31. For a contract to be legal and binding
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a. parties to the contract must be members of the bar.
b. parties to the contract must be legally competent.
c. parties to the contract must be above 21.
d. parties to the contract must possess blood relationship.
32. All of the following would be practicable to become beneficiaries except
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a. children by former marriage.
b. brothers and sisters.
c. someone who owes you money.
d. someone to whom you owe money.
33. Policy reserves are future obligations on the part of
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a. the Insurance Commission
b. the Insurance Company
c. the beneficiary
d. the policyowner
34. If the policy did not contain the name of a beneficiary, the beneficiary will be
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a. the wife.
b. the children
c. the insured’s brothers and sisters.
d. the insured’s estate.
35. For life insurance coverage to be valid, insurable interest must exist
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a. only at the inception of the policy.
b. only at the time of the loan.
c. throughout the entire lifetime of the policy.
d. both at the time of the policy issue and at the time of the loan but not necessarily throughout the lifetime of the policy.
36. 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
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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.
37. An automatic premium loan differs from the other policy loans in that an automatic premium loan
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a. need not be repaid by the policyowner.
b. must be repaid during the policy year in which it is granted.
c. goes into effect requiring no separate action from the policyowner.
d. involves higher interest payments because of the greater cost of administration.
38. If a loan is taken on a participating policy, dividends for that policy while there is a loan against the policy will be
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a. suspended.
b. paid a reduced rate.
c. unaffected.
d. increased.
39. Endowment life insurance and term life insurance are similar in that both plans
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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
40. The typical grace period provision in a life insurance policy obliges the life insurance company to
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a. establish a policy loan to cover any premium which the policyowner fails to pay by due date.
b. keep the policy in force for the duration of any major disability suffered by the policyowner.
c. allow the policyowner a three-month extension beyond the due date to make the late premium payment without penalty.
d. none of the above