Traditional_Life_Reviewer___IIIAP___Answer_Key.pdf

Manulife Business Academy IIAP MOCK EXAM – ANSWER KEY 1. A single premium policy means a policy a. requiring only a single premium each year b. under which only one premium payment is required c. only available to...

Manulife Business Academy IIAP MOCK EXAM – ANSWER KEY 1. A single premium policy means a policy a. requiring only a single premium each year b. under which only one premium payment is required c. only available to single individuals d. on which no more than one premium can be paid in advance 2. A fixed amount added to the premium of a given policy regardless of policy size is known as a. policy fee b. policy reserve c. policy values d. extra premium 3. To be able to calculate the required premiums for a given policy, the agent must know the applicant’s a. Age b. choice of plan c. face amount desired d. all of the above 4. To calculate premiums for the other modes of premium payment, the annual premium is a. divided by the desired number of premium payments b. divided by a conversion factor for the mode of payment desired c. multiplied by a conversion factor for the mode of payment desired d. multiplied by a constant conversion factor 5. The convertible feature of a term insurance policy provides that the policy may be a. changed to a permanent insurance policy without evidence of insurability b. changed to another life c. cashed for a guaranteed sum d. changed to permanent insurance with evidence of insurability 6. Within two years of buying a life insurance policy, you are accidentally killed when your car hits a tree. In these circumstances the insurance company will a. refund premium because it is suicide b. pay double the face amount c. pay the face amount d. pay nothing 7. When explaining dividends, the following information must be supplied a. that they are not guaranteed b. the dividends paid-up in the previous years c. the anticipated dividends d. the relation to the cost of the policy 8. The fundamental advantage of the use of insurance as a means of meeting economic losses is that through insurance these losses are a. spread over a large number of people b. deferred for a specified period of time c. reduced for the group as a whole through the multiplier effect d. met as they arise through savings accumulated on an assessment basis  Manulife Business Academy 9. 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 a. 20 Yr. Endowment b. 20 Pay Life c. 20 Yr. term d. None of the above 10. In a 20 Life policy a. protection is until age 100, payment of premium is for 20 years b. protection is until age 100, payment of premium until age 100 c. protection is for 20 years, payment of premium is for 20 years d. protection is for 20 years, payment of premium until age 100 11. A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains features: a. convertibility b. renewability c. dividend option d. both a & b 12. The main difference between a term plan and a permanent plan is a. permanent plans provide both protection and savings while term plans offer protection only b. permanent plans provides savings and dividends while term plans provide savings only c. permanent plans can be converted and renewed while term plans cannot d. all of the above 13. 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 a. cease b. continue at reduced rate c. continue as if the owner is paying the premium d. continue but they would be applied toward the premium being waived 14. Since the purchase of life insurance is a voluntary choice, the individual must meet a. comprehensive inspection report b. certain standards of health and occupation c. minimum income requirement d. all of the above 15. Which of the following factors would have the least effect on the premium charged for life insurance a. age b. occupation c. income d. all of the above 16. Anti-selection occurs a. when an agent thinks only of his own interest and not of his policyowners b. when you purchase bad stocks with expectation that they will improve c. when the insurance company accepts more than its share of poor risks d. when persons in poor health wish to buy insurance  Manulife Business Academy 17. In an application, the information that must be disclosed include a. only his date and place of birth b. only his family history c. every fact in his knowledge that is material to the insurance d. only information he wants the agent to know 18. Why is it important that the application is the basis of the policy? a. because the completed application is the basis of the policy contract and the company may accept or reject an application based on the information given in the application b. for the agent to have available data of his prospect in connection with future sales c. to avoid the necessity of the insurer putting all relevant details in the contract d. none of the above 19. The term loading means a. the difference between the gross and net premiums for the purpose of paying the insurance overhead expenses including commissions and taxes b. the amount which the company will lend to the policyholder with the policy as a security c. the amount payable in the event of the occurrence of a loss which renders him unfit for insurance d. None of the above 20. The three elements that make up a life insurance premium are a. mortality experience, investment earnings and operating expenses b. cash values, dividends and paid up values c. cash values, loan values and paid up values d. past dividend experience, present dividend and projected interest 21. If the insured dies during the grace period of an unpaid life insurance policy, the amount payable to the beneficiary is usually the a. total premium paid plus interest. b. cash surrender value of the policy minus the unpaid premium. c. face amount of the policy minus the unpaid premium. d. full face amount. 22. Which of the following statements is correct? a. 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. b. an insurance agent’s license is valid only for one month. c. an insurance agent’s license is valid during the lifetime of the agent. d. an insurance agent’s license will be renewed when the corresponding application and fee are received by the Insurance Commissioner. 23. Which of the following statements is correct? a. an agent is allowed to share commissions when selling a whole life policy but not when selling a term policy. b. an agent is allowed to share commissions with another licensed agent or agents but with no one else. c. sharing the commission with any other person is called twisting. d. an agent is not allowed to share commissions with any person. 24. Persuading a policyowner, directly or indirectly, to surrender or lapse a policy in one company and replacing it with a policy from another company is a. rebating b. twisting c. knocking d. discounting  Manulife Business Academy 25. Interest is charged on policy loans a. for registered policies only. b. if the loan is outstanding for more than a year. A loan repaid within a year is interest free. c. to replace investment income the insurer cannot earn since a loan has been granted. d. for participating policies only 26. An insurance agent’s license can be revoked for a. fraudulent practices. b. violation of any provision of the Insurance code. c. misrepresentation in the application for license. d. any or all of the above 27. The term knocking means a. promising to pay to two annuitants a fixed annual income as long as both survive. b. making derogatory remarks about competing underwriters or companies. c. the number of years that person at a given age will live on the average as shown by the mortality table. d. None of the above 28. The three non-forfeiture values in a permanent policy are a. cash dividends, bonus additions and extended term insurance. b. cash surrender values, loan value, assignment. c. waiver of premium, reinstatement and the policy loan. d. cash surrender value, paid value, extended term insurance. 29. What are the basic settlement options? a. cash surrender value, automatic premium loan. b. fixed amount, fixed period, interest, fixed period and for life. c. double indemnity, total disability waiver of premium. d. policy loans, assignment, beneficiary designation. 30. 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 a. the face amount. b. the face amount adjusted for misstatement of age. c. the sum of the premium paid. d. slightly less than the face amount. 31.. For a contract to be legal and binding a. parties to the contract must be members of the bar. b. parties to the contract must be legally competent. c. parties to the contract must be above 21. d. parties to the contract must possess blood relationship. 32. All of the following would be practicable to become beneficiaries except a. children by former marriage. b. brothers and sisters. c. someone who owes you money. d. someone to whom you owe money.  Manulife Business Academy 33. Policy reserves are future obligations on the part of a. the Insurance Commission b. the Insurance Company c. the beneficiary d. the policyowner 34. If the policy did not contain the name of a beneficiary, the beneficiary will be a. the wife. b. the children c. the insured’s brothers and sisters. d. the insured’s estate. 35. For life insurance coverage to be valid, insurable interest must exist a. only at the inception of the policy. b. only at the time of the loan. c. throughout the entire lifetime of the policy. d. both at the time of the policy issue and at the time of the loan but not necessarily throughout the lifetime of the policy. 36. In the case of life insurance, a sale is considered completed if the application is signed and payment of the first premium is made by the applicant. For the sale to be considered completed a. a medical examination has to be made first. b. payment of the first premium has to be made by the applicant in full or in part, as specified. One of the acceptable methods of settlement is by cash or check in part, with a note for the balance. c. payment of the first premium has to be made in full by a note first. d. the first premium has to be paid for in full and in cash. 37. An automatic premium loan differs from the other policy loans in that an automatic premium loan a. need not be repaid by the policyowner. b. must be repaid during the policy year in which it is granted. c. goes into effect requiring no separate action from the policyowner. d. involves higher interest payments because of the greater cost of administration. 38. If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be a. suspended. b. paid a reduced rate. c. unaffected. d. increased. 39. 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 is alive at the end of the 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  Manulife Business Academy 40. The typical grace period provision in a life insurance policy obliges the life insurance company to a. establish a policy loan to cover any premium which the policyowner fails to pay by due date. b. keep the policy in force for the duration of any major disability suffered by the policyowner. c. allow the policyowner a three-month extension beyond the due date to make the late premium payment without penalty. d. none of the above 41. In most life insurance applications, 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 payment 42. The conservation of a life insurance policy is dependent on all the following except a. The level of first year commission b. Agent’s service oriented attitude c. Pressure selling d. The use of effective needs selling 43. 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 44. Indicate which of the following is not a function of an application for life insurance policy. a. To give details pertaining to non-forfeiture options b. To furnish information on which the contract 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 45. A father enters into a life insurance contract on behalf of his child. In this case, the father is the a. insured b. beneficiary c. insurer d. applicant-owner 46. Part of the premium paid by a policyholder is invested by the insurance company. In premium computation, this factor is known as a. interest b. investment c. loading d. mortality 47. The parties involved in life insurance contract are the a. insurance company and agent b. insurance company and insured c. agent and insured d. insured and beneficiary  Manulife Business Academy 48. Life insurance contributes directly to the welfare and progress of the country by a. accumulating capital for investment in commerce and industry b. partially relieving the community of the care of dependents c. encouraging provisions for the future d. all of the above 49. The number of years that persons at a given age will live on the average as shown by the mortality table is called a. law of large numbers b. life income option c. life annuity d. life expectancy 50. An insurance plan which offers both protection and savings is called a. Temporary Plan b. Permanent Plan c. Participating Plan d. Non-participating Plan 51. A man with moderate means can have maximum protection possible through a. 20 Yr. Endowment b. Limited Pay Life c. Term Insurance d. Whole Life Insurance 52. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez? a. Participating b. Non-participating Plans c. Term Insurance d. None of the above 53. Which of the following can give the longest protection? a. 20 Yr. Endowment b. Endowment at 65 c. Ordinary Life d. 20 Yr. Term 54. A participating plan entitles the policyowner to receive a return of excess premium. Such is termed as: a. endowment b. dividends c. cash value d. cash surrender value 55. 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: a. Ordinary Life b. Limited Pay Life c. Decreasing Term d. Level Term 56. Two attractive features of a Term insurance are: a. convertibility and cash values b. cash values and dividends c. protection and dividends d. convertibility and renewability  Manulife Business Academy 57. A term policy only offers a. cash values b. protection c. savings d. dividends 58. The savings element of permanent plans allows for the build up of a. dividends b. cash values c. maturity benefits d. death benefits 59. A term rider is a. a term policy with a waiver of premium b. another name for a convertible term policy c. a renewable term policy d. a term insurance added to a permanent plan 60. An optional rider which can be attached to a policy stopping further premium payment in the event of disability is called a. policyholder protection clause b. accidental death and dismemberment c. waiver of premium d. total disability monthly income 61. For the waiver of premium to be effective a. disability must be total b. disability must be permanent c. both a & b d. either a or b 62. Disability benefits are not paid a. for self-inflicted injuries b. if there is a loan against the policy c. if all the policy dividends have been withdrawn d. if disability resulted from sickness only 63. 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 a. receive the total disability income benefit and the waiver of premiums b. receive partial disability benefits c. be granted the waiver of premium d. receive neither disability income nor waiver of premiums 64. 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. a waiver of premium b. term insurance rider c. guaranteed insurability rider d. accidental death rider  Manulife Business Academy 65. One supplementary benefit offered is a payor’s benefit which is intended to a. provide for the return of premiums to an adult payor in the event that a minor insured dies b. provide a waiver of premium benefit in the event of death or disability of the person paying the premium c. allow the insurance company to pay the policy’s proceeds to the person who seems equitable entitled to the proceeds d. assure that the adult payor will retain a vested in the policy when the insured reaches the age of majority 66. A policy with a minor as the proposed insured is called a. rated policy b. juvenile policy c. regular policy d. substandard policy 67. Life insurance policies for which higher than standard premium rates are payable are said to be a. rated policies b. contingent policies c. non-participating policies d. conditional policies 68. Insurance Companies have various sources of information about the insured. These are a. application form b. medical information bureau c. inspection report d. all of the above 69. In insurance, risk means a. chances of you being declined by the company b. hazard on people’s lives c. chances of the beneficiary being paid d. none of the above 70. In insurance risks are classified as a. unacceptable and acceptable b. regular and irregular c. standard, substandard and declined d. complete and incomplete 71. A risk is considered substandard based on any or all of the following criteria a. death, occupation and moral character b. occupation, moral character and family health history c. income, educational attainment and occupation d. death, income and educational background 72. A hazardous occupation could be defined a. an occupation the duties of which expose the insured to a degree of danger of sustaining injury b. an occupation in an unhealthy working condition exposing the insured to elements which can cause sickness c. an occupation which exposes the insured to social hazards d. all of the above  Manulife Business Academy 73. Statements in the application forms are a. guarantees b. representations c. warranties d. none of the above 74. An agent is filling up the Agent’s Confidential Report. What information must he put in his report? a. information about insured’s standing in the community b. information about insured’s finances c. all information he knows which are material to the application for insurance d. a & b only 75. 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 a. name of attending doctor, diagnosis, date of confinement b. the bill and medicines c. name of doctor only d. date of confinement only 76. Insurance companies have a source of confidential medical information on applicants for life insurance. This is the a. agents confidential report bureau b. inspection reports bureau c. financial standing bureau d. medical impairment bureau 77. Insurance companies which are owned by the policyowners are examples of a. stock companies b. mutual companies c. family corporation d. open-end companies 78. Stock companies are owned by a. policyowners b. stockholders c. creditors d. government 79. Which one of the following statements is correct? a. advertising by life insurance agents is prohibited b. all information about a client or a prospective client has to be treated as confidential c. the agents should always recommend the amount and type of policy to a prospective client which would be profitable for the company d. when an agent advertises his services in the press, he is not allowed to state the name of his company 80. Choose the incorrect statement The entire contract between the policyowner and the insurance company include: a. the application and the policy b. any verbal statement made by the agent to the application c. any document attached to the policy when issued d. any subsequent written amendments to the contract  Manulife Business Academy 81. Life insurance is a. a luxury afforded by the rich b. only available to a specific group c. a cooperative risk-sharing plan d. a speculative risk 82. A life insurance company earns income from two main sources a. premium income and investment income b. mortgage income and premium income c. dividend income and interest income d. mortgage income and dividend income 83. The official who makes the necessary assumption and calculation with respect to the principal elements of life insurance premium in order to arrive at the premium rates to be charged is the a. life agent b. senior statistician c. Insurance Commissioner d. Actuary 84. Life insurance can provide money when income stops because of a. disability b. death c. retirement d. all of the above 85. The insurance industry is under government regulations because a. it is required to account for money spent in company operations. b. it pays high taxes. c. it affects public interest. d. it is a charitable institution. 86. Which of the following statements is correct? a. rebating of premiums can only be authorized by the head office of the insurer. b. a life insurance is not allowed to identify on his letterhead the name of the insurer he represents. c. life insurance agents are allowed to act for two insurers at the same time under the same license. d. rebating of premiums by an insurance agent is prohibited. 87. Rebating is a. dating the policy a month in advance. b. giving false information. c. twisting. d. premium discrimination against policyholders. 88. One example covered under the ethical practices and procedures is a. keep all policyholders information confidential. b. always recommend a will. c. never drink in front of clients. d. always pick up the first premium with the application for insurance.  Manulife Business Academy 89. The following are unethical practices in the solicitation and procurement of insurance except a. misleading estimates of the dividends or shares of surplus to be received thereon. b. inducing a policyholder to lapse, forfeit or surrender a policy he holds for another company. c. misrepresenting the terms of any policy issued by any insurance company or the benefits or advantages promised thereon. d. obtaining or attempting to obtain a license by fraud or misrepresentation. 90. The misstatement of facts by either of the parties of insurance, whether in writing or orally, preliminary and in reference to making the insurance contract is a. knocking b. overloading c. misrepresentation d. twisting 91. An agent is prohibited from doing all of the following except: a. alter an application without the applicant’s prior written approval. b. 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. c. refund some of his commission to his client. d. make complete comparisons of policies he sells and those offered by competing insurance companies. 92. Inducing an insured to lapse or forfeit his insurance a. is not allowed by the conditions of the contract. b. is always to the advantage of the policyholder. c. is an offense in the great majority of cases. d. is a matter left entirely to the discretion of the agent. 93. The suicide clause is in effect for a. the first 6 months. b. the first year. c. the first 2 years. d. the first 18 months. 94. Benefits payable under health insurance policies cover a. accidental death and dismemberment benefits. b. expense reimbursement benefits. c. disability income benefits. d. all of the above 95. In case of misstatement of age a. the policy is cancelled and a new one is issued for the correct age. b. the insured can be changed. c. the amount of insurance is adjusted to the amount which the premium paid at the correct age would have purchased. d. the policy remains in force and the company cannot contest it. 96. Name the provision in a permanent life insurance policy under which, if the premiums are discontinued, full insurance coverage will be maintained for a specified period. a. extended term insurance b. paid up insurance c. paid up additions d. life income option  Manulife Business Academy 97. Which of the following is not derived from the non-forfeiture values? a. cash surrender value b. paid up insurance c. dividends d. extended term insurance 98. In the event that the policyowner elects the paid-up insurance option a. premiums stop and the policy continues for a full face until age 65. b. premiums cease and protection continues for a reduced amount. c. insurance continues at a reduced amount and with reduced premium. d. the policy will automatically terminate. 99. Which of the non-forfeiture option gives the largest amount of protection? a. fully paid insurance b. cash surrender value c. extended term insurance d. all of the above give equal protection 100. Any policy which has lapsed can be reinstated subject to normal conditions of proof of insurability within a. three years b. six months c. one year d. two years