phil am reviewer

MULTIPLE CHOICE:  Choose the letter of the best answer.

1. The only instance when a life insurance contract is treated primarily as an indemnity agreement is when a

a.     a person insures the life of a friend

b.     creditor insures the life of his debtor to protect himself

c.     person insures the life of his or her spouse to protect against the loss of  income earned by the spouse

d.     person in a partnership insures the life of his partner to protect the firm

     against loss due to the death of that partner

2. Life insurance guarantees cash benefits for all the following except

                        a.     clean-up fund                    c.     educational fund                b.     family dependency period income                        d.     mortgage

3. “Critical years”  in insurance programming refer to

                        a.    the years immediately following the insured’s death

                        b.    the years between the time the youngest child is 18 years old and the mother is 62 years old.

                        c.    the years when the children are small and cannot provide for themselves

            d.    the retirement years

4. Participating life insurance policies are policies which

                        a.     allow variation in the wording of certain provisions

                        b.     provide for the distribution of dividends to the policyowner

                        c.     develop profit which must me paid to stockholders

                        d.     permit beneficiaries to exercise certain ownership rights during the lifetime  of the insured.

5. The commuted value of an insurance policy is

                        a.     the cash value of basic addition

                        b.     the single sum of money which is equal in value to the discounted future  payments

                        c.     the cash value of the policy after the loan has been deducted

                        d.     the paid-up value of the policy

6. A convertible term insurance policy offers the insured the option of

            a.     converting to any form of term insurance with evidence of insurability

                        b.     converting to any permanent insurance subject to a medical examination and payment of a higher premium

                        c.     taking a reduced paid-up policy

            d.     converting to any form of permanent insurance without evidence of insurability

 7. Which of the following describes the convertible feature of a term insurance policy?

                        a.     It may be changed to another term insurance policy without evidence of insurability.

                        b.     It may be changed for a guaranteed sum.

                        c.     It may be changed to another whole life policy.

                        d.     It may be changed to a permanent insurance without evidence of insurability.

8. Mr. Alvarez bought a P150,000 policy with a 20-year reducing term rider.  He died 5 years after the policy issue

date.  After his death, his wife received P150,000 and a monthly  income thereafter for 15 years.  This policy definitely has a

                        a.     Family Maintenance Policy                         c.     Straight Family Policy

                        b.     Family Income Rider                                                          d.     Combination of Whole Life and Level Term Insurance

9. A Family Income rider is specifically designed to

                        a.     pay twice the face amount of the policy in the event of death

                        b.     provide a monthly income from the date of death of the insured to some  future date specified in the contract

                        c.     provide an income for the adjustment period immediately following death

                        d.     provide a retirement income for the insured and his spouse

10. 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.   waiver of premium     b.  term insurance rider            c.     guaranteed insurability rider            d.     accidental death rider

11. Which of the following factors are important in determining an individual’s insurability?        

                  I.     physical condition          II.    character              III.     Occupation                       IV.     financial status

         The answer is:    a.     I, II, III                    b.     I and II                  c.     I, III, IV                              d.     all of the above

12. Applicants for life insurance with moderate physical impairments are called  sub-standard risks and

                        a.     therefore cannot obtain life insurance in any company

                        b.     may be insured at increased rates to compensate for the extra hazard

                        c.     are issued policies without any non-forfeiture values

                        d.     are required to pay premiums on an annual basis

13. Life Insurance companies practice risk selection primarily to

                        a.     guard against anti-selection                                                                                                c.     determine policy reserve amount

                        b.     establish dividend rates on participating policies                d.     gather and test mortality statistics

14. A hazardous occupation could be defined as