TRADITIONAL REVIEWER

Direction: Choose the correct answer. Indicate your answer by marking the appropriate parenthesis on the answer sheet with an X.

1. In a policy where an irrevocable beneficiary has been designated the insured, without the beneficiary’s permission,
can
a. Avail of non-forfeiture option
b. Discontinue premium payments
c. Borrow minimal cash loan
d. Alter the dividend option presently in effect
2. Indicate which of the following is not a function of an application for life insurance policy
a. To give details pertaining to non-forfeiture option
b. To furnish information on which contact of life insurance may be written
c. To furnish initial information as to insurability
d. To convey to the company the desire of the applicant to obtain insurance
3. Both endowment and term life insurance policies provide that
a. No cash value is available to the policy owner during the term of the policy
b. Renewal and conversion privilege are available
c. A benefit will be paid at the end of the period of coverage if the person insured is then alive
d. Insurance protection will be limited to specified period
4. A father has present life insurance payable to his estate and because he has now retired he wants to pass the policy
on to his son who will assume the premium payments. Which of the following will he have to appoint his sin to
achieve his desire and protect the son from Estate Tax Liability?
a. Irrevocable primary beneficiary
b. Absolute assignee
c. Irrevocable secondary beneficiary
d. Revocable primary beneficiary
5. Which of the following is the least important reason for requiring that the insurance agents be licensed?
a. To establish and maintain high professional and ethical standards
b. To protect the public
c. To give the government adequate control over the conduct of agents
d. To provide additional income to the government through license fees
6. An insurance company generally has the right to rescind a life insurance policy if
a. Company discovers at any time that the policy owner was actually a minor at the time of application
b. Insured person intentionally kills himself during the suicide exclusion period specified in the policy
c. Insured person is killed in military action during the contestability period of the policy
d. Company discovers during the contestability period that the application contains a material statement
7. In the event that a policy owner elects the paid-up insurance option
a. The premiums stop and the policy continues for the full face amount until age 65
b. The insurance continues at a reduced amount and with a reduce premium
c. The policy will automatically terminate
d. The premiums cease and protection continues with a reduced amount of coverage
8. The company will allow a policy change from a higher premium to a lower premium provided the insured
a. Buys a new plan altogether
b. Presents satisfactory evidence of insurability
c. Momentarily assigns the policy to the company
d. Obtains written consent from his or her spouse
9. What are the basic settlement options?
a. Policy loan, guaranteed insurability
b. Cash surrender values, automatic premium loans
c. Fixed amount, fixed period, life income, interest on deposit
d. Double indemnity, total and permanent disability waiver
10. Paid-up additions:
a. Affect both cash and loan value of the policy
b. Don’t affect the cash value of the policy
c. Don’t affect the loan or cash value of the policy
d. Only affect the cash value of the policy
11. In most life insurance application, the largest amount of information requested is data which
a. Identifies the applicant
b. Describes the type of insurance applied for
c. Relates to the insurability of the applicant
d. Describes the desired benefits and mode of the payment
12. The total life coverage of a permanent basic policy can be greatly increased through the use of
a. An accidental death benefit rider
b. An interim term rider
c. A supplemental term rider
d. None of the above
13. A policy which permits the policy holder to vary the level of premium or the sum insured, and has its cash values
dependent upon the investment performance and the level of premium paid is known as __________ policy.
a. Participating whole life policy
b. Participating endowment
c. Universal life
d. None of the above
14. Which of the following statements about “Disability Waiver of Premium Rider” is false?
a. Disability must occur before a stated date
b. The insured has to die while disabled
c. There is no a waiting period
d. It has to be attached to a life insurance policy
15. A man applied for a P20, 000 whole life policies and paid the full initial premium to the soliciting agent. The agent
issued receipt. Under such a receipt, the insurance company,
a. Offers permanent insurance coverage effective as of the date application
b. Promises that the insurance coverage will become effective as of the date the application is approve
c. Guarantees that policy will be issued as applied for
d. Immediately provides interim insurance that remains in effect until the policy is issued or the application is declined
16. In case of renewable term insurance, the policy owner may
a. Renew the coverage based on a higher premium
b. Change the life insured at renewal date
c. Renew providing the insurance company agrees to continue coverage
d. Renew at the same premium for further period of years
17. Life insurance companies make use of the laws of probability in order to
a. Estimate future death rates among members of a given group
b. Predict when an individual insured will die
c. Develop statistics of past death among the general population
d. Determine the experience death rate among the insured person
18. Endowment life insurance and term life insurance are similar in that both plans
a. Build up cash value rapidly in the early policy years
b. Provide for payment of the face amount if the insured alive at the end of specified period
c. Provide life insurance protection for only the period of time specified in the policy contract
d. Contain provisions for automatic continuation of the insurance protection at the end of a specified period
19. A n agent who determine a prospect’s complete financial requirements preparatory to offering him a policy using the
correct selling approach known as
a. Counselor selling
b. Total needs selling
c. Planned selling
d. Multiple product selling
20. The conservation of a life insurance policy is dependent on all the following except:
a. The level of the first year commission
b. Agent’s service oriented attitude
c. Pressure selling
d. The use of effective needs selling
21. All of the following are sources of information to an insurance company pertaining to the insurability of an applicant
except:
a. The applicant’s personal appearance
b. Medical examination report
c. Agent’s inspection report
d. Government tax records
22. Name the provision in a permanent life insurance policy under which premiums are discontinued, full insurance will
maintained for a specified period:
a. Extended term insurance
b. Paid-up insurance addition
c. Life income option person
d. Reduced paid-up insurance
23. The extent of medical evidence required is determined by
a. The age of the applicant and the proposed sum to be insured
b. Occupation of the applicant
c. Financial condition of the applicant
d. Date of the last medical examination
24. Notwithstanding various possible legal impediments, if the owner of an endowment at age 65 policy tells you that the
maturity of the policy he wants to provide his church with a monthly donation for as long as the church exists. Which
option do you recommend?
a. Fixed income option
b. Periodic annuity option
c. Interest option
d. Life annuity option
25. The settlement option provision may provide all of the following except:
 a. Payment of the proceeds for the life of the insured
b. Payment of the proceeds over a fixed period
c. Payment of the proceeds in fix amounts until exhausted
d. Proceeds held by the company, with interest payable to the beneficiary on request
26. If the applicant for life insurance fails to disclose or misrepresents a material fact, the contract is
a. Valid of the insurer issues a policy which is delivered to the applicant
b. Void from the beginning
c. Voidable by the insurer If it has been in force less than 2 years
d. Valid unless the insurer can prove fraud
27. In certain situations a company may file interpleaded actions with the Court of Law. This remedy is used to
a. Determine if the cause of the insured’s death was an excluded risk
b. Decide conflicting on the same insurance proceeds
c. Resolve the question of insurable interest
d. Recommend the best settlement option for the beneficiary
28. Non- forfeiture provisions are included in a whole life and endowment policies to assure the policy owner that certain
minimum policy benefits shall remain with him even under certain changed conditions. Non-forfeiture values
guarantee to the policy owner that
a. No death claim will be denied for any misstatement on the application
b. Any guaranteed policy values will belong to the policy owner even if premium payments are discounted
c. The face amount of the policy will remain the same even if the insured’s health becomes impaired
d. The premium on the policy will remain the same even when another beneficiary is added to the policy
29. Purchasing a continuous-premium, whole life policy rather than a limited-payment, whole life policy gives the policy
owner the advantage of
a. Concentration of premium payments during the period of highest earnings
b. Liberal risk selection procedures
c. More insurance protection for the same annual premiums outlay
d. More rapid accumulation of cash values
30. Which of the following does not have a legitimate insurable interest?
a. An individual on the life of his mistress
b. An individual on his own life
c. An individual on the life of his spouse
d. A finance company on the life of its borrower
31. A non-forfeiture option would ordinarily be selected at the time a policy owner
a. Renews a term life policy
b. Converts a term policy to a whole life policy
c. Chooses a mode of settlement for the life proceeds
d. Discontinues premium payments for a whole life or endowment policy
32. Which of the following statements regarding insurance premiums is false?
a. Cash is required for all premiums paid in the grace period
b. A premium is the legal consideration needed to effectuate a life insurance policy
c. The grace period is usually 31 days
d. Premiums which are paid quarterly or semi-annually are higher than those paid annually
33. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
a. Demand full settlement of the loan
b. Terminate the contract
c. Refuse to grant future additional loans
d. Increase the present loan by the interest
34. The basic coverage provided by life insurance policies may be supplemented by separate provision that provide
coverage for additional amounts or of a different nature. Collectively these provision are known as:
a. Riders
b. Deposit privileges
c. Dividends
d. Assignment
35. Which of the following statement is false?
a. The cash value of a whole life policy builds up at a slower rate than a 20 year endowment
b. The cash value in a permanent policy is guaranteed by the company
c. The cash value of an endowment builds up faster than that for a limited pay life policy of the same duration
d. Because of its very short duration the cash value of a yearly renewable term policy grows very fast
36. If the interest on a policy loan is not paid at the policy anniversary the insurance company may
a. Increase the present loan by interest
b. Terminate the contract
c. Refuse to grant future additional loan
d. Demand settlement of the loan
37. When you bought an insurance policy in your wife’s life, you were 27 and she was 26, but you stated that you were 26
and she was 27. 5 years later your wife died. The insurer will pay
a. Slightly less than the face amount
b. The face amount
c. The face amount adjusted for misstatement of age
 d. The sum of the premium pay
38. The incontestability clause
a. Gives the company the right to rescind a policy at any time
b. Permits the company to pay claims within 2 years
c. Makes it necessary for the beneficiary to present proof of death in the event of a death claim
d. Prevents the company from denying a claim after the policy has been in force for 2 years
39. The insured named a primary and secondary revocable beneficiary for P20, 000 policies. Which of the following is
correct?
a. The designation of contingent beneficiary is subject to the primary beneficiary’s approval
b. The insured can add a third beneficiary at any time
c. Any policy loan or assignment will required the primary beneficiary’s signature
d. Upon the insured’s death the primary and secondary beneficiaries shall each receive P10,000
40. A yearly renewable term life insurance policy generally specifies that
a. The policy owner may renew the policy only once
b. Premium shall increase every time that the policy is renewed
c. Evidence of insurability shall be required every renewal
d. Cash values will increase for as long as the policy is in force

41. In the case misstatement of age, the amount of insurance is adjusted to the amount which the premium paid at
the correct age would have purchased. T
42. In a case where the premium has not been paid and the cash value has been exhausted, the policy can still avail
of grace period. F
43. A policy is not rendered void by reason of misstatement of the assureds’ death. T
44. In a group insurance, it is assumed that every member of the group is insurable, provided that every member of
the group is working a minimum number (usually 50) each week. F
45. A policy is still in force for the full face amount and will remain in force for a further period of 4 years of 118 days
without the payment of any premiums has availed of paid-up insurance option. F
46. In most life insurance application, the largest amount of information requested is data which identifies the
applicant. F
47. A policy that provides guaranteed cash value plus extra annual distribution and pays the insured after a specified
time is known as participating endowment. T
48. An endowment at age 65 policy with premium payable for a limited period of 20 years pays the full amount after
20 years. F
49. Anti-selection occurs when persons in poor health wish to buy insurance. T
50. According to the law of large numbers, events which happen seemingly by chance will actually be found to follow
a predictable pattern if enough such happenings are observed. T
 VARIABLE REVIEWER

1. Variable Life Insurance policy owners may take withdrawals in terms of

Number of units or fixed monetary amount through cancellation of units

2. Which of the following statement about flexibility features of variable life policy us FALSE
Policy holders can take loans against their variable life policies up to the entire withdrawal value of their policies

3. Investment returns under variable insurance policy

ALL except Are assured

4. Which of the following statement is TRUE?

ALL of the above

5. Which of the following statement of FALSE

Misinterpretation id a specific form of twisting

6. Which of the following statement about variable life policies are TRUE
All except the policy value is calculated based on the bid price of units allocated into the policy

7. What is the most suitable investment instrument for an investor who is interested in protecting his principal
and receiving a steady stream of income
Fixed income securities

8. What are the disadvantages of investing in common shares

ALL of the above
9. Which of the following statement about the differences between variable life policies and endowment policies
are FALSE
ALL except the policy values of variable life endowment policies directly reflect the performance of the fund of the
life company

10. Which of the following statement about twisting is FALSE

It refers to an agent offering a prospect a special inducement to purchase a policy

11. Mr Juan Dela Cruz is currently earning Ps 30,000/month. He is 35 yrs old and has reasonable amount of
savings. He has a moderate level for risk tolerance. What kind of policy would you recommend to buy
Variable life policies

12. What are the benefits available when investing in variable life funds
All Except The variable life policyholder can have access to a pool of qualified and trained professional fund
managers

13. Rank the following in terms of their liquidity, from least liquid to the most liquid
Property , Equities , Short Term Securities, Cash

14. A unit trust is

One whereby investor buys unit in the trust itself and not shares in the company

15. Under variable life insurance policies

All except There is no guaranteed minimum sum assured for the purpose of declaring dividends and There is not
guaranteed minimum sum assured as a level of life insurance protection.

16. The benefits of investing in variable life funds include

All except Policy owners can buy a variable life insurance policy only with high initial investment

17. Which of the following best describes the policy benefits variable life policies
The policy benefits are directly linked to the investment performance of the underlying assets

18. Why is it important that the customer must understand the sales proposal in full
Because the impact of changes in investment condition on variable life policy borne solely by the customer
19. Which if the following statement about rebating is TRUE
ALL Except Rebating will enhance the sales performance and uphold the prestige of an agent

20. Which of the following statement is FALSE

Variable insurance policies offers investors policies with values and indirect linked to the investment performance
of the life company.

21. Which of the following statements about option to top-up under variable life insurance product is FALSE
Policy owners may buy additional units of the variable life fund and these units will be allocated to new variable
life insurance policies

22. The characteristics of a variable life insurance policy include

ALL except Its protection costs are generally met by implicit charges.

23. Which of the following statements about single premium variable life policies are TRUE
ALL of the above.

24. Investing in bonds offer the following except

It enables investors an opportunity for capital appreciation

25. Which of the following statements about variable life policies are TRUE
ALL except The variable life policyholder has direct control over the investment decisions of the variable life fund

26. Single premium variable life insurance policy

Must issued with a minimum death benefit.

27. Which of the following statements about characteristics of variable life policies are TRUE
ALL except The protection costs are generally met by implicit charges, which vary with age and level of cover.
28. Which of the following statements about benefits in variable life fund is FALSE
The fund ensures definite high yield an investor since it is managed by professional who are well versed in the
management of risk of investment portfolios.

29. The flexibility benefits of investing in variable life funds include

ALL of the above.

30. The fundamental differences between traditional participating life insurance policies and variable life
insurance policies include
ALL except Variable life insurance policies are less likely to offer more choices in terms of the type investment
funds.

31. The switching facility under variable life insurance policies is very useful
For the purpose of financial planning by the policy owners

32. The following statement about surrender value under traditional participating life insurance product is TRUE
The amount of surrender value is usually higher than the amount under non-participating policies and it varies
with the age of the assured, being lower at older ages.

33. Which of the following statements about risk of investing in variable life funds is TRUE
Policy owners who invest in variable luge funds with high equity investment face greater risk but can expect to
achieve higher return than the traditional life insurance product over the long term.

34. What would be the withdrawal value after a year

Ps 401,107.58

35. The protection cost under a variable life insurance policy

ALL except Are met by a flat initial charges for regular premiums plans.

36. Which of the following statement about diversification in portfolio management is FALSE
Diversifies can completely eliminate the risk of investing in stock in a portfolio

37. What are the advantages of investing in preferred shares

ALL except Has the priority over the company assets during dissolution.

38. With traditional participating life insurance products, the allocation to policy owners in the form of dividends
ALL except Are not directly linked to the life company's investment performance

39. The objective of satisfying customers need profitability can be achieved by an agent through
Extensive investment training by the company and The use of sales plan, where sales goals, strategic and
objectives are coordinated with market analysis segmentation and targeting.

40. Which of the following statement is TRUE about cash

Amount invested in cash depends on the size of the cash flow requirement

41. Under a regular premium variable whole life insurance plan

ALL except Life protection is the main objective of the plan with investment as a nominal purpose

42. Which of the following statements about investment objective is FALSE

People invest money in fixed deposits to produce high and guaranteed returns

43. Which of the following is/are the main characteristics of variable life policies
ALL except The net cash values of the policies are the gross cash values shown in the policy that includes
dividends ip to the date of surrender, less any indebtedness including interest

44. Risk can be classified into two particulars categories in relation to invevstment. They include
The Risk of not losing some or all of a person's initial investment AND The risk rates of return on the investment
matching up to the individual's expectation.

45. The duties of the trustees of unit trust do not include

 Managing the portfolio of investment and administering the buying and selling of share in the unit trust itself

46. Policy fee payable by variable life insurance policy owner to cover
The administrative expense of setting up the variable life insurance policy

47. The selling price under a variable life insurance policy is

The price at which units under the policy are offered for the sale by the life company

48. In risk-return profile of cash funds bonds funds balanced funds, manage funds and equity funds, a risk-return
graph will show that
ALL except Higher return normally comes with lower risk

49. Diversification in investment involves

Reducing the risk of investment by putting the fund under management into several categories of investment

50. Variable life funds can be invested in any financial instruments including cash funds, bond funds, equity
funds, property funds specialised funds and diversified funds. Equity funds
Invest in shares of stocks and investor who buy such assets usually aims for capital appreciation