Review
Insurance Knowledge Quiz
Test your knowledge of essential life insurance concepts and practices with our comprehensive quiz. Whether you're studying for a certification, looking to expand your understanding, or just curious, this quiz is designed for you!
- 50 challenging questions
- Multiple choice format
- Scores and feedback after completion
For the waiver of premium to be effective
A. Either b and c
C. Disability must be permanent
B. Disability must be total
D. Both b and c
In an application, the information that must be disclosed include
Only the information he wants the agent to know
Only his family history
Every fact in his knowledge that is material to the insurance
Only his date and place of birth
Which of the following is a settlement option?
Policy loan
Extended term insurance option
Interest on insurance proceeds
Cash surrender value
Critical years” in the programming of life insurance means:
Years immediately following the insured’s death
Period during which the children are small, and cannot provide for themselves
Retirement years
Years between the time the youngest child is 15 years old and the mother is 62 years old
The following statements about “Disability Waiver of Premium Rider” are true, except:
The insured has to die while disabled
It has to be attached to a life insurance policy
There is a waiting period
Disability must occur before a stated date
Jared wants to update his yearly renewable term life insurance policy. Which of the following applies to a yearly renewable term life insurance?
Cash values will increase for as long as the policy is in force.
Premiums shall increase every time the policy is renewed.
The policy owner may renew the policy only once.
Evidence of insurability shall be required every renewal.
Which of the following statements is false?
Agents with persistent business seldom stay long with one company.
When a policy lapses, the agent loses a valuable source of prospect.
Too many lapsed policies can cause an agent’s agreement to be cancelled.
When a policy lapses, the agent loses all future commissions on renewal premiums.
In a life insurance company, risk appraisal is necessary to:
Calculate the mortality rate for a given policy
Prevent anti-selection
Project dividend rates for participating policies
Collate mortality statistics
Limited payment life policies are called as such because those policies _____.
Limit the number of beneficiaries, thereby, minimizing the problems of paying too many people
Limit the period during which the premiums are payable
Shorten the period when the benefits may be paid
Limit the conditions under which the policies are payable
The Insurance Commissioner has the power to revoke or refuse an agent’s license in all of the following instances, except:
When an agent influences the applicant’s choice of plan to be purchased
When the applicant for license has intentionally withheld information concerning his conviction of a crime involving moral turpitude
When the agent has diverted any premium collection for his personal use
None of the above
An applicant wants to get a participating policy that will have the maximum cash available for emergencies. Which of the following should he select?
Loan value
Paid-up addition
Accumulated dividends
Extended term Insurance
A businessman has arranged for a development loan that will available 1 year from now. Because he is unable to wait until then he has arranged an interim loan with his bank. The only problem is that the bank wants loan secured against the risk of his death. What is the best economic arrangement that you recommend?
Interim term
Yearly renewable term
Decreasing term
Extended term
A prospect tells you that he wants to be insured at age 65, but he does not want to pay more than the minimum possible level of premiums. Would you offer him?
Whole life policy
Endowment Policy
A life at age 65 policy
Term Policy
The following statements are true with respect to reinstatement process EXCEPT ____.
Written assurance of intent to keep the policy in force
Assumption or repayment of any indebtedness
Payment of back premiums with interest
An application for reinstatement
In which circumstance does an insurance company have the right to rescind a policy?
Insured person is killed in military action during the contestable period of the policy
Insured person intentionally kills himself during the suicide exclusion period specified in the policy
Company discovers at any time that the policy owner was actually a minor at the time of application
Company discovers during the contestable period that the application contains a material statement
Which of the following does a whole life provide?
Low cost protection only for a limited term of years with no savings
Protection for the life of the policyholder with premiums payable for a limited term of years
Protection with premiums payable for life and low level of savings as an alternative to continued protection in old age
The highest level of savings for the insured within a specific term of years
An applicant wants a participating policy where the death benefit will be maximized. Which of the following should he choose?
Extended term
Paid - up insurance (reduced insurance)
Paid-up additions
Accumulated dividend
Gwen is thinking of electing the paid-up insurance option, what will happen to her policy if she does?
The insurance continues at a reduced amount and with a reduced premium.
The premiums cease and protection continues with a reduced amount of coverage.
The policy will automatically terminate.
The premiums stop and the policy continues for the full face amount until age 65.
Which statement is false when the new owner borrows on a policy?
Dividend will be reduced by the amount of the current interest.
The proceeds of the policy will be reduced by the amount of unpaid loan plus interest, if the insured dies.
The policy will lapse if, after reasonable notice, the indebtedness exceeds the cash value.
If a large loan is taken after the policy has been in force for some years, the interest cost may exceed the premium.
The company usually allows a policy change from a higher premium to a lower premium if the insured ____.
Presents satisfactory evidence of insurability
Momentarily assigns the policy to the company
Obtains written consent from his or her spouse
Buys a new plan altogether
A client tells you that his bank wants him to use his insurance policy so that his bank loan will be paid off if he dies. Which of the following will you recommend?
A. He makes a collateral assignment
C. He makes an absolute assignment
B. He appoints an irrevocable beneficiary
D. None of the above
Insurable interest is necessary when a person insures another ____.
Because interest on premiums must be entered
To make sure that he will pay the premiums
So that the person being insured may be properly appraised
To establish that there is a genuine risk
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. Which of the following will the insurer pay?
The sum of the premium paid
The face amount
Slightly less than the face amount
The face amount adjusted for misstatement of age
Which of the following does a limited pay life policy provides?
The highest level of savings for the insured within a specified term of year
A Protection for the life of the policyholder with premiums payable for a limited term of years
Protection with premiums payable for life and a low level of savings as an alternative to continued protection in old age
Low-cost protection only for a limited term of years with no savings
If premiums are being waived under a waiver of premiums benefit and the insured dies, what would the proceeds be?
Cash surrender values
Reduced paid-up face amount
Face amount
Face amount less unpaid premiums
Claire is considering purchasing either an endowment or term life policy. What do these policies have in common?
A benefit will be paid at the end of the period of coverage if the person is then alive
Renewal and conversion privileges are available
No cash value is available to the policy owner during the term of the policy
Insurance protection will be limited to a specified period
Group life insurance covers ____.
Accidental death only
Death provided it is during working hours and in the place of employment
Only death by heart attack, pneumonia or cancer
Death of the employee regardless of cause except suicide during the first year (sometimes two years)
A life insurance agent is permitted to
Waive any of the requirement of the company
Approve an application for insurance
Guarantee dividends on participating policies
Prepare routine proposals for life insurance coverage
Which of the following is a living benefit in an insurance policy?
Waiver of premium for disability
Right to change beneficiaries
Cash surrender value
Guaranteed insurability benefit
Your client George wants to apply for a life insurance policy. As his advisor, you would advise him to do all of the following, EXCEPT which one?
Give details pertaining to non-forfeiture options
To furnish information on which the contract of life insurance may be written
Furnish initial information as to insurability
To convey to the company the desire of the applicant to obtain insurance
What happens to a policy when an irrevocable beneficiary has been designated and the policy owner needs to loan against his policy for a specific reason?
Avail of a non-forfeiture option
Borrow minimal cash loan
Alter the dividend option now in effect
Any transactions or changes in the policy would need the endorsement of the irrevocable beneficiary
In life insurance, which of the following does the term “substandard rates” generally refer to?
Premiums charged to persons who are considered to be higher-than-average risk categories
Premiums charged for policies with low amounts
Mortality rates that are lower than those expected by the company according to its mortality table
Mortality rates that are lower than the rates suggested by the regulatory authorities
Your client tells you that when his father died, he received P500,000 free of Estate Tax, and that he had not even known that his policy existed. Which of the following classifications did your client fall under?
Irrevocable primary beneficiary
Revocable primary beneficiary
Collateral assignee
Absolute assignee
Life insurance policy loans are limited to an amount which with interest will not exceed the ___.
Net amount of risk
Present value of future premiums
Cash value of the policy
Total premiums paid
Mr. Sy walked out of his house one night, and was never heard from since . His wife wanted to make a claim on his insurance policy, as she believes that he is dead. In this case, which of the following statements is correct?
The company will pay immediately.
It will require 6 months before the court could declare him dead.
It will take four years before the court could declare him legally dead.
It will take seven years before the court could declare him legally dead.
Under an endowment policy, if the person whose life is insured survives to the end of the period stated in the policy, the ___.
Policy will automatically be converted to paid-up whole policy
The extended term insurance will be brought into effect
Face amount of the policy be paid
Policy will terminate without value
If a policyholder changes his occupation without notifying the company, would it affect the benefits under his policy?
Yes, unless the policy specified otherwise. If he engaged in a more hazardous occupation, his benefits may be pro-rated.
No, benefits and premiums may only be changed at the renewal date of the policy.
No, benefits agreed upon at the inception of the policy may not be changed.
None of the above
Which of the following statements is FALSE?
When an agent meets a prospect for the first, he has to sell confidence in himself.
When an agent makes a sales presentation, he has to sell confidence in the product.
The job of an agent is to squeeze as much money as possible out of making a new sale.
The primary job of an agent is to get people happily involved with the ownership of his policy.
The fundamental advantage of the use of life insurance as a means of meeting economic losses is that through life insurance, these losses are
Reduced for the group as a whole through the multiplier effect
Deferred for a specified period of time
Met as they rise through savings accumulated on an assessment basis
Spread over a large number of people
What will happen if the insured fails to pay the interest on a policy loan during its policy anniversary?
Demand full settlement of the loan
Refuse to grant future additional loan
Terminate the contract
Increase the present loan by the interest
Which of the following considerations is required by the life insurance company to make the insurance coverage effective?
Applicant’s promise to act in good faith
Payment of the initial premium
Payment of each renewal premium before the end of applicable period
Beneficiary’s continuing insurable interest in the life of the insured
The basic purposes of a conditional premium receipt are to acknowledge payment of initial premium for life insurance and to ____
Backdate the policy to save age
Provide insurance coverage earlier than the policy delivery date if certain requirements are met
Guarantee that a policy will be issues as applied for
Eliminate the need for acceptance of the offer in forming the contract
If the insured dies during the grace period of an unpaid life insurance policy, the amount payable to the beneficiary is usually the
Face amount of the policy minus the unpaid premiums
Full Face Amount
Total premiums paid plus interest
D. Cash surrender value of the policy minus the unpaid premiums
Which of the following best describes a person’s human economic value?
The amount of capital required to replace family income needs
Total value of his physical assets
Total value of the individual’s tax contribution to the national economy
Total value of the assets and any future earnings derived therefrom
Which of the following statements best describes a Pure Endowment policy?
It pays proceeds to the insured if he lives to the end of endowment period, or pays the face amount to named beneficiary if the insured dies before the end of the endowment period.
It pays proceeds to the insured only if he lives to the end of a specified period.
It is actually a combination of endowment insurance and term insurance.
None of the above
In practice, most claims for the death benefits of life insurance policies are ____.
Paid on the first policy anniversary after the death of the insures
Investigated thoroughly for evidence of misrepresentation or fraud before payment is made
Paid promptly as soon as properly completed claim forms are received by the company
Settled by interpleader proceedings
Which policy permits the policyholder to vary the level of premiums, the sum insured, and has its cash values dependent on the investment performance, and the level of premiums paid?
Participating endowment
Participating whole life policy
Universal life
Endowment
Life insurance contributes directly to the welfare and progress of the country by
Encouraging provisions for the future
Accumulating capital for investment in commerce and industry
Partially relieving the community of the care of dependents
All of the above
The following statements concerning insurable interest are correct, except:
A. Everyone has an insurable interest in his own life
C. It is deemed to exist by virtue of a relationship by blood or by marriage
B. It is deemed to exist if economic loss would occur at the death of the insured
D. It is important for purposes of underwriting the risk
What are the basic settlement options?
Policy loan, guaranteed insurability
Fixed amount, fixed period, interest, fixed period and for life
Double indemnity, total disability, waiver of premium
Cash surrender value, automatic premium loan
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