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IIAP – MOCK EXAM 1

1. 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 single individuals
d. On which no more than one premium can be paid in advance.

2. A fixed amount added to the premium of a given policy regardless

of policy size is known as

a. Policy fee
b. Policy reserve
c. Policy values
d. Extra premium

3.To be able to calculate the required premiums for a given policy, the
agent must know the applicant’s
a. Age
c. Face amount desired
d. All of the above

4.To calculate premiums for the other modes of premium payment,

the annual premium is,
a. Divided by the desired number of premium payments
b.divided by the a conversion factor for the mode of payment
desired
c. multiplied by a conversion factor for the mode of payment desired
d. multiplied by a constant factor.

5. 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

6. The convertible feature of a term insurance policy provides the

policy may be
a. Changed 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

7. 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 premium because it is suicide
b. Pay double the face amount
c. pay the face amount
d. pay nothing

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8.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

9.Part of the premium paid by the policy holder is invested by the

insurance company. In the premium computation, this factor is
known as
a.interest
b. investment
c.loading
d. mortality

10. The parties involved in life insurance contract are the

a. insurance company and agent
b.insurance company and insured
c. agent and insured
d. insured and beneficiary

11. The fundamental advantage of the use of insurance as means of

meeting economic looses is that through insurance between 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

12. 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

13. The number of the years that persons at a given age will live on
the average as shown by the mortality table is called
a. law of a large numbers
b. life income option
c. life annuity
d. life expectancy
14. An insurance plan which offers both protection and savings is
called
a. Temporary Plan
b. Permanent plan
c. Participating Pan
d. Non- participating plan

15. A man with moderate means can have maximum protection

possible through
a. 20 Yr. Endowment
b. Limited Pay Life
c. Team Insurance
d. Whole Life Insurance

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16. Mr. Juan valdez wants a policy which will entitle him to receive
dividends yearly. What will you recommend to Mr. Valdez?
a. Participating
b. Non participating Plans
c. Term Insurance
d. None of the above

17. Which of the following can give the longest protection?

a. 20 Yr. Endowment
b. Endowment @ 65
c. Ordinary life
d. 20 Yr. Term

18. 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
b. 20 Pay life
c. 20 Yr. term
d. None of the Above

19. In a 20 life policy

a. Protection is until age 100, payment of premium is for 20 years
b. Protection is until age 100, payment of premium until age 100
c. Protection is for 20 years, payment of premium is for 20 years
d. Protection is for 20 years, payment of premium until age 100

20. A participating plan entitles the policy owner to receive a return

of excess premium. Such is termed as:
a. Endowment
b. Dividends
c. Cash value
d. Cash surrender value

21. 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:
a. Ordinary Life
b. Limited Paylife
c. Decreasing Term
d. Level Term

22. Two attractive features of a term insurance are:

a. convertibility and cash values
b. cash values and dividends
c. protection and dividends
d. convertibility and renewability

23. A term insurance which allows the policy owners to convert it to

a permanent insurance within in a specified period without evidence
of insurability contains ______________ features.
a. convertibility
b. renewability
c. dividend option
d. both a and b
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24. A term policy only offers

a. cash values
b. protection
c. savings
d. dividends

25. The difference between a term plan and a permanent plan is

a. Permanent plans provide both protection and savings while term
plans offer protection only
b. Permanent plans provide savings and dividends while term plans
provide savings only
c. Permanent plans can be converted and renewed while term plans
cannot
d. all of the above

26.The savings element of permanent plans allows for the build up

of
a. dividends
b. cash values
c. maturity benefits
d. death benefits
27. A term rider is
a. a term policy with the waver of premium
b. another name for a convertible term policy
c. a renewable term policy
d. a term insurance added to a permanent plan

28. An optional rider which can be attached to a policy stopping

further premium payment 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

29. For the waiver of premium to bb. e effective

a. Disability must be total
b. disability must be permanent
c. Both a and b
d. Either a or b

30. Disability benefits are 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

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31. Mr. pedro cruz became paralyzed as a result of jumping out o

the window in an attempt to commit suicide. Under the usual
provisions of a disability policy, he will 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 premium
d. Receive neither disability income nor waiver of premiums

32. 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
b. term insurance rider
c. guaranteed insurability rider
d. accidental rider

33. 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 premium
c. allow the insurance company to pay the policy’s proceeds to the
person who seems equitable entitled to the proceeds
d. assure that the adult payor will retain a vested in the policy when
the insured reaches the age of majority

34. 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 be applied toward the premium being
waived

35. A policy with a minor as the proposed insured is called

a. rated policy
b. juvenile policy
c. regular policy
d. substandard policy

36. Life insurance policies for which higher than standard premium
rates are payable are said to be
a. rated policies
b. contingent policies
c. non-participating policies
d. conditional policies

37. Since the purchase of life insurance is a voluntary choice,

individual must meet
a. comprehensive inspection report
b. certain standards of health and occupation
c. minimum income requirement
d. all of the above

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38. 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

39. Insurance companies have various sources of information about

the insured. These are
a. Application form
b. Medical Information bureau
c. Inspection Report
d. All of the above

40. Anti-selection occurs

a. When an agent thinks of his own interest and not his policyowners
b. When you purchase bad stock with expectation that they will
improve
c. When the insurance company accepts more than its share of poor
risks
d. When persons is in poor health wish to buy insurance

41. In insurance, risk means

a. Chances of you being declined by the company
b. Hazzard on people’s lives
c. Chances of the beneficiary being paid
d. None of the above

42. In an application, the information that must be disclosed include

a. Only his date and place of birth
b. Only his family history
c. Every fact in his knowledge that is material to the insurance
d. Only information he wants the agent to know

43. In insurance risks are classified as

a. Unacceptable and acceptable
b. Regular and irregular
c. Standard, substandard and declined
d. Complete and incomplete

44. 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 education background

45. 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 an unhealthy working condition exposing the
insured to elements which can cause sickness
c. An occupation which exposes the insured to social hazards
d. All of the above

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46. Statements in the application forms are

a. Guarantees
b. Representations
c. Warranties
d. None of the above

47. An agent is filling up the agents 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 nd B only

48. Mr. Roel Reyes has been confined in a hospital 3 yrs prior to
his application for insurance. He, therefore, needs to give the
following information
a. Name of attending doctor, diagnosis, date of confinement
b. The bill and medicine
c. Name of doctor only
d. Date of confinement only

49. 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

50. Insurance companies which are owned by the policyowners are

examples of
a. Stock companies
b. Mutual companies
c. Family corporation
d. Open-and companies

51. Stock companies are owned by

a. Policyowners
b. Stockholders
c. Creditors
d. Government

52. Why it is important that the application is the basis of the policy?
a. Because the completed application is the basis of the policy
contract and He 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 the avoid the necessity of the insurer putting all relevant details
in the contract
d. None of the above
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53. Which one 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 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

54. Choose the correct statement

The entire contract between the policyowner and the
insurance company include:
a. The application and the policy
b. Any verbal statement made by the agent to the application
c. Any document attached to the policy when issued
d. Any subsequent written amendments to the contract

55. Life insurance is

a. A luxury afforded by the rich
b. Only available to specific group
c. A cooperative risk-sharing plan
d. A speculative risk
56. A life insurance company earns income from two main sources
a. Premium income and investment income
b. Mortgage income and premium income
c. Dividend income and interest income
d. Mortgage income and dividend income

57. the official who makes the necessary assumption and calculation
with respect to the principal elements of life insurance premium in
order to arrive at the premium rates to be charged is the
a. Life agent
b. Senior Statistician
c. Insurance commissioner
d. Actuary

58. The term loading means

a. The difference between the gross and net premiums for the
purpose of paying the insurance overhead expenses including
commissions and taxes
b. The amount which the company will lend to the policyholder with
the policy as a security
c. The amount payable in the event of the occurrence of a loss
which renders him unfit for insurance
d. None of the above

59. Life can provide money when income stop because of

a. Disability
b. Death
c. Retirement
d. All of the above

60. The three elements that make up a life insurance premium are
a. Mortality experience, investment earnings and operating
expenses
b. Cash values, dividends and paid up values
c. Cash values, loan values and paid up values
d. Past dividend experience, present dividend and projected interest