Know Everything About Insurance Policies - Insurance Quiz

50 Questions | Total Attempts: 23

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Know Everything About Insurance Policies - Insurance Quiz

The insurance policy is a contract between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language. Know Everything About Insurance Policies in this Insurance Quiz


Questions and Answers
  • 1. 
    Both endowment and term life policies provide that
    • A. 

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

    • B. 

      Renewal and conversion privileges are available

    • C. 

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

    • D. 

      Insurance protection will be limited to a specified period

  • 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 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

  • 3. 
    A father has his 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 son 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

  • 4. 
    A policy where an irrevocable beneficiary has been designated the insured, without the beneficiary’s permission, can
    • A. 

      Avail of a non-forfeiture option

    • B. 

      Discontinue premium payments

    • C. 

      Borrow minimal cash loan

    • D. 

      Alter the dividend option now in effect

  • 5. 
    What are the basic settlement options?
    • A. 

      A. Policy loan, guaranteed insurability

    • B. 

      Cash surrender value, automatic premium loan

    • C. 

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

    • D. 

      Double indemnity, total and permanent disability waiver

  • 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 contestable period of the policy

    • D. 

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

  • 7. 
    Which of the following is the least important reason for requiring that 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

  • 8. 
    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 reduced premium

    • C. 

      The policy will automatically terminate

    • D. 

      The premiums cease and protection continues with a reduced amount of Coverage

  • 9. 
    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

  • 10. 
    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
    • A. 

      Participating whole life policy

    • B. 

      Participating endowment

    • C. 

      Universal life

    • D. 

      None of the above

  • 11. 
    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 a waiting period

    • D. 

      It has to be attached to a life insurance policy

  • 12. 
    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

  • 13. 
    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

  • 14. 
    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

  • 15. 
    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 deaths among the general population

    • D. 

      Determine the experienced death rate among the insured persons

  • 16. 
    In the 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. 
    A man applied for a PhP 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
    • A. 

      Offers permanent insurance coverage effective as of the date of the application

    • B. 

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

    • C. 

      Guarantees the 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

  • 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 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

  • 19. 
    An agent who determines a prospect’s complete financial requirements preparatory to offering him a policy using the correct selling approach knows as
    • A. 

      Counselor selling

    • B. 

      Total needs selling

    • C. 

      Planned selling

    • D. 

      Multiple products selling

  • 20. 
    Name the provision in a permanent life insurance policy under which premiums are discontinued, full insurance will be maintained for a specified period:
    • A. 

      Extended term insurance

    • B. 

      Paid-up insurance additions

    • C. 

      Life income option pension

    • D. 

      Reduced paid-up insurance

  • 21. 
    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

  • 22. 
    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

  • 23. 
    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

  • 24. 
    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

  • 25. 
    If the applicant for life insurance fails to disclose or misrepresents material fact, the contract is
    • A. 

      Valid if 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

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