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LATEST FINAL-INSURANCE CONCEPTS-MOCK PRACTICE EXAMS, Exams of Insurance Economics

Fayetteville State University (FSU)Insurance Economics

1. Inherent in life insurance is the concept of __________ where a group of people places funds together in preparation for life’s many uncertainties. a. pure risk b. law of large numbers c. probability d. Insurable interest e. mortality table f. risk sharing 2. (The) _____________ involves uncertainty as to the happening of an event which may produce a loss but which involves no possibility of gain. a. pure risk b. law of large numbers c. probability d. insurable interest e. mortality table f. risk shari

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Available from 12/05/2024

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LATEST FINAL-IC-MOCK PRACTICE EXAMS
MODULE 1: LIFE INSURANCE CONCEPTS AND SERVICES
1. Inherent in life insurance is the concept of __________ where a group of people places
funds together in preparation for life’s many uncertainties.
a. pure risk
b. law of large numbers
c. probability
d. Insurable interest
e. mortality table
f. risk sharing
2. (The) _____________ involves uncertainty as to the happening of an event which may
produce a loss but which involves no possibility of gain.
a. pure risk
b. law of large numbers
c. probability
d. insurable interest
e. mortality table
f. risk sharing
3. The following may be considered in the determination of a prospect’s needs except
a. family maintenance
b. clean-up fund
c. agent’s commission
d. educational fund
4. A life insurance agent may get involved in estate planning where the main objective is to
a. insulate insurance proceeds from creditors
b. to present the client with several methods of preventing policy lapsation and
forfeiture of future values
c. to retain the purchasing power of the fund coming from insurance proceeds
d. to assist the client in his real estate ventures
e. to provide the liquidity to settle the estate
5. A person’s human economic value is defined as the
a. total value of his physical assets
b. the amount of capital required to replace family income needs
c. total value of assets and any future earnings delivered therefore
d. total value of the individual’s tax contribution to the national economy
6. A clean-up fund would be used to provide for all the following except:
a. Burial expenses
b. Outstanding personal loans
c. Life income for the widow
d. Last illness expenses
7. Life Insurance is:
a. luxury afforded by the rich
b. only available to a specific group
c. cooperative risk-sharing
d. speculative risk
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Download LATEST FINAL-INSURANCE CONCEPTS-MOCK PRACTICE EXAMS and more Exams Insurance Economics in PDF only on Docsity!

LATEST FINAL-IC-MOCK PRACTICE EXAMS

MODULE 1: LIFE INSURANCE CONCEPTS AND SERVICES

  1. Inherent in life insurance is the concept of __________ where a group of people places funds together in preparation for life’s many uncertainties. a. pure risk b. law of large numbers c. probability d. Insurable interest e. mortality table f. risk sharing
  2. (The) _____________ involves uncertainty as to the happening of an event which may produce a loss but which involves no possibility of gain. a. pure risk b. law of large numbers c. probability d. insurable interest e. mortality table f. risk sharing
  3. The following may be considered in the determination of a prospect’s needs except a. family maintenance b. clean-up fund c. agent’s commission d. educational fund
  4. A life insurance agent may get involved in estate planning where the main objective is to a. insulate insurance proceeds from creditors b. to present the client with several methods of preventing policy lapsation and forfeiture of future values c. to retain the purchasing power of the fund coming from insurance proceeds d. to assist the client in his real estate ventures e. to provide the liquidity to settle the estate
  5. A person’s human economic value is defined as the a. total value of his physical assets b. the amount of capital required to replace family income needs c. total value of assets and any future earnings delivered therefore d. total value of the individual’s tax contribution to the national economy
  6. A clean-up fund would be used to provide for all the following except: a. Burial expenses b. Outstanding personal loans c. Life income for the widow d. Last illness expenses
  7. Life Insurance is: a. luxury afforded by the rich b. only available to a specific group c. cooperative risk-sharing d. speculative risk
  1. 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
  2. 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
  3. Life insurance can provide money when income stops because of: a. disability b. death c. retirement d. all of the above
  4. Since the purchase of life insurance is a voluntary choice, the individual must meet a) Agents report b) Certain standards of health and occupation c) Minimum income requirement d) All of the above
  5. The fundamental advantage of the use of insurance as means of meeting economic losses as 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 a. assessment basis.
  6. 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 provision for the future. d) All of the above MODULE 2: PREMIUMS
  7. 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
  8. 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 available to single individuals d) On which no more than one premium can be paid in advance

a. pure risk d. insurable interest b. law of large numbers e. mortality table c. probability f. risk sharing

  1. The proper management of a Company’s assets is necessary to achieve the essential a. Natural factors d. risk sharing b. Investment yield e. mortality c. Profit allowance f. expense
  2. The three crucial aspects in the successful running of a Life Insurance Company are mortality, investment yield, and d. Natural factors d. risk sharing e. Investment yield e. mortality f. Profit allowance f. expense MODULE 3: TYPES OF POLICY
  3. A fixed amount added to the premium of a given a policy regardless of policy size is known as b) Policy Fee c) Policy Reserve d) Policy Values e) Extra Premium
  4. Benefits payable under the health insurance policies cover a) Accidental death and dismemberment benefits b) Expense reimbursement benefits c) Disability income benefits d) All of the above
  5. With the employer-employee groups, an employee does not fill out personal application for insurance. Instead he merely fills out a) An enrollment card b) A registration card c) A certificate of insurance coverage d) A salary deduction form
  6. 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 a) Policy exchange facility b) Conversion privilege c) Change of plan provision d) Policy change form
  7. 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
  8. When the proceeds of a life insurance policy are left with the company to earn interest a) Income tax is levied on the proceeds 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
  1. A person has insurable interest in 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
  2. The convertible feature of a term insurance policy provides that the policy may be a) Change 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
  3. 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 premiums because it is suicide b) Pay double the face amount c) Pay the face amount d) Pay nothing
  4. 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
  5. An insurance plan which offers both protection and savings is called a) Temporary plan b) Permanent plan c) Participating plan d) Non-participating plan
  6. A man with moderate means can have maximum protection possible through a) 20 Yr. Endowment c) Term Insurance b) Limited Pay Life d) Whole Life Insurance
  7. Mr. Juan Valdez wants a policy which will entitle him to receive dividends yearly. What will you recommend to Mr. Valdez? a) Participating Plan c) Term Insurance b) Non-participating plan d) None of the above
  8. Which of the following can give the longest protection a) 20 Yr. Endowment c) Ordinary Life b) Endowment at 65 d) 20 Yr. Term
  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 c) 20 Yr. Term b) 20 Pay Life d) None of the above
  10. In a 20 pay Life policy a) Protection is until age 100, payment of premium is for 20 years b) Protection is until age 100, payment of premium is for 100 years c) Protection is until age 20 years, payment of premium is for 20 years d) Protection is until age 20 years, payment of premium until age 100

MODULE 4: RIDERS

  1. A term rider is a) A term policy with a waiver of premium b) Another name for a convertible term policy c) A renewable a term policy d) A term insurance added to a permanent plan
  2. An optional rider which can be attached to a policy stopping further premium payments 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
  3. 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
  4. 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
  5. Mr. Pedro Cruz became paralyzed as a result of jumping out of the window in an attempt to commit suicide. Under the usual provision 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 premiums d) Receive neither disability income nor waiver of premiums
  6. 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 premiums c) Allow the insurance company to pay the policy’s proceeds to the person who seems equitability entitled to the proceeds d) Assure that the adult payor will retain a vested interest in the policy when the insured reaches the age of majority
  7. The basic coverage provided by life insurance policies may be supplemented by separate provisions that provide coverage for additional amounts or of a different nature. Collectively these provisions are known as a. assignments c. riders b. deposit privileges d. dividends
  8. Which is the rider that is often attached to juvenile policies a. Double indemnity c. Payor’s waiver of premium

b. Disability waiver of premium d. Common disaster clause

  1. The total life coverage of a permanent basic policy can be greatly increased through the use of a. an interim term rider c. a supplemental term rider b. an accidental death benefit rider d. a cancer rider
  2. Which of the following statements about a “Disability waiver of Premium Rider” is incorrect? a. There is a “waiting period” b. Disability must occur before a stated age c. The insured has to die while disabled d. It has to be attached to a life insurance policy
  3. Which if the following is incorrect? a. Accidental Death d. Double indemnity Rider b. Guaranteed Insurability e. Total Disability Waiver of Premium Rider c. Child Insanity Rider
  4. 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 premiums because it is suicide c. pay the face amount b. pay double the face amount d. pay nothing
  5. A term rider is a. a term policy with a waiver of premium c. a renewable term policy b. another name for a convertible term policy d. a term insurance added to a permanent plan
  6. An optional rider which can be attached to a policy stopping further payments in the event of a disability is called a. policyholder protection clause c. waiver of premium b. accidental death and dismemberment d. total disability monthly income
  7. For the waiver of premium to be effective a. disability must be total c. both a & b b. disability must be permanent d. either a or b
  8. If a policy with the accidental death rider becomes paid up the accidental death rider ceases a. the face amount of the policy is reduced b. premiums on the basic policy stop but the rider premium continues c. none of the above
  9. 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 c. guaranteed insurability rider b. Term insurance rider d. accidental death rider
  10. 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 apply toward premium being waived
  1. Insurance companies have a source of confidential medical information on applicants for life insurance. This is the a) Agents confidential report bureau b) Inspection report bureau c) Financial standing bureau d) Medical impairment bureau
  2. 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
  3. Insurance companies which are owned by the policyowners are examples of a) Stock companies c) Family corporation b) Mutual companies d) Open-end companies
  4. Stock companies are owned by a) Policyowners c) Creditors b) Stockholders d) Government
  5. 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.
  6. 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.
  7. Which of the following statements is correct? a) Advertising by life insurance agent is prohibited. b) All information about a client or a prospective client has to be treated as confidential. c) The agents should be always recommended 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.
  8. All the following statements regarding a life insurance application are correct except, a) It must be signed by the applicant. b) Usually it will be made a part of the policy contract. c) Misstatements of material facts could void the policy during the contestable period. d) Statements made on the application are warranties
  9. Since the purchase of life insurance is a voluntary choice the individual must meet a) A comprehensive inspection report

b) Certain standards of health and occupation c) A satisfactory medical examination d) A minimum income figure

  1. Life insurance policies for which higher than standard premium rates are payable are said to be a. rated policies b. contingent policies b. non-participating policies d. conditional policies
  2. 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
  3. 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
  4. In insurance, risks are classified as: a. unacceptable and acceptable b. regular and irregular c. standard, substandard and declined d. complete and incomplete
  5. 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
  6. 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 unhealthy working conditions exposing the insured to elements which can cause sickness c. an occupation which exposes the insured to social hazards d. all of the above
  7. 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 MODULE 6 : LEGAL ASPECT & POLICY PROVISIONS
  8. Insurance companies which are owned by the policyowners are examples of c) Stock companies c) Family corporation d) Mutual companies d) Open-end companies
  9. Stock companies are owned by a) Policyowners c) Creditors b) Stockholders d) Government

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

  1. 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
  2. The IC has the power to adjudicate insurance claims against insurance companies for any single claim not exceeding a) P 1,000,000. b) P 250,000. c) P 100,000. d) P 500,000.
  3. Which one 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.
  4. The insurance industry is under government regulations because 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) It affects public interest. d) It is a charitable institution.
  5. Which one 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.
  6. Which one of the following statement 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.
  7. 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 a) Rebating b) Twisting

c) Knocking d) Discounting

  1. Rebating is a) Dating the policy a month in advance b) Giving false information c) Twisting d) Premium discrimination against policyholders
  2. An insurance agent’s licensed 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
  3. 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 client d) Always pick-up the first premium with the application for insurance
  4. 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 given age will on the average as shown by the mortality table. d) None of the above.
  5. The following are unethical practices in the solicitation and the procurement of insurance except a) Misleading estimates of the dividends or shares of surplus to be received thereon. b) Including a policyholder to lapse, forfeit or surrender a policy he holds for another company. c) Misrepresenting the term of any policy issued by any insurance company or the benefits or advantages promised thereon. d) Obtaining or attempting to obtain a licensed by fraud or misrepresentation.
  6. Twisting a) Paying the premium on one policy surrendering the dividends of another policy. b) The replacement of a policy in one company with another policy in another company. c) An attempt made by an insurance company to secure the services of an agent from another company. d) An offense which does not apply to variable concepts.
  7. 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 a) Knocking b) Overloading c) Misrepresentation d) Twisting
  8. Selling a person more insurance than what is warranted by his sources is called a) Overloading b) Twisting c) Rebating d) Knocking

d) Extended term insurance

  1. Mr. Dela Cruz stated in his application that he was 30 years of age and a policy was issued to him on that basis. When he died twenty years later it was found out that, in fact, he was 34 years of age at the time of his application. In conformity with the Insurance Code, the company a) Paid the amount of insurance payable to his beneficiary reduced in relation to his actual age at the time the contract was signed. b) Paid one-half of the face value of the policy. c) Need to pay the face value of the policy, but refund all premiums paid. d) Paid the full face value of the policy without any extra charges.
  2. In the event that the policyowner elects the paid-up insurance option a) Premiums stop and the policy continue for a full face amount until age 65. b) Premium cease and protection continues for a reduced amount. c) Insurance continues at reduced amount and with reduced amount. d) The policy will automatically terminate.
  3. If a policyowner commit suicide within one year, what’s the company’s liability? a) The company is not liable at all. b) The company would be liable for the payment of the face value of the policy. c) The company would be liable for the payment of the premiums paid by the insured only. d) None of the above.
  4. Which of the following 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
  5. 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
  6. A policy 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
  7. 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 you 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
  8. 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 premiums paid plus interest b) Cash surrender value of the policy minus the unpaid premiums

c) Face amount of the policy minus the unpaid premiums d) Full face amount

  1. 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) None of the above
  2. An automatic premium loan differs from the other policy loans in 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
  3. When a policy is assigned absolutely a) The assignee acquires all the rights and interest of the original policy holder b) The original policy holder still can exercise some of the rights c) The original beneficiary is not changed d) None of the above
  4. If a policy did not contain the name of a beneficiary, the beneficiary will be a) The wife b) The children c) The insured’s brother and sisters d) The insured estate
  5. If a 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 lesser amount c) Go into automatic premium loan d) Continue in full force for a grace period
  6. 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