Traditional Insurance Review

A single premium policy means that:

A policy under which only one premium payment is required.

A fixed amount added to the premium of a given policy regardless of policy size is known as:

Policy Fee

To be able to calculate the required premiums for a given policy, the agent must know the applicant's:

Age, Choice of Plan & Face Amount Desired

To calculate premiums for the other modes of premium payment, the annual premium is:

Multiplied by a conversion factor for the mode of payment desired.

Benefits payable under health insurance policies cover:

Accidental Death & Dismemberment; Expense Reimbursement; Disability Income Benefits

With employer-employee groups, an employee does not fill out a personal application for insurance. Instead he merely fills out:

An enrollment card.

In the event an employee leaves the company in which he is a member of its group-insurance policy, his group coverage can be changed to an individual policy using the:

Conversation Privilege

For a contract to be legal and binding,

Parties to the contract must be legally competent.

A father enters into a life insurance contract on behalf of his child. In this case, the father is the:

Applicant-Owner

For life insurance coverage to be valid, insurable interest must exist:

Only at the inception of the policy.

The insurance code specifies that a contract does not take effect unless:

Payment of the first premium is made to the insurer or its authorized agent.

All of the ff would be practicable to become beneficiaries except:

Someone who owes you money.

Under the law pertaining to life insurance,

Any person with insurable interest can be named irrevocable beneficiaries.

When the proceeds of a life insurance policy are left with the company to earn interest,

Income tax is levied on the interest earnings of the proceeds.

A person has insurable interest in the life of:

His child/grandchild; any partial dependents & any persons of pecuniary interest.

Anybody can be designated a beneficiary except:

Those expressly prohibited by law to receive donations.

The common practice of most life insurances is that the life insurance goes into force:

When the agent gives a binding receipt.

The parties involved in life insurance contract are the

Insurance company & the insured.

According to insurance law, a common-law spouse cannot be designated a beneficiary

If his/her legal partner is still living & the previous marriage hasn't been legally dissolved.

Which one of the following provisions in a permanent life insurance policy may lapse for non-payment of premium?

Automatic premium loan

The convertible feature of a term insurance policy provides that the policy may be:

Changed to a permanent insurance policy without the evidence of insurability.

Within 2 years of buying a life insurance policy, you are accidentally killed when your car hits a tree. In these circumstances, the insurance company will:

Pay the face amount.

A policyholder may obtain money from the insurance company and still remain insured by:

Taking a policy loan

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:

The face amount adjusted for misstatement of age.

When explaining dividends, the ff information must be supplied:

That they aren't guaranteed.

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.

An automatic premium loan differs from the other policy loans in that an automatic premium loan,

it goes into effect requiring no separate action from the policyowner.

When a policy is assigned absolutely,

The assignee acquires all the rights and interests of the original policyholder.

If a policy did not contain the name of a beneficiary, the beneficiary will be:

The insured estate

If a policyowner does not pay a premium on the due date, the policy will immediately:

Continue in full force for a period of grace.

If a policyowner whose wife is the irrevocable beneficiary wishes to cash in his policy, he must:

Have the wife's consent.

The entire contract between the policyowner and the insurance company include:

Any verbal statement made by the agent to the applicant.

If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be:

Unaffected

Interest is charged on policy loans:

To replace investment income the insurer cannot earn since a loan has been granted.

An insurance plan which offers both protection and saving is called:

Permanent Plan

A man with moderate means can have maximum protection possible through a:

Term insurance

Mr Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr Valdez?

Participating Plans

Which of the ff can give the longest protection?

Ordinary Life

In a 20-Life Policy

Protection is until age 100, payment of premium is for 20 years.

An optional rider which can be attached to a policy stopping further premium payments in the event of disability is called:

Waiver of premium

A participating plan entitles the policyowner to receive a return of excess premiums. Such is termed as:

Dividends

A term rider is:

A term insurance added to a permanent plan.

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:

Level Term

The savings element of permanent plans allows for the build up of:

Cash values

The main difference between a term plan and a permanent plan is:

Permanent plans provide both protection and savings while term plans offer protection only.

A term insurance which allows the policyowners to convert it to a permanent insurance within a specified period without evidence of insurability contains ___________________ feature:

Convertability

A term policy only offers:

Protection

For the waiver of premium to be effective,

Disability must be total & permanent

If a policy with the accidental death rider becomes paid up,

The accidental death rider ceases

Disability benefits are not paid

For self-inflicted injuries

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:

Receive neither disability income nor waiver of premiums

A person wanting a greater coverage for the least amount of premium has an option of attaching what rider in his permanent life policy?

Term insurance

One supplementary benefit offered is a payor's benefit which is intended to:

Provide a waiver of premium benefit in the event of death or disability of the person paying the premiums.

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

Continue as if the owner is paying the premium

A policy with a minor as the proposed insured is called

Juvenile policy

Life insurance policies for which higher than standard premium rates are payable are said to be

Rated policies

Since the purchase of life insurance is a voluntary choice, the individual must meet

Certain standards of health & occupation

Which of the ff factors would have the least effect on the premium charged for life insurance?

Income

Anti-selection occurs

When persons in poor health wish to buy insurance

In insurance, risk means

Hazard on people's lives

In an application, the information that the disclosed include

Every fact in his knowledge that is material to the insurance

Insurance Companies have various sources of information and the insured. These are:

Application form, Medical Information Bureau, and Inspection Report

In insurance, risks are classified as

Standard, Substandard & Declined

A risk is considered substandard based on any or all of the ff criteria:

Occupation, moral character & family health history

A hazardous occupation could be defined

Danger of sustaining injury, Unhealthy working conditions, Social hazards

Statement in the application forms are

Representation

Mr Roel Reyes has been confined in a hospital 3yrs prior to his application for insurance. He therefore needs to give the ff info:

Name of attending doctor, diagnosis & date of confinement

Insurance companies have a source of confidential medical info on applicants for life insurance. This is the

Medical impairment bureau

An agent is filling up the Agent's Confidential Report. What information must he put in his report?

All info he knows which are material to the application

An annuity plan

Is a purchase of income

The person who purchases the annuity plan is called

The annuitant

A life insurance company earns income from two main sources

Premium income & investment income

Policy reserves are future obligations on the part of

The Insurance Company

Insurance Companies which are owned by the policyowners are examples of

Mutual companies

Stock companies are owned by

Stockholders

In the case of life insurance, a sale is considered completed if the applications is signed and payment of the first premium is made by the applicant. For the sale to be considered completed,

A medical exam has to be made first

Why is it important for the application to be the basis of the policy?

The completed application is the policy contract and the company may accept or reject an application based on the info given in the application.

Which one of the ff statements is correct?

All info about a client or prospect has to be treated confidential

All of the ff statements regarding a life insurance application are incorrect except

Statements made on the applications are warranties

The suicide clause is in effect for:

The first 2 years

Inducing an insured to lapse or forfeit his insurance:

Is an offense in the great majority of cases

An agent is prohibited from doing all the ff except:

Making complete comparisons of policies he sells and those offered by competing insurance companies.

Selling a person more insurance that what is warranted by his sources is called:

Overloading

The misstatement of facts by either of the parties of insurance to the other whether in writing or orally preliminary and in reference to making the insurance contract is:

Misrepresentation

Twisting is:

The replacement of a policy in one company with another policy in another policy.

The ff are unethical practices in the solicitation & procurement of insurance except:

Obtaining or attempting to obtain a license by fraud or misrepresentation.

Knocking means:

Making derogatory remarks about competing underwriters or companies.

One example covered under ethical practices & procedures is:

Keeping all policyholders' info confidential.

An insurance agent's license can be revoked for:

Fraud; Violation of the Insurance code; Misrepresentation in the application for license

Rebating:

Premium discrimination against policyholders

Persuading a policyowner, directly or indirectly, to surrender or lapse a policy in one company and replacing it with a policy in another company is:

Twisting

Which one of the ff statements is correct:

Rebating of premiums by an insurance agent is prohibited.

Which one of the ff statements is correct?

An agent is allowed to share commissions with another licensed agent or agents but with no one else.

The insurance industry is under govt regulations because

It affects public interest.

Which one of the ff statements is correct:

An insurance agent's license will be renewed when the Commissioner is satisfied that the info in the application is accurate and all requirements are met.

The IC has the power to adjudicate insurance claims against insurance companies for any single claim not exceeding

P100,000

Prior to granting a license, the IC requires proof of:

A clean record of employment; Reasonable educational background; Prospective agent's character & reputation.

The 3 non-forfeiture values in a permanent policy are

Cash surrender value, Paid value, and Extended term insurance

In the event that a policy elects the paid up insurance option,

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

What are the basic settlement options?

Fixed amount, Fixed period, Interest, Fixed period & for life