IIAP Mock Exam I & II Review PDF

Mock Exam II  b) Income tax is levied on the interest earnings of the proceeds c) Estate tax is levied on the proceeds d) Donor’s tax is levied on the proceeds 38) A person has insurable interest on the life of a) His child or grandchild b) Any person upon whom he is w...

Mock Exam II  b) Income tax is levied on the interest earnings of the proceeds c) Estate tax is levied on the proceeds d) Donor’s tax is levied on the proceeds 38) A person has insurable interest on the life of a) His child or grandchild b) Any person upon whom he is wholly or in part dependent on, or from whom he is receiving support or education c) Any person in whom he has pecuniary interest d) All of the above 39) Anybody can be designated as beneficiary except a) A creditor b) Minors c) Those expressly prohibited by law to receive donations d) All of the above 40) The common practice of most life insurance is that the life insurance goes into force a) When the application is received by the branch office b) When the policy is delivered to the applicant c) In accordance with the legal stipulation of the insurance code d) When the agent gives a binding receipt 41) According to insurance law, a common-law spouse cannot be designated a beneficiary a) Since there is no benefit of marriage in the relationship b) If his/her legal partner is still living and the previous marriage has not been legally dissolved c) Since common-law relationship is an immoral relationship d) All of the above 42) Policy reserves are future obligations on the part of a) The Insurance Commission b) The insurance company c) The beneficiary d) The policy owner 43) Which one of the following provisions in a permanent life insurance policy may lapse for non- payment of premium a) Guaranteed insurability b) Automatic premium loan c) Settlement options d) Reinstatement provisions 44) A policy holder may obtain money from the insurance company and still remain insured by a) Surrendering the policy for its cash value b) Discontinuing payment of premium for some period c) Taking a policy loan d) Taking the extended insurance option 45) When you bought an insurance policy on your wife’s life you were 27 and she was 26, buy 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 46) 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 47) If a policy owner whose wife is the irrevocable beneficiary wishes to cash in his policy, he must a) Tell his wife what he is going to do b) First take a loan on the policy c) Have the check issued in the name of his wife d) Have the wife’s consent 48) If a policy with the accidental death rider becomes paid up a) The accidental death rider ceases b) The face amount of the policy is reduced c) Premiums on the basic policy stop but the rider premium continues d) None of the above 49) An annuity plan a) Offers a life insurance protection b) Offers waiver of premium benefit c) Is the same as an endowment plan d) Is a purchase of income 50) The person who purchases the annuity plan is called the a) Assignor b) Owner c) Insured d) Annuitant 51) All of the following statements regarding a life insurance application are correct except a) It must be signed by the applicant b) Usually it will be a part of the policy contract c) Misstatement of material facts could void the policy during the contestable period d) Statements made on the applications are warranties 52) Prior to granting a license, the IC requires proof of a) A clean record of employment b) A reasonable educational background c) A prospective agent’s character and reputation  d) All of the above 53) The IC has the power to adjudicate insurance claims against insurance companies for any single claim not exceeding a) 1,000,000 b) 250,000 c) 5,000,000 d) 500,00 54) For life insurance coverage to be valid, insurable interest must exist a) Only at the time of 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 issued and at the time of the loan but not necessarily throughout the lifetime of the policy 55) In the case of life insurance, a sale is considered completed if the applicant has signed and the applicant makes payment of the first premium. 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 balance c) Payment of the first premium has to be made in full by note first d) The first premium has to be paid in full and in cash 56) An automatic premium loan differs from the other policy loans I that an automatic premium loan a) Need not be repaid by the policy owner b) Must be repaid during the policy year in which it is granted c) Goes into effect requiring no separate action from the policy owner d) Involves higher interest payments because of the greater cost of administration 57) 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 policy owner fails to pay by due date b) Keep the policy in force for the duration of any major disability suffered by the policy owner c) Allow the policy owner a three-month extension beyond the due date to make the late premium payment without penalty d) Non of the above 58) When a policy is assigned absolutely a) The assignee acquires all the rights and interest of the original policyholder b) The original policyholder still can exercise some of the rights c) The original beneficiary is not changed d) Non of the above 59) If the policy owner does not pay a premium on the due date, the policy will immediately a) Lapse b) Be converted to a paid up policy for a lesser amount  c) Go into automatic premium loan d) Continue in full force for a period of grace 60) If a loan is taken on the 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 End of Mock Exam II