Traditional Exam

A visually engaging image depicting various life insurance concepts, such as policy documents, families, financial planning, and investment symbols, in a professional and educational style.

Test Your Life Insurance Knowledge

Enhance your understanding of life insurance with our comprehensive quiz designed for both beginners and professionals. Whether you're looking to deepen your knowledge or prepare for a certification exam, this quiz is tailored for you.

Key Features:

Multiple-choice questions covering a range of life insurance topics
Assess your knowledge and identify areas for improvement
Engaging and informative format

50 Questions12 MinutesCreated by LearningLion42

Both endowment and term life policies provide that

Renewal and conversion privileges are available

Insurance protection will be limited to a specified period

No cash value is available to the policy owner during the term of the policy

A benefit will be paid at the end of the period of coverage if the person is then alive

Indicate which of the following is not a function of an application for life insurance policy.

To give details pertaining to non-forfeiture options

To furnish information on which the contract of life insurance may be written

To furnish initial information as to insurability

To convey to the company the desire of the applicant to obtain insurance

A father has his present life insurance payable to this 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 his son from the Estate Tax Liability?

Irrevocable primary beneficiary

Absolute Assignee

Irrevocable secondary beneficiary

Revocable primary beneficiary

A policy where an irrevocable beneficiary has been designated the insured, without the beneficiary’s permission, can

Avail of a non-forfeiture option

Discontinue premium payments

Borrow minimal cash loan

Alter the dividend option now in effect

What are the basic settlement options?

Policy loan, guaranteed insurability

Cash surrender value, automatic premium loan

Fixed amount, fixed period, life income, interest on deposit

Double indemnity, total and permanent disability waiver

An insurance company generally has the right to rescind a life insurance policy if

Company discovers at any time that the policyowner was actually a minor at the time of application

Insured person intentionally kills himself during the suicide exclusion period specified in the policy

Insured person is killed in military action during the contestable period of the policy

Company discovers during the contestable period that the application contains a material statement

Which of the following is the least important reason for requiring that insurance agents be licensed?

To establish and maintain high professional and ethical standards

To protect the public

To give the government adequate control over the conduct of exam

To provide additional income to the government through license fees

In the event that a policy owner elects the paid-up insurance option

The premium stop and the policy continues for the full face amount until age 65

The insurance continues at a reduced amount and with a reduced premium

The policy will automatically terminate

The premium cease and protection continues with a reduced amount of coverage

The company will allow a policy change from a higher premium to a lower premium provided the insured

Buys a new plan altogether

Presents satisfactory evidence of insurability

Momentarily assigns the policy to the company

Obtains written consent from his or her spouse

A policy which permits the policyholder to vary the level of premiums, the sum insured and has its cash values dependent upon the investment performance and the level of premium paid is known as ________ policy

Participating whole life policy

Participating endowment

Universal life

None of the above

Which of the following statements about “Disability Waiver of Premium Rider” is false?

Disability must occur before a stated date

The insured has to die while disabled

There is a waiting period

It has to be attached to a life insurance policy

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

Identifies the applicant

Describes the type of insurance applied for

Relates to the insurability of the applicant

Describes the desired benefits and mode of payment

Paid-up addition

Affect both cash and loan value of the policy

Don’t affect the cash value of the policy

Don’t affect the loan or cash value of the policy

Only affect the cash value of the policy

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

An accidental death benefit rider

An interim term rider

A supplemental term rider

None of the above

Life insurance companies make use of the law of probability in order to

Estimate future death rates among members of a given group

Predict when an individual insured will die

Develop statistics of past deaths among the general population

Determine the experienced death rate among the insured persons

In the case of renewable term insurance, the policy owner may

Renew the coverage based on a higher premium

Change the life insured at a renewal date

Renew providing the insurance company agrees to continue coverage

Renew at the same premium for further period of years

A man applied for a Ps. 20,000 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

Offers permanent insurance coverage effective as the date of the application

Promises that the insurance coverage will become effective as of the date the application is approved

Guarantees the policy will be issued as applied for

Immediately provides interim insurance that remain in effect until the policy is issued or the application is declined

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

Build up cash value rapidly in the early policy years

Provide for payment of the face amount if the insured is alive at the end of the specified period

Provide life insurance protection for only the period of time specified in the policy contract

Contain provisions for automatic continuation of the insurance protection at the end of a specified period

An agent who determines a prospect’s complete financial requirements preparatory to offering him a policy using the correct selling approach known as

Counselor selling

Total needs selling

Planned selling

Multiple products selling

Name the provision in a permanent life insurance policy under which premiums are discontinued, full insurance will be maintained for a specified period

Extended term insurance

Paid-up insurance additions

Life income option pension

Reduced paid-up insurance

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?

Fixed income option

Periodic annuity option

Interest option

Life annuity option

The extent of medical evidence required is determined by

The age of the applicant and the proposed sum to be insured

Occupation of the applicant

Financial condition of the applicant

Date of the last medical examination

The conservation of a life insurance policy is dependent on all the following except

The level of first year commission

Agent’s service-oriented attitude

Pressure selling

The use of effective needs selling

All of the following are sources of information to an insurance company pertaining to the insurability of an applicant except

The applicant’s personal appearance

Government tax records

Medical examination report

Agent’s inspection report

If the applicant for life insurance fails to disclose or misinterprets material fact, the contract is

Valid unless the insurer can prove fraud

Valid if the insurer issues a policy which is delivered to the applicant

Void from the beginning

Voidable by the insurer if it has been in force less than 2 years

The settlement options provisions may provide all of the following except:

Payment of the proceeds for the life of the insured

Payment of the proceeds over a fixed period

Payments of the proceeds in fixed amounts until exhausted

Proceeds held by the company, with interest payable to the beneficiary on request

Non-forfeiture provisions are included in whole life and endowment policies to assure the policyowner that certain minimum policy benefits shall remain with him even under certain changed conditions. Non-forfeiture values guarantee the policy owner that

No death claim will be denied for any misstatement on the application

Any guaranteed policy values will belong to the policy owner even if premium payments are discounted

The face amount of the policy will remain the same even if the insured’s health becomes impaired

The premium on the policy will remain the same even when another beneficiary is added to the policy

Purchasing a continuous – premium, whole life policy rather than a limited payment, whole life policy gives the policyowner the advantage of

Concentration of premium payments during the period of highest earnings

Liberal risk selection procedures

More insurance protection for the same annual premiums outlay

More rapid accumulation of cash values

In certain situations a company may file interpleader action with a Court of Law. This remedy is used to

Decide conflicting claims on the same insurance proceeds

Determine if the cause of the insured’s death was an excluded risk

Resolve the question of insurable interest

Recommend the best settlement options for the beneficiary. If the interest on a policy loan is not paid at the policy anniversary the insurance

Which of the following statement is false?

Because of its very short duration the cash value of a yearly renewable term policy grows very fast

The cash value of a whole life policy builds up at a slower rate than for a 20 year endowment

The cash value in a permanent policy is guaranteed by the company

The cash value of an endowment builds up faster than that for a limited pay life policy of the same duration

Which of the following does not have a legitimate insurable interest?

An individual on his own life

An individual on the life of his mistress

An individual on the life of his spouse

A finance company on the life of its borrower

The basic coverage provided by the life insurance policies may be supplemented by a separate provision that provides coverage for accidental amounts or of a different nature. Collectively these provisions are known as:

Deposit privileges

Riders

Dividends

Assignment

Which of the following statements regarding insurance premium is false?

Cash is required for all premiums paid in the grace period

A premium is the legal consideration needed to affectuate a life insurance

The grace period is usually 31 days

Premiums which are paid quarterly or semi-annually are higher than those paid annually

A non-forfeiture option would ordinarily be selected at the time a policyowner

Renews a term life policy

Converts a term policy to a whole life policy

Choses a mode of settlement for the life proceed

Discontinues premium payments for a whole life or endowment policy

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

Demand full settlement of the loan

Terminate the contract

Refuse to grant future additional loan

Increase the present loan by the interest

The incontestability clause

Gives the company the right to rescind a policy at any time

Permits the company to pay claims within 2 years

Makes it necessary for the beneficiary to present proof of death in the event of a death claim

Prevents the company from denying a claim after the policy has been in force for 2 years

The insured named a primary and secondary revocable beneficiary for Ps 20,000 policy. Which of the following is correct?

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

The insured can add a third beneficiary at any time

Any policy loan assignment will require the primar y beneficiary’s signature

Upon the insured’s death the primary and secondary beneficiaries shall each receive Ps 10,000

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

Slightly less than the face amount

The face amount

The face amount adjusted for mistatement of age

The sum of the premium paid

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

Increase the present loan by the interest

Terminate the contract

Refuse to grant future additional loan

Demand full settlement of the loan

A yearly renewable term life insurance policy generally specifies that

The policyowner may renew the policy only once

Premiums shall increase every time the policy is renewed

Evidence of insurability shall be required every renewal

Cash values will increase for as long as the policy is in force

In a case where the premium has not been paid and the cash values has been exhausted the policy can still avail of the grace period.

True

False

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

True

False

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

True

False

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

True

False

In the case of misstatement of age, the amount of insurance is adjusted to the amount of which the premium paid at the correct age would have purchased

True

False

A policy provides guaranteed cash values plus extra annual distribution and pays the insured after a specified time is known as a participating endowment.

True

False

In a group insurance it is assumed that every member of the group is insurable provided that ever y member of the group is working a minimum number of (usually 50 hours) each week.

True

False

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

True

False

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

True

False

A policy is not rendered void by reason of misstatement of the assured’s death

True

False

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