ordinary Life
Decreasing term
Limited Pay Life
Level Term
Two attractive features of a term insurance are:
Convertibility and cash values
Cash values and dividends
Protection and dividends
Convertibility and renewability
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
Dividend option
Renewability
Both a & b
A term policy only offers
Cash values
Savings
Protection
Dividends
The main difference between a term plan and a permanent plan is
Permanent plans provide both protection and savings while term plans offer protection only
Permanent plans provides savings and dividends while term plans provide savings only
Permanent plans can be converted and renewed while term plans cannot
All of the above
The savings element of permanent plans allows for the build up of
Dividends
Maturity benefits
Cash values
Death benefits
A term rider is
A term policy with a waiver of premium
Another name for a convertible term policy
A renewable term policy
A term insurance added to a permanent plan
An optional rider which can be attached to a policy stopping further premium payments in the event of disability is called
Policyholder protection clause
Accidental death and dismemberment
Waiver of premium
Total disability monthly income
For the waiver of premium to be effective
Disability must be total
Disability must be permanent
Both a & b
Either a or b
If a policy with the accidental death rider becomes paid up
The accidental death rider ceases
The face amount of the policy is reduced
Premiums on the basic policy stop but the rider premium continues
None of the above
Disability benefits are not paid
For self-inflicted injuries
If there is a loan against the policy
If all the policy dividends have been withdrawn
If disability resulted from sickness only
Mr. Pedro Cruz became paralyzed as a result of jumping out of the window in an attempt to commit suicide. Under the usual provisions of a disability income policy, he would be entitled to
Receive the total disability income benefit and the waiver of premiums
Receive partial disability benefits
Be granted the waiver of premiums
Receive neither disability income nor waiver of premiums
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
Guaranteed insurability rider
Term insurance rider
Accidental death rider
One supplementary benefit offered is a payor’s benefit which is intended to
Provide for the return of premiums to an adult payor in the event that a minor insured dies
Provide a waiver of premium benefit in the event of death or disability of the person paying the premiums
Allow the insurance company to pay the policy’s proceeds to the person who seems equitably entitled to the proceeds
Assure that the adult payor will retain a vested interest in the policy when the insured reaches the age of majority
If an insured is disabled and his life insurance policy is being continued in force through the waiver of premium, the dividends of the policy would
Cease
Continue at reduced rate
Continue as if the owner is paying the premium
Continue but they would be applied toward premium being waived
A policy with a minor as the proposed insured is called
Rated policy
Juvenile policy
Regular policy
Substandard policy
Life insurance policies for which higher than standard premium rates are payable are said to be
Rated policies
Non-participating policies
Contingent policies
Conditional policies
Since the purchase of life insurance is a voluntary choice, the individual must meet
Comprehensive inspection report
Certain standards of health and occupation
Minimum income requirement
All of the above
Which of the following factors would have the least effect on the premium charged for life insurance
Age
Income
Occupation
All of the above
Anti-selection occurs
When an agent thinks only of his own interest and not of his policyowners
When you purchase bad stocks with expectation that they will improve
When the insurance company accepts more than as share of poor risks
When persons in poor health wish to buy insurance
In insurance, risk means
Chances of you being paid by the company
Hazard on people’s lives
Chances of the beneficiary being paid
None of the above
In an application, the information that must be disclosed include
Only his date and place of birth
Only his family history
Every fact in his knowledge that is material to the insurance
Only information he wants the agent to know
Insurance Companies have various sources of information and the insured. These are
Application form
Inspection report
Medical information bureau
All of the above
In insurance risks are classified as
Unacceptable and acceptable
Standard, substandard and declined
Regular and irregular
Complete and incomplete
A risk is considered substandard based on any or all of the following criteria
Death, occupation and moral character
Occupation, moral character and family health history
Income, educational attainment and occupation
Death, income and educational background
A hazardous occupation could be defined
An occupation the duties of which expose the insured to a degree of danger of sustaining injury
An occupation in unhealthy working conditions exposing the insured to elements which can cause sickness
An occupation which exposes the insured to social hazards
All of the above
Statement in the application forms are
Guarantees
Representation
Warranties
None of the above
Mr. Roel Reyes has been confined in a hospital 3 years prior to his application for insurance. He therefore needs to give the following information
Name of attending doctor, diagnosis, date of confinement
The bill and medicines
Name of doctor only
Date of confinement only
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 he put in his report?
Information about insured’s standing in the community
Information about insured’s finances
All information he knows which are material to the application for insurance
A & b only
An annuity plan
Offers life insurance protection
Offers the waiver of premium benefit
Is the same as an endowment plan
Is a purchase of income
The person who purchases the annuity plan is called the
Assignor
Insured
Owner
Annuitant
A life insurance company earns income from two main sources
Premium income and investment income
Mortgage income and premium income
Dividend income and interest income
Mortgage income and dividend income
Policy reserves are future obligations on the part of
The Insurance Commission
The beneficiary
The Insurance Company
The policyowner
Insurance companies which are owned by the policyowners are examples of
Stock companies
Family corporation
Mutual companies
Open-end companies
Stock companies are owned by
Policyowners
Creditors
Stockholders
Government
In the case of life insurance a sale is considered completed if the applications is signed and payment of the first premium is made by the applicant. For the sale to be considered completed
A medical examination has to be made first
Payment of the first premium has to be made by the applicant in full nor in part, as specified. One of the acceptable methods of settlement is by cash or check in part, with a note for the balance
Payment of the first premium has to be made in full by a note first
The first premium has to be paid for in full and in cash
Why is it important that the application is the basis of the policy?
Because the completed application is the policy contract and the company may accept or reject an application based on the information given in the application
For the agent to have available data of his prospect in connection with future sales
To avoid the necessity of the insurer putting all relevant details in the contract
None of the above
Which one of the following statement is correct?
Advertising by life insurance agents is prohibited
All information about a client or a prospective client has to be treated as confidential
The agents should always recommend the amount and type of policy to a prospective client which would be profitable for the company
When an agent advertises his services in the press, he is not allowed to state the name of his company
All of the following statements regarding a life insurance application are not correct except,
It must be signed by the applicant
Usually it will be made a part of the policy contract
Misstatements of material facts could avoid the policy during the contestable period
Statements made on the applications are warranties
Prior to granting a license, the IC requires proof of
A clean record of employment
A reasonable educational background
A prospective agent’s character and reputation
All of the above
The IC has the power to adjudicate insurance claims against insurance companies for any single claim not exceeding
P 1,000,000.00
P 250,000.00
P 100,000.00
P 500,000.00
Which one of the following statements is correct?
An insurance agent’s license will be renewed when the Commissioner is satisfied that the information in the application is accurate and all requirements are met
An insurance agent’s license is valid only for one month
An insurance agent’s license is valid during the lifetime of the agent
An insurance agent’s license will be renewed when the corresponding application and fee are received by the Insurance Commissioner
The insurance industry is under government regulations because
It is required to account for money spent in company operations
It pays high taxes
It affects public interest
It is a charitable institution
Which one of the following statements is correct?
An agent is allowed to share commissions when selling a whole life policy but not when selling a term policy
An agent is allowed to share commissions with another licensed agent or agents but with no one else
Sharing the commission with any other person is called twisting
An agent is not allowed to share commissions with any person
Which one of the following statements is correct?
Rebating of premiums can only be authorized by the head office of the insurer
A life insurance is not allowed to identify on his letterhead the name of the insurer he represents
Life insurance agents are allowed to act for two insurers at the same time under the same license
Rebating of premiums by an insurance agent is prohibited
Persuading a policyowner, directly or indirectly, to surrender or lapse a policy in onecompany and replacing it with a policy in another company is
Rebating
Twisting
Knocking
Discounting
Rebating is
Dating the policy a month in advance
Giving false information
Twisting
Premium discrimination against policyholders
An insurance agent’s license can be revoked for
Fraudulent practices
Violation of any provision of the Insurance code
Misrepresentation in the application for license
Any or all of the above
One example covered under the ethical practices and procedures is
Keep all policyholders information confidential
Always recommend a will
Never drink in front of client
Always pick up the first premium with the application for insurance
The term knocking means
Promising to pay to two annuitant a fixed annual income as long as both survive
Making derogatory remarks about competing underwriters or companies
The number of years that person at a given age will live on the average as shown by
None of the above
The following are unethical practices in the solicitation and procurement of insurance except
Misleading estimates of the dividends or share of surplus to be received thereon
Including a policyholder to lapse, forfeit or surrender a policy holds for another company
Misrepresenting the terms of any policy issued by any insurance company or the benefits or advantages promised thereon.
Obtaining or attempting to obtain a license by fraud or misrepresentation
Twisting is
Paying the premium on one policy by surrendering the dividends of another policy
The replacement of a policy in one company with another policy in another company
An attempt made by an insurance company to secure the services of an agent from another company
An offense which does not apply to variable concepts
The misstatement of facts by either of the parties of insurance to the other whether in writing or orally preliminary and in reference to making the insurance contract is
Knocking
Overloading
Misrepresentation
Twisting
Selling a person more insurance that what is warranted by his sources is called
Overloading
Twisting
Rebating
Knocking
An agent is prohibited from doing all the following except:
Alter an application without the applicants prior written approval
Convince a prospective client to cancel his policy in one insurance company in order to buy a policy in the insurance company represented by the agent
Refund some of his commission to his client
Make complete comparisons of policies he sells and those offered by competing insurance companies
Inducing an insured to lapse or forfeit his insurance
Is not allowed by the conditions of the contract
Is always to the advantage of the policyholder
Is an offense in the great majority of cases
Is a matter left entirely to the discretion of the agent
The suicide clause is in effect for
The first 6 months
The first year
The first 2 years
The first 18 months
The three non-forfeiture values in a permanent policy are
Cash dividends, bonus additions and extend term insurance
Cash surrender value, loan value, assignment
Waiver of premium, reinstatement and the policy loan
Cash surrender value, paid value, extended term insurance
In the event that a policy elects the paid up insurance option
The premiums stop and the policy continues for the full face amount until age 65
The premium cease and protection continues with a reduced amount of coverage
The insurance continues at a reduced amount and with a reduced premium
The policy will automatically terminate
What are the basic settlement options?
Cash surrender value, automatic premium loan
Fixed amount, fixed period, interest, fixed period and for life
Double indemnity, total disability waiver of premium
Policy loans, assignment, beneficiary designation
In case of misstatement of age
The policy is cancelled and a new is issued for the correct age
The insured can be changed
The amount of insurance is adjusted to the amount which the premium paid at the correct age would have purchased
The policy remains in force and the company cannot contest it
Which of the following is a settlement option
Policy loan
Cash surrender value
Extended term insurance option
Interest on insurance proceeds
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
Extended term insurance
Paid up insurance
Paid up additions
Life income option
Which one of the following is not derived form the non-forfeiture values
Cash surrender value
Paid up insurance
Dividends
Extended term insurance
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 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 the policyowner elects the paid-up insurance option
Premiums stop and the policy continues for a full face amount until age 65
Premium cease and protection continues for a reduced amount
Insurance continues at a reduced amount and with reduced premium
The policy will automatically terminate
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 face value of the policy
The company would be liable for the payment of the premiums paid by the insured only
None of the above
Which of the non-forfeiture option gives the largest amount of protection?
Fully paid insurance
Cash surrender value
Extended term insurance
All of the above give equal protection
Any policy which has lapsed can be reinstated subject to normal conditions of proof of insurability within
Three years
Six months
One year
Two years
Life insurance is
A luxury afforded by the rich
Only available to a specific group
A cooperative risk-sharing plan
A speculative risk
The official who makes the necessary assumption and calculation in respect of the principal elements in life insurance premium in order to arrive at the premium rates to be charged is the
Life agent
Senior statistician
Insurance Commissioner
Actuary
Since the purchase of the life insurance is a voluntary choice the individual must meet
A comprehensive inspection report
Certain standards of health and occupation
A satisfactory medical examination
A minimum income figure
The fundamental advantage of the use of insurance as a means of meeting economic losses is that through insurance these losses are
Spread over a large number of people
Deferred for a specifies 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
The term loading means
The difference between the gross and net premiums for the purpose of paying the insurance overhead expenses including commissions and taxes=1
The amount which the company will lend to the policyholder with the policy as a security
The amount payable in the event of the occurrence of a loss which renders him unfit for insurance
None of the above
Life insurance contributes directly to the welfare and progress of the country by
Accumulating capital for investment in commerce and industry
Partially relieving the community of the care of dependents
Encouraging provisions for the future
All of the above
Life insurance can provide money when income stops because of
Disability
Retirement
Death
All of the above
The three elements that make up a life insurance premium are
Mortality experience, investment earnings and operating expenses
Cash values, dividends and paid up values
Cash values, loan values and paid up values
Past dividend experience, present dividend and projected interest
The number of years that persons at a given age will live on the average as shown by the mortality table is called
Law of large numbers
Life annuity
Life income option
Life expectancy
Part of the premium paid by a policyholder is invested by the insurance company. In premium computation, this factor is known as
Interest
Loading
Investment
Mortality
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