BAM 200 TEST BANK QUESTIONNAIRE

Life and Microinsurance, Variable contracts, Rescission of Insurance Contracts,

Claims and Subrogation

1. Leni is a passenger of a jeepney for hire being driven by BongBong. The jeepney
collided with another passenger jeepney being driven by Carl who was driving
recklessly. As a result of the collision, Leni suffered injuries. Both passenger jeepneys
are covered by comprehensive motor vehicular insurance coverage. If Marife wants to
claim under the “No fault indemnity clause”, her claim will lie
a. Against the insurer of the jeepney being driven by Carl who was the one at
fault.
b. The claim shall lie against the insurer of the passenger jeepney driven
by BongBong because Leni was his passenger.
c. Leni has a choice against whom he wants to make his claim.
d. None of the above.

2. When Frances insured her building, Frances indicated in the application that it is
a residential building, but actually the building was being used as a warehouse for
some hazardous materials. What is the effect on the insurance policy, if any?
a. The insurance policy can be cancelled because of the change in the
use.
b. The insurance policy will automatically be changed.
c. The insurance policy need not be changed.
d. The insurance policy is fixed regardless of the change in the use.

3. Brewin, the president of ml corporation, was authorized by the board of directors

of ML Corporation to obtain a loan from Axie bank and to sign documents on behalf of
the corporation. Brewin personally negotiated for the loan and got the title loan at very
low interest rates. Upon maturity of the loan, ml corporation was unable to pay. Make
the most accurate statement.
a. Because Brewin was personally acting on behalf of the corporation, he can
be held personally liable.
b. Brewin, as president, cannot be personally held liable for the
obligation of the corporation even though he signed all the loan
documents, because the loan was authorized by the board.
c. Axie bank can choose as to who it wants to hold liable for the loan.
d. If ML Corporation cannot pay, Brewin can be held subsidiary liable.

4. Hazel insured her brand-new car with KD insurance company. The insurance
policy provides that the total premium amounting to P250,000 is payable in 6 months.
Hazel only paid the first two months installments. Despite demands, she failed to pay
the subsequent installments. Five months after the issuance of the policy, the vehicle
was carnapped. Hazel filed with insurance company a claim for its value. However, the
company denied her claim on the ground that he failed to pay the premium resulting in
the cancellation of the policy. Can hazel recover from KD insurance company?
a. No, because the premiums were not paid.
 b. Yes because when the car was lost, the period for the installment has
not yet lapsed and partial payment was already made.
c. No, because he failed to pay the installments upon demand.
d. Yes, because carnapping is a covered risk.

5. Karen owns a Mitsubishi Montero. On September 27, 2020, Disc Insurance Co.
issued a comprehensive car policy to Karen for P1,500,000 valid for one year
commending on September 27, 2020 up to September 27, 2021. To collect the
premiums, Disc Insurance Co. sent Karen a statement of account. Karen immediately
processed the payment and issued a check on that day (September 27) since it was
the birthday of their president, Disc Insurance Co. informed Karen that they pick up the
check the next day. In the evening of September 27, Karen's car was stolen. Oblivious
of the incident, Disc Insurance Co. Picked up the check and issued an or dated
September 28, 2020, acknowledging receipt of the premium payment. The check was
encashed on October 1, 2020.
On the same day, Karen informed Disc Insurance of the loss and filed a claim for
the insurance proceeds. Disc Insurance refused to pay the proceeds and asserted that
the non-payment of the premium rendered the policy ineffective. Was there a binding
insurance contract between Karen and disc insurance co.?
a. Yes, because the DISC insurance company issued a comprehensive car
policy to Karen on September 27.
b. Yes, because DISC insurance company was the only one Karen talked to.
c. No, because no payment of premium has been made at the time of
loss thus the insurance is not binding and valid.
d. No, because Karen notified the insurance company late.

6. ABC, Inc. is indebted to Bank Y in the amount of P50,000,000.00. The loan was
secured by a suretyship agreement issued by Z Insurance Co. Due to ABC, Inc's
default, Bank Y filed a case against Z Insurance Co. as surety. There is also a pending
criminal case for violation of the Bouncing Checks Law against the President of ABC,
Inc., Mr. Phillip, who signed the check as signatory for the company. Unable to meet its
obligations as they fell due, ABC Inc. filed a petition for rehabilitation. Finding the
petition sufficient in form and substance, the court issued a Commencement Order,
which was thereafter published. Should the case filed against Z Insurance Co. be
suspended in light of the Commencement Order? Explain.
a. Yes, because it covers the Insurance Company including the suretyship
they offer.
b. Yes, because the company was approved for rehabilitation.
c. No, the case filed against Z Insurance should not be suspended in light
of the Commencement Order because the effects of the
Commencement Order do not apply to claims against sureties and
other persons solidarily liable with the debtor.
d. No, because the contract is not valid and binding.
Use the given problem for items 7 and 8.
Carl applied for a car insurance under the Dina-Ngopya Insurance Company for
his Ferrari Pista 488 and paid a total premium of P150,000. While he was driving along
Marcos highway a truck hit him from behind. The truck is owned by [Link] of
Alphapichupapi Corporation. The car damage is worth P100,000.

7. Who will pay for the damages?

a. Mr. Brewin
b. Dina-ngopya insurance company
c. The truck driver
d. It depends.

8. Can Carl claim from [Link] and Dina-Ngopya Insurance Company? Why or
why not?
a. Yes, because he has paid the insurance premium and [Link]'s
employee has caused him damages.
b. Yes, because they are obliged to do so.
c. No, because [Link]'s employee is the one who caused the damages to
his car. He is the one liable to pay Carl.
d. None of the above.

Use the given problem for items 9 and 10.

Carl applied for a car insurance under the Dina-Ngopya Insurance Company for
his Ferrari Pista 488 and paid a total premium of P150,000. While he was driving along
Marcos highway a truck hit him from behind. The truck is owned by [Link] of
Alphapichupapi Corporation. The car damage is worth P100,000. [Link] refuses to
pay the damages claiming that Carl is the one at fault for suddenly stopping while the
traffic light signal is go. Carl gets angry and wants to file a case against [Link] and
the truck driver.

9. Can carl go directly to the court to sue [Link]?

a. Yes, because the refusal to pay of [Link] is conclusively presumed to
be an act of evading his obligations.
b. Yes, because [Link] is guilty of accusing carl of doing a criminal act.
c. No, because he can still claim from the Dina-Ngopya Insurance Company if
[Link] refused to pay for the damages.
d. No, because he can still consult the insurance commission for the
proper settlement procedures between the both parties.

10. Who usually does the investigation under the insurance company?
a. Insurance investigator
b. Insurance agent
c. Insurance adjuster
d. Private investigator
11. What should be the amount of claim before a claimant goes to court to sue an
insured individual?
a. Five million or more
b. Four million or more
c. Two million or more
d. One million or more

12. This is an activity providing specific insurance-like and other similar products and
services that meet the needs of the low-income sector for risk protection and relief against
distress, misfortune, and other contingent events
a. Microinsurance
b. Casualty insurance
c. Fire insurance
d. Compulsory motor vehicle liability insurance

13. I. No insurance company authorized to transact business in the Philippines shall

issue, deliver, sell or use any variable contract in the Philippines, unless and until such
company shall have satisfied the commissioner that its financial and general condition
and its methods of operations, including the issue and sale of variable contracts, are not
and will not be hazardous to the public or to its policy and contract owners.
II. No foreign insurance company shall be authorized to issue, deliver or sell any
variable contract in the Philippines, unless it is likewise authorized to do so by the laws of
its domicile.
a. Both statement is true
b. Both statement is false
c. Only statement i is true
d. Only statement ii is true

14. I. No policy of fire insurance shall be pledged, hypothecated, or transferred to any

person, firm or company who acts as agent for or otherwise represents the issuing
company, and any such pledge, hypothecation, or transfer hereafter made shall be void
and of no effect insofar as it may affect other creditors of the insured.
II. An alteration in the use or condition of a thing insured from that to which it is
limited by the policy, which does increase the risk, does not affect a contract of fire
insurance.
a. Both statement is true
b. Both statement is false
c. Only statement i is true
d. Only statement ii is true

15. Which statements are true?

I. Casualty insurance is an insurance covering loss or liability arising from accident or
mishap, including those certain types of loss which by law or custom are considered as
falling exclusively within the scope of other types of insurance such as fire or marine.
II. Casualty insurance includes, but is not limited to, employer's liability insurance, motor
vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal
accident and health insurance as written by non-life insurance companies, and other
substantially similar kinds of insurance.
a. Statement I only
b. Statement II only
c. Both statements are true
d. Both statements are false

16. Which statements are true?

I. A contract of suretyship is an agreement whereby a party called the surety guarantees
the performance by another party called the principal or obligor of an obligation or
undertaking in favor of a third party called the obligee.
II. A contract of suretyship includes official recognizances, stipulations, bonds or
undertakings issued by any company by virtue of and under the provisions of Act No. 536,
as amended by Act No. 2206
a. Statement 1 only
b. Statement 2 only
c. Both statements are true
d. Both statements are false

17. Which statements are true?

I. pertinent provisions of the insurance code of the Philippines shall be applied in a
suppletory character whenever necessary in interpreting the provisions of a contract of
suretyship.
II. the surety or sureties shall be solidarily liable with the obligor and shall be limited to the
amount of the bond. It is determined strictly by the terms of the contract of suretyship in
relation to the principal contract between the obligor and the obligee
a. Statement 1 only
b. Statement 2 only
c. Both statements are true
d. Both statements are false

Use the given problem for items 18 to 20.

On December 31, 2020, [Link] took a loan to the Maypagasapa Bank amounting
to P1,000,000, 10% annually that is due on December 31,2025. His friend, [Link],
signed a disclosure agreement to be his surety. Every year, [Link] pays his interest
accordingly. In January of 2025, [Link] told [Link] that she cannot be a surety for Mr.
Phil anymore and signed a contract with him. On December 31,2025, Maypagasapa Bank
collects the payment to [Link] yet due to bankruptcy, he went to [Link] for the
payment of the loan.

18. Can [Link] disagree with the charge of payment to her by Maypagasapa Bank?
a. Yes, because that's her choice.
b. Yes, because that is included in the disclosure agreement of the
suretyship.
c. No, because the bank was not informed by the cancellation of
suretyship.
 d. No, because she was the surety from the very start.

19. Disregarding [Link]' cancellation of suretyship, up to how much is the amount

of payment [Link] should pay to the bank if [Link] wasn't able to pay his interest since
the beginning of the year?
a. P1,000,000
b. P1,500,000
c. P1,400,000
d. P1,300,000

20. If [Link] handed the contract of cancellation to Maypagasapa Bank yet the bank
did not provide written notice that approves the suretyship bond’s cancellation, is the
collection of payment of the bank to [Link] valid?
a. Yes, ms. Pines is still liable because the bank did not approve the
suretyship bond's cancellation.
b. Yes, because the loan is due on dec. 31,2025.
c. No, because mr. Phil already informed the bank on the cancellation of the
suretyship.
d. No, because ms. Pines did not borrow the money from the bank.

Use the given problem for items 21 to 23.

Mr. Gregorio went to a bar to drink some whisky and celebrate his accomplishment
then get home. While he is driving along the road, he suddenly bumped into another car
causing them to be injured. Ms. Veronica who's driving the other car was extremely
injured. Mr. Gregorio is insured for any casualty insurance to Wheelzonthesouth
Insurance Company and has completed his insurance premium. Subsequently after
identifying the accident is fault of [Link], [Link] is claiming damage and
hospital fees caused by the accident.

21. Mr. Gregorio said that she will be paid by his insurance company. Is [Link]
correct?
a. Yes, because [Link] said that his insurance company will pay.
b. Yes, because the casualty of [Link] is covered by the
insurance of [Link].
c. No, because [Link] should be the one to pay [Link].
d. No, because [Link] should be the one to decide because she was
damaged heavily.

22. In connection to the question above. Up to what amount will [Link] can
claim?
a. Half of damage and full hospital fee
b. Half of damage and half hospital fee
c. Full damage and full hospital fee
d. Full damage fee
23. What if the damages fee exceeds the amount of the casualty insurance premium
contributed by [Link], can [Link] claim the deficit amount to [Link]?
a. Yes, because she was the victim in the accident.
b. Yes, because [Link] is liable for the damage and hospital fee of
[Link].
c. No, because [Link] should pay [Link] according to his
insurance premium.
d. No, because [Link] is also liable for the accident.
24. I. Surety undertakes to pay if the principal does not pay.
II. The surety assumes liability as a regular party to the undertaking and is
secondary liable.
III. The liabilities of the sureties shall be joint and several with the obligor.
Which of the statements above is true concerning suretyship?
a. I and II
b. I and III
c. II and III
d. I, II, and III

25. I. Living death does not involve permanent disability.

II. Retirement death is living beyond the period of life capacity.
III. Health, death and disability insurance is a life insurance only.
Which of the statements above is not true concerning life insurance?
a. I and II
b. I and III
c. II and III
d. I, II and III

26. Kimmy's best friend Dora was diagnosed with a severe illness and needs medical
treatment. Due to lack of finance Kimmy decided to transfer his life and health insurance
to Dora to help his best friend. Does the transfer of insurance is valid?
a. No, because policy of insurance does not allow transfer of life and health
insurance.
b. No, because Dora does not have insurable interest.
c. Yes, because policy of insurance upon life or health may pass by
transfer, will or succession to any person, whether he has an
insurable interest or not.
d. Yes, because policy of insurance upon life or health may pass by transfer,
will or succession to any person, only if he has insurable interest.

27. I. The insurer in a life insurance contract shall be liable in case of suicide only when
it is committed after the policy has been in force for a period of three (3) years from the
date of its issue or of its last reinstatement, unless the policy provides a shorter period.
II. Provided, however, that suicide committed in the state of insanity shall be
compensable regardless of the date of commission.
a. Statement I is true and statement II is false.
b. Statement I is false and statement II is true.
 c. Both statements are false.
d. Both statements are true.

28. Mr.X and Mrs.Y died due to drowning during the typhoon Maring living their 18
years old daughter named Celine and an 8 years old son named Benji. Both of them are
insured. Who shall act as a guardian without need of a court order or judicial
appointment?
a. Celine, the 18 year old daughter of Mr.X and Mrs.Y.
b. Grandparents or relative who has actual custody.
c. Choice b only.
d. Both a and b.

29. I. A contract of insurance is a contract of indemnity.

II. The insurable interest in life insurance must exist only at the time the policy
takes an effect and need not exist at the time of loss.
a. Both statements are true.
b. Both statements are false.
c. Only statement 1 is true.
d. Only statement 2 is true.

30. A wandering samurai from Inazuma named Kazuha obtained life insurance and
secured the policy upon his own life. He assigned Zhongli as a beneficiary, who is god of
contracts and helped the citizens of Inazuma. Assuming that they are not relatives, is
Zhongli a valid beneficiary of Kazuha?
a. No, because they’re not relatives.
b. No, because the beneficiary must have insurable interest over the thing
insured.
c. Yes, since he is a god of contracts and helped the citizens of inazuma, him
being a beneficiary is justifiable.
d. Yes, because Zhongli need not have an insurable interest over the
life of Kazuha if Kazuha himself secured the policy.

31. Xiao borrowed money from Giqi amounting to P500,000 to purchase Wangshu Inn
located in Liyue. Thinking that Xiao might not be able to pay his debt, Giqi obtains a life
insurance and secured a policy upon the life of Xiao. After three years, Xiao paid his debt
in full amount. Five months after Xiao paid his debt, he died. Can Giqi claim the proceeds
from the insurance policy?
a. Yes, because the insurance policy remains valid even if xiao died.
b. No, because at the time of death of xiao, qiqi can no longer recover
the proceeds on the insurance policy.
c. Yes, because of the fact that xiao borrowed money from qiqi.
d. No, because the life insurance obtained by qiqi upon the life of xiao is not
valid.
32. John and Jenny just celebrated their anniversary as a boyfriend and girlfriend. He
is so concerned to the life of his girlfriend and he wants to marry her soon, so he decided
to take life insurance for her and make himself as the beneficiary. After 5 months of their
anniversary, Jenny wanted to surprise John with many surprises and took a van to carry
stuff to celebrate John's 23rd birthday. Unfortunately, the van where she is riding was hit
by a truck and Jenny was diagnosed as dead on arrival. John was very sad and went to
the insurance company to claim the life insurance of jenny, but the insurance company
denied it. Is the insurance company correct?
a. Yes, because John doesn't have insurable interest.
b. Yes, because he was not there when the accident had happened.
c. No, John can claim the insurance because he had an insurable interest
being in a relationship.
d. None of the above.

33. Aling Nena and Mang Amboy owned one hectare of land in which they cultivated
it for crops as their main source of income. Aling Nena is worried about the risks that may
negatively affect their crops like the natural disasters. Therefore, Mang Amboy urge her
to apply for a microinsurance and pay smaller premiums. After some time, a strong
typhoon came unexpectedly and almost of their crops were destroyed. So, they went to
the micro insurance company to claim for compensation against the risk that had
happened. What is the valid reason/s for them to claim their compensation from the micro
insurance company?
a. They are considered low-income families.
b. They pay considerably smaller premiums.
c. The risks for crops are covered under micro insurance.
d. All of the above.

34. On January 2, 2016, A issued a life insurance policy. He concealed the fact that
he has a cancer and had been going often to hospital for treatment 3 years prior to the
issuance of his life insurance policy. March 1, 2018, A died due to his illness. The heirs
of a file a claim for the insurance but it was denied by the insurance company because of
the concealment done by a. How should the heirs respond to the denial of their claim?
a. The insurance company is right, the heirs must accept the denial.
b. Go to court and sue the insurance company.
c. Request a copy of the insurance policy to know the rules, gather
necessary documents to support the claim, and make an appeal letter
together with supporting documents and submit it to the insurance
company.

35. Mina has been a long-time household helper of lorry. Mina's husband, Jay, has
also been Lorry's long-time driver. May Lorry insured the lives of both Mina and Jay with
Lorry as beneficiary?
a. Yes, since mina and jay render services to lorry.
b. No, since mina and jay have no pecuniary interest on the life of lorry arising
from their employment with her.
c. No, since lorry has no pecuniary interest in the lives of mina and jay
arising from their employment with her.
d. Yes, since mina and jay are lorry's employees.
36. Jin mailed to Hybe Insurance Co. His application for life insurance, with payment
for 5 years of premium enclosed in it. On July 21, 2021, the insurance company accepted
the application and mailed, on the same day, its acceptance plus the cover note. It
reached Jin's residence on August 11, 2021. But, as it happened, on August 4, 2021, Jin
figured in a car accident. He died a day later. May Jin's heir recover on the insurance
policy?
a. Yes, since under the cognition theory, the insurance contract was
perfected upon acceptance by the insurer of Jin's application.
b. No, since there is no privity of contract between the insurer and Jin's heirs.
c. No, since Jin had no knowledge of the insurer's acceptance of his
application before he died.
d. Yes, since under the manifestation theory, the insurance contract was
perfected upon acceptance of the insurer of Jin's application.

37. Which of the following statements is true?

a. Life insurance allows individuals and their beneficiaries to protect against
loss in income through premature death.
b. Life insurance allows individuals and their beneficiaries to protect against
loss in income through premature retirement
c. [Link] insurance allows individuals and their beneficiaries to protect against
loss in income through unforeseen accidents.
d. Life insurance allows individuals and their beneficiaries to protect
against loss in income through premature death or retirement.

38. Jacob applied for a life insurance policy with Lisa insurance company. When he
filled up the form, he indicated that he was a teller in a bank, when in fact he was a security
guard in that bank. The application was approved. A year later, Jacob died in a vehicular
accident. Can Lisa insurance company refuse to pay the beneficiary on the ground of
misrepresentation?
a. No, because the application of his insurance was already approved.
b. No, because of occupation of Jacob is not relevant in the application for
life insurance
c. Yes, because Jacob made a misrepresentation; the nature of his
actual occupation is much riskier that what was declared.
d. Yes, because Jacob died a year after the insurance policy was approved.

39. A obtains insurance over his life and names his spouse B the beneficiary. If A dies,
how B can claim from an insurance company?
a. B need to submit certified copies of the insured’s death certificate
along with any forms required by the insurance company. The
insurance company shall pay insurance proceeds within a certain
period of time, such as 30 to 60 days.
b. B is not entitled to claim indemnity for the death of the insured.
c. B need to submit certified copies of the insured’s death certificate along
with any forms required by the insurance company. The insurance
 company shall pay insurance proceeds within a certain period of time, such
as 60 to 90 days.
d. None of the above.

40. Ms. Lovely took out a life insurance on her own life on April 1,2018, or two years
before her 28th birthday for 2 million pesos. For reason unknown to his family, she took
her own life the day before her 30th birthday. The policy contains no excepted risk. Which
statement is most accurate?
a. The insurer will be liable
b. The insurer will not be liable
c. The state of sanity of the insured is relevant in cases of suicide in order to
hold the insurer liable
d. The state of sanity of the insured is irrelevant in cases of suicide in order
to hold the insurer liable.

41. Cove applied for life insurance for P1 million. The insurance took effect and was
issued on September 1, 2019 having his children as his beneficiaries. On May 8, 2021,
cove died of hepatoma, a liver ailment. The life insurance company denied the children’s
claim for the insurance proceeds on the ground that cove failed to disclose in his
application, 2 previous consultations with his doctor, including the doctor’s diagnosis of
his hepatoma. Life insurance company also rescinded the policy and refunded the
premiums paid. Was the insurance company correct?
a. No, incontestability clause applies, thus insurer can no longer prove that
the policy is void ab initio or rescindable by reason of fraudulent
concealment or misrepresentation by the insured.
b. Yes, Cove died in less than two years from the date of issuance
policy, thus concealment of the insured is material and can be used
as a defense by the insurer.
c. No, life insurance proceeds can only be claimed 2 years after the death of
the insured.
d. Yes, incontestability clause will not apply, thus policy may be rescinded,
but will still be required to pay the proceeds of beneficiaries two years from
the time the concealment was identified.

42. Phoebe applied for a life insurance to Friends Inc. The policy was made and issued
on May 2, 2021. After nine months, her beloved dog Joey died. Due to this, Phoebe could
not contain her longingness to her pet. Since that day, she could not eat nor sleep properly
and sometimes her family could see her talking all by herself. There were also lot of times
that they caught her laugh and abruptly cry alone. Her laugh and cry situation had
worsened for months. One day, on a broad day light of May 1, 2023, Phoebe was seen
hanged on her room and not breathing anymore. Her family filed a claim on Friends Inc.
But the latter refused defending that they were not liable for Phoebe’s death due to
insanity since the suicide was committed before two years after the policy had been in
force. Is the latter correct?
 a. Yes, provided in art. 183 of insurance code that in cases of suicide due to
insanity, the insurer is liable only if the suicide is committed after the policy
has been in force for a period of two years after the issuance of the policy.
b. No, the insurer is liable because it is his responsibility to indemnify the
insured under the life insurance.
c. Yes, because it is not their responsibility if their client dies due to insanity.
d. No, in cases of suicide due to insanity, the insurer is liable regardless
of the date of commission of the suicide.

43. Mang Kanor and his spouse, Aling Cubes have a small business in their place.
Their income does not exceed to P10,000 a month. Afraid about the risks of fire, storm
and other events that could destroy their important business, Mang Kanor applied for a
5-year non-life microinsurance for his properties. Due to the decreasing flow of income,
Mang Kanor failed to pay premiums. Before the due date of their policy, he asked for a
45 days grace period to the insurance company saying that he will pay premiums once
their sales increase. Decide.
a. Under the microinsurance, the insurance company can grant him the 45
days grace period.
b. The insurance company can grant him only 30 days grace period as
provided under the insurance code.
c. The insurance company can grant his wish since 45 days grace period is
granted for life and non-life microinsurance.
d. The 45 days grace period is already repelled under RA 10607.

44. All of the following are false, except:

a. A policy of insurance upon life or health cannot be passed by transfer but
by will and succession.
b. The maximum sum of guaranteed benefits is not less than one thousand
(1000) times of the current daily minimum wage rate for nonagricultural
workers in metro manila.
c. Unless the interest of a person insured is susceptible of exact
pecuniary measurement, the measure of indemnity under a policy of
insurance upon life or health is the sum fixed in the policy.
d. As a general rule, the designation of a beneficiary is irrevocable unless the
insured expressly waived the right to revoke in the policy.

45. Jin insured two life insurances. (1) He insured his own life and designated his friend
Suga as beneficiary and on the other hand (2) Insured Suga's life with himself (Jin) as the
beneficiary. Which life insurance is valid?
a. First insurance is valid because Suga, a friend, need not have
insurable interest in the life of Jin.
b. First insurance is void because Suga, as beneficiary, must have an
insurable interest in the life of Jin.
c. Second insurance is valid because Jin, as a friend, need not have an
insurable interest in the life of Suga.
d. Both life insurances are valid.
46. Kaloy purchased a life insurance contract 3 years ago and has been regularly
paying the premiums. During the third year of the contract, he was bankrupted. His son
was also diagnosed with a terminal illness. In order to pay for the hospital bills, he thought
of committing suicide so that the insurance proceeds can be claimed by his son. Upon
his death, the insurance company denied the claim on the grounds that his act of suicide
is fraudulent. Is the denial correct?
a. No, because the policy has already been in force for a period more
than the prescribed 2 years from the date of issue
b. No, because the policy holder was desperate to cure his son. The
insurance company should be sympathetic
c. Yes, because he was not in the state of insanity when he committed
suicide
d. Yes, because it is a common practice among the insurance companies.

47. Bente insured his sari-sari store, as it is his only source of income, from risks of
fire, theft, etc. He did not fail to pay the premiums regularly for 2 years. But due to the
pandemic, his store did not earn much causing him to default 2 months of premium. One
day his store was destroyed in a fire. Can he claim from the insurance company?
a. Yes, he can claim up to the amount agreed on the policy less the
amount he defaulted.
b. Yes, he can claim the full amount agreed on the policy
c. No, since he defaulted payment, he is no longer entitled to the benefits
agreed upon.
d. No. Because of the pandemic, the insurance company should also be
stricter in collection of premium.

48. Juanito Manaloto, a very hardworking breadwinner to the Manaloto family, is an

electrician minimum wage earner that earns P570 a day. Fearing that he might encounter
an accident that will cause his life, he insured his life by paying a 7.5% premium of his
daily minimum wage or a contribution of P42.75 for 365 days totaling P15,600 per year.
The guaranteed benefit that his beneficiary may claim in case something happens to him
is up to P570, 000. The 7.5% premium payment of his daily minimum wage is based on:
a. Suretyship
b. Microinsurance
c. Casualty insurance
d. Variable Contract

49. On March 1, 2020, [Link] insured her life for 2 million and named her
daughter Mari as her beneficiary. Santibanez is a loving wife to her husband and a very
kind mother to her child. The people around them say that their family is perfect and she
is living the life that every woman could dream of. February 2021 before Valentine’s Day
she found out that her husband, Facundo, has an illicit affair with her best friend, Senyora,
and they are already expecting a child. Because of this, [Link] was deeply hurt
and agonized because she can't bear the wrongdoing committed by two of her most
trusted and loved people. She was very hurt she could no longer bear the pain she
decided to end her life by drug overdose.
The insurance company claims that they are not liable to compensate her
beneficiaries because she committed suicide before the policy has been in force for two
years. Is the insurer correct?

a. Yes. The insurer in life insurance is not liable to pay a death benefit if
the covered person dies by suicide within the first two years of
coverage—commonly known as the exclusion period.
b. No. The death caused by suicide shall be compensable regardless of the
date of commission.
c. No. The insurer in a life insurance contract shall be liable because the
suicide was committed after the exclusion period.

50. Kim applied for an insurance policy, however, he died before the delivery of the
acceptance of his insurance application. Can the beneficiary of Kim claim from the
insurer?
a. Yes, because a mere submission of the insurance application is tantamount
to the perfection of the contract.
b. Yes, because the delivery of acceptance of the insurer is not tantamount to
the perfection of the contract.
c. No, because there is no meeting of minds and there must be a delivery
of the acceptance.
d. None of the above.

51. Jolo is the common law partner of Akira. Akira loves Jolo so much that he took out
a life insurance on his own life and made him the sole beneficiary. Akira did this to ensure
that Jolo will be financially comfortable when he is gone. Upon the death of Akira, -
a. Jolo as sole beneficiary under the life insurance policy on the life of Akira
will be entitled to the proceeds of the life insurance.
b. Despite the designation of Jolo as the sole beneficiary, the proceeds
of the life insurance will go to the estate of Akira.
c. The proceeds of the life insurance will go to the compulsory heirs of Akira.
d. The proceeds of the life insurance will be divided equally amongst Jolo and
the compulsory heirs of Akira.

52. Helcurt insurance has a policy of promptly responding to communications from

policyholders regarding claims. Does that mean it probably responds within how many
days?
a. Helcurt immediately acknowledging pertinent claims related
communications within 60 days is an unfair claim settlement practice.
b. Helcurt immediately acknowledging pertinent claims related
communications within 30 days is an unfair claim settlement practice.
c. Helcurt is not immediately acknowledging pertinent claims related
communications within 15 days is an unfair claim settlement practice.
 d. Helcurt immediately acknowledging pertinent claims related
communications within 10 days is an unfair claim settlement practice.

53. Balmond Insurance Company receives a claim and proof of loss from an insured
on July 1 investigates the claim on July 5 and determines that the claim is valid on July
12. The insured submits additional information in support of the claim on august. On what
date was Balmond first forced to resolve the claim?
a. The date of Balmond is July 1 because an insurer must not attempt to settle
a claim as soon as the insurer's liability becomes clear.
b. The date of Balmond is July 5 because an insurance must have to settle a
claim as soon as possible.
c. The date of Balmond is July 2 because a claim must attempt to settle an
insurer.
d. The date of Balmond is July 12 because an insurer must attempt to
settle a claim as soon as the insurer's liability becomes clear.

54. Layla insurance company practices insurer adopt to legally resolve their claims. In
what statement Layla insurance company is required?
a. Layla insurance company requires an immediate investigation of a
claim, even if the insured has not presented all evidence of loss.
b. Layla insurance company requires an claim, even if insurer has presented
all evidence of profit.
c. Layla insurance company requires an insured investigation of insurer.
d. Layla insurance company requires an insurer presented all evidences of
loss.

55. The Gusion department of insurance found that ling insurance has not responded
promptly to communications from policyholders regarding claims. In what Gusion is
normally does not respond within?
a. Gusion insurance must not timely acknowledge pertinent communications
relating to a claim arising under insurer's policy within 20 business days.
Can be considered a fair claim settlement practice.
b. Gusion insurers must timely acknowledge pertinent communications
relating to a claim arising under insurer's policy within 15 business
days. Failing to do so can be considered an unfair claim settlement
practice.
c. Gusion claimants must timely acknowledge pertinent communications
relating to an insurance arising under insurer's policy within 30 business
days. It is considered a fair claim settlement practice.
d. Gusion claimants can timely acknowledge pertinent communications
relating to an insurer arising under insurance policy within 10 business days.
It is under claim settlement practice.

56. Ann's new car is insured by star insurance co. One night, Ann parked her car in
front of a store to buy food. Mark also arrived with his big motorcycle and accidentally hit
the side mirror of Ann's car. Can Ann recover from both start insurance co. and Mark?
 a. No, Ann can only recover from mark because it is Mark's fault.
b. No, Ann can only recover from star insurance co. Because her new car was
insured.
c. Yes, Ann can recover from mark at the same time with star insurance co.
d. No, Ann can either recover from star insurance co. or Mark but not
both.

57. On October 12, 2021, Sky applied for fire insurance for his coffee shop for 5 years.
On October 20, 2023, he sold his coffee shop to his friend cloud. Unfortunately, the coffee
shop was accidentally burnt on December 8, 2024. Can Sky claim from the insurance
company.
a. No, because he did not suffer from the loss.
b. Yes, because he has an insurable interest at the time the policy takes effect.
c. Yes, because has insurable interest when the loss occurs.
d. None of the above.

58. Mamaleni insured a building she owns with two insurance companies, Safekahere
Insurance Company and Suresafe Insurance Company for the same amount. In the case
of earthquake happens -
a. The two insurers will be proportionately liable
b. The two insurers will be solidary liable to the extent of the loss.
c. Mamaleni can choose who she wants to claim against.
d. Mamaleni cannot claim to the two insurers because of the double insurance,
the insurance coverage becomes automatically void.

59. Where the insurer was made to pay the insured for a loss covered by the insurance
contract, such insurer can run after the third person who caused the loss through
subrogation. What is the basis for conferring the right of subrogation to the insurer?
a. Their express stipulation in the contract of insurance.
b. The equitable assignment that results from the insurer’s payment of
the insured.
c. The insured’s formal assignment of his right to indemnification to the
insurer.
d. The insured’s endorsement of its claim to the insurer.

60. On October 12, 2019, Manny took out a life insurance policy and named his wife
Jinky, as beneficiary. The policy was silent with regard to any change of beneficiary.
Suspecting that Jinky was committing adultery, Manny immediately notified the insurance
company in writing that he is substituting his brother Rastaman as beneficiary in place of
Jinky. Manny died later on december 30, 2019. Jinky claims the proceeds of the insurance
policy, contending that as designated beneficiary, she cannot be changed without her
consent, she having acquired a vested right to the proceeds of the policy. Choose the
correct statement.
a. Jinky cannot claim the proceeds of Manny's life insurance policy.
Manny can change his beneficiary without the consent of Jinky.
 b. The action of Manny in substituting his brother Rastaman in place of his wife
is not valid.
c. Manny cannot change the beneficiary in a policy of life insurance without
the consent of the beneficiary.
d. Jinky cannot claim because she is committing adultery.

61. Mr. Rr insured his warehouse located in Dagupan City in a fire insurance company.
One of his warehouses in Baguio City was lost due to fire and [Link] wants to claim the
loss but the company refuses to indemnify the loss, is the company correct?
a. Yes, [Link] has no right to claim any losses or damages of the property
because the property is not insured and the place of the property is
not stated in the policy.
b. Yes, because [Link] pays the premium then the company should indemnify
the insured against loss or damage.
c. No, the company should indemnify the loss because [Link] suffered damage
and loss due to fire.
d. No, [Link] has a right to claim the loss and no insurance company shall
refuse to pay claims.

62. The primary purpose of ________ is to obtain reimbursement to the person who
advanced payment for the payments made by that person with respect to a legal claim.
a. Contract
b. Subrogation
c. Execution
d. Legal subrogation

63. Rr company acquired an insurance to Jj insurance to insure his business for any
losses. L&C company installed lights that is defective to Rr company but due to
negligence, the company.
a. Rr company can claim any damages or losses to an insurance company.
b. Insurance company can sue L&C company to recover the amounts paid to
their insured.
c. The L&C company is not liable to any losses incurred by Rr company
d. Both a and b

64. Mr.A parked his car in a parking area. Unfortunately, it was hit by another car driven
by Mr.B. Mr.A's car is insured by insurance X and Mr.b's car is insured by insurance Y.
Which of the following statements is correct?
a. Mr. A can demand Mr.B to pay the damage.
b. Mr. B can file claim to insurance Y for the repair of Mr.A's car.
c. Mr. A can claim to insurance X and insurance X will recover the expense to
insurance.
d. All of the above
65. Mark bought a new car amounted to P500,000 but he insured it with the value of
P700,000. The car got into an accident and it resulted to a total wreck. Can he claim the
P700,000?
a. Yes, because he insured the car with the amount of P700,000.
b. No, because the amount of total wreck claim depends on the market
value of the car.
c. Yes, as long as he paid the premium.
d. None of the above.

66. All of the following are unfair claim settlement practice except
a. Knowingly misinterpreting to claimant’s pertinent facts or policy provisions
relating to coverage at issue.
b. Not attempting in bad faith to effectuate prompt, fair and equitable
settlement of claims submitted in which liability has become
reasonable clear.
c. Failing to acknowledge with reasonable promptness pertinent
communications with respect to claims arising under its policies.
d. Failing to adopt and implement reasonable standards for the prompt
investigation claims arising under its policies.

67. The luxurious house of [Link] was insured at fire insurance company. One day
[Link], her ex-boyfriend accidentally burned the luxurious house of [Link] because
of jealousy. [Link] claimed the loss from her insurance. Can [Link] have the right
to claim another payment from her ex-boyfriend?
a. No. Because it will violate the principle of subrogation
b. Yes, because it will not violate the principle of subrogation
c. Yes, because he is also liable for damages in the incident.
d. None of the above.

68. Refer to the question above. Can the insurance company have the right to claim
from [Link] to recover losses?
a. Yes, the insurance company can apply the principle of subrogation to
recover its losses.
b. Yes, because it will not violate the principle of subrogation
c. No. Because it will violate the principle of subrogation
d. A and b
e. A and c

69. In non-life policies, the proceeds shall be paid within _____ days after the receipt
by the insurer of proof of loss, and ascertainment of the loss or damage by agreement of
the parties or by arbitration but not later than _____ days from such receipt of proof of
loss whether or not ascertainment is had or made.
a. 20;40
b. 30; 60
c. 30; 90
d. 40;30
70. Life insurance in particular, provides _______ in every household.
a. Non-financial stability
b. Financial stability
c. Financial and non-financial instability
d. Financial and non-financial stability
e. None of the above

71. _______ is the ______ of the loss suffered by the _______.

a. Unclaim payment; indemnification; insurer
b. X. Unclaim settlement; indemnification;insurer
c. Y. Claim settlement; indemnification;insurer
d. Z. Claim settlement; indemnification;insured

72. Which of the following statements is not incorrect?

a. An insured is not liable for a loss caused by the willful act or through the
connivance suffered by the insured; but he is not exonerated by the
negligence of the insured or of the insured's agents or others.
b. An insured is liable for a loss caused by the willful act or through the
connivance suffered by the insured; but he is not exonerated by the
negligence of the insured or of the insured's agents or others.
c. An insurer is not liable for a loss caused by the willful act or through the
connivance suffered by the insured; but he is exonerated by the
negligence of the insured or of the insured's agents or others.
d. An insurer is not liable for a loss caused by the willful act or through
the connivance suffered by the insured; but he is not exonerated by
the negligence of the insured or of the insured's agents or others.
e. An insurer is liable for a loss caused by the willful act or through the
connivance suffered by the insured; but he is not exonerated by the
negligence of the insured or of the insured's agents or others.

73. Someone/everyone is liable where the thing insured is rescued from a peril insured
against that would otherwise have caused a loss, if, in the course of such rescue, the
thing is exposed to a peril not insured against, which permanently deprives the insured of
its possession, in whole or in part' or where a loss is caused by efforts to rescue the thing
insured from a peril insured against.
a. Third party and insured
b. Third party and insurer
c. Insured only
d. Insurer only
e. Any of these.

74. Where the same person is insured by several insurers separately in respect to the
same subject and interest.
a. Double reinsurance unexist
b. Double insurance unexist
c. Dual insurance exits
 d. Dual reinsurance exist
e. Double insurance exist

75. It provides benefits or other contractual payments or values thereunder to vary so

as to reflect investment results of any segregated portfolio of investments.
a. Claims settlements
b. Variable contracts
c. Examination of companies
d. Suspension or revocation

76. A right held by most insurance carriers to legally pursue a third party that caused
an insurance loss to the insured.
a. Right of subrogation
b. Rights of claims
c. Rights of innovation
d. Right of indemnity

77. In determining the qualifications of a company requesting authority to issue,

deliver, sell or use variable contracts, the commissioner shall always consider the
following, except:
a. The history, financial and general condition of the company: provided,
that such company, if a foreign company, must have deposited with the
commissioner for the benefit and security of its variable contract owners
in the Philippines, securities satisfactory to the commissioner consisting
of bonds of the government of the Philippines or its instrumentalities with
an actual market value of two million pesos (P2,000,000.00).
b. The character, responsibility and fitness of the officers and directors of
the company.
c. The law and regulation under which the company is authorized in the
state of domicile to issue such contracts.
d. The law and regulation under which the company is not authorized
in the state of domicile to issue such contracts.
e. All of the choices are correct.

78. Under the common law, an equitable claim for rescission on the basis of fraud
voids the policy ab initio, at its inception, and may be asserted by establishing:
a. a representation in the form of a statement of material fact, made for the
purpose of inducing the other party to act;
b. that the statement is false and known by the party making it to be false,
or not actually believed by him to be true; and
c. the party to whom it is made is ignorant of its falsity, must reasonably
believe it to be true, must act thereon to his damage, and in so acting
must rely upon the truth of the statements.
d. a and c only
e. all of the above statements are true
79. On December 19, 2020, Manny Pacquiao acquire an insurance on his life with an
amount of P1,000,000 from Surelife Company with his wife Jinkee Pacquiao as a sole
beneficiary. On the same day, Manny issued an undated check to Surelife Company for
the full amount of the premium. On January 31, 2021 Surelife Company issued the policy
covering Manny’s life insurance. On February 14, 2021. Manny died because of an
airplane crash. Jinkee claimed the insurance benefit, but Surelife Company denied the
claim because at the time of Manny’s death, the check was not yet cashed and therefore
the premium remained unpaid. Is Surelife correct?
a. Yes. Surelife company’s denial to Jinkee is correct.
b. Yes. Undated check should be encashed first on order for the contract to
be valid.
c. No. As a rule, once a policy has been issued, the presumption lies
that the premium has been duly paid.
d. No. A person insured is entitled to return of the premium because Surelife
is being unlawful.

80. BongBong owns and operates several passenger jeepneys in Dagupan city. He
entered into a contract with Safekadito insurance company insuring the operation of his
jeepneys against accidents with third party liability. During the effectivity of the insurance
one of his jeepneys bumped Leni, who had just got off from another passenger jeepney
whose driver unloaded passengers at the middle of the street. Leni suffered bodily injury
as a consequence and filed a claim against the insurance company. The latter refused to
pay on the ground that the driver of the jeepney from which passenger Leni got off was
guilty of negligence in unloading at the middle of the street, and that the driver of the
insured operator was not at fault, can Leni recover from the insurance company?
a. Yes. Leni can directly claim from the insurer of BongBong, without
the need of proving fault or negligence on bong bong’s party.
b. Yes. Leni can claim from the insurer to the jeepney she had rode.
c. No. It is not the fault of the jeepney driver of bong that’s why he is not
liable to Leni.
d. No. Given the fact that it was the fault of the jeepney driver that he rode
of, Leni should demand damages to the latter.

Use the given problem for items 81 and 82.

81. Leni brought a new pink car from Pinky Paquiao Co. Leni and Kiko got involved in
a car accident. As a result, Leni’s car was severely damaged, and he required P300,000
for the repair of the vehicle. Luckily, Leni’s car was insured, and she recovered the full
cost of the repair (P300,000) through an insurance claim.
Eventually, an investigation determined that Kiko was responsible for the accident
as he didn’t use the break to stop the car. Leni’s insurance company decides to recover
the amount of the claim from Kiko, as he caused the damages. Can the insurance
company claim the damages against Kiko?
a. Yes, under the principle of subrogation, the insurance company has
the right to take over the rights of the insured against the party
responsible for the injury, loss, or damage suffered by the insured.
 b. No, since the car is already insured the insurance company is the one
who will pay for the damages.
c. No, the insurance company can’t demand Kiko to pay for the damages.
d. Yes, although there is no right of subrogation the insurance can still claim
the damages from Kiko.

82. What if Kiko has a waiver of subrogation and he said that due to malfunctioning
of the break they got accident. Does Kiko has the right to file a waiver of subrogation?
(choose the most appropriate answer)
a. No, the insurance company can’t accept the file of Kiko because the car
is new so there is no malfunctioning.
b. No, based on the investigation Kiko did not use the break and that’s
the reason why they got into accident and not because of
malfunctioning.
c. No, Kiko’s waiver of subrogation is not applicable in the situation.
d. Yes, since Kiko has a waiver of subrogation Kiko can file that to the
insurance company.

83. Dowoon is applying for a marine insurance policy from Wheretheseasleeps

Company. It was stated that his vessel usually sails in the middle of September and
normally with 100 tons of cargo. It turned out later that the vessel departed in the first
week of October with only 10 tons of cargo. Will this avoid the policy that was issued?
a. Yes, because there was a breach of implied warranty.
b. No, because there was no intent to breach an implied warranty.
c. Yes, because it relates to a material representation.
d. No, because there was only representation of intention.

84. The following are the grounds for rescission of an insurance contract, except:
a. Concealment
b. Misrepresentation
c. Breach of immaterial warranty
d. Breach of a condition subsequent

85. Mike, a supplier of commercial explosives solutions acquired property insurance

for his warehouse containing chemicals used as ingredients in the manufacture of
explosives with Miguel insurance company. The warehouse was recently set on fire since
mike willfully agreed to the monthly burning of waste near the warehouse. Mike compelled
the insurance company for the recovery of the loss but the insurer wants to rescind the
contract. Can the insurance company be entitled to rescind the contract?
a. No, the insurance company cannot rescind the contract because there
was already an agreement for payment of any loss
b. No, the insurance company should pay the loss since the happening of
the event was covered in the contract
c. Yes, the insurance company can rescind the contract anytime
d. Yes, the insurer can rescind the contract because mike agreed to a
willful or reckless act increasing the hazard insured against.
86. Bato Dela Rosa, a bus operator, secured an insurance contract with Bong Gogogo
Insurance Company covering any loss or liability against accident or mishap. Before the
perfection of the contract, dela rosa by his knowledge, did not disclose all the necessary
information to the insurance company that five of its buses are defective as to their brakes,
headlights and radiator. After the effectivity date of the contract, the insurer found out that
these buses were defective where the insured failed to communicate all the material facts
within his knowledge. Therefore, the insurance company exercised its right to abandon
the contract. Is Bong Gogogo insurance company claim valid?
a. Yes, the claim is valid under the ground of fraudulent acts committed by
the insured.
b. Yes, the claim is valid under the grounds of concealment which
entitles the insurer to rescind the contract.
c. No, the claim is not valid because the contract is already perfected before
the discovery concealment.
d. No, the claim is not valid because the failure of dela rosa to communicate
material facts to the insurer is not intentional.

87. JYP obtained a life insurance policy from Guardyou Co. on December 19, 2021.
He named his children as his beneficiaries. On April 28, 2022, he died because of heart
failure. Guardyou Co. rescinded the policy on the grounds that JYP failed to disclose that
he has heart disease. Is Guardyou Co. correct?
a. No, because the incontestability clause applies.
b. Yes, because of concealment.
c. No, because it is not material.
d. Yes, because of misrepresentation.

Use the given problem for items 88 and 89.

88. [Link] insured her life for P15 million. She maintains a healthy lifestyle by
attending zumba classes every day and loves hiking with [Link]. However, she is
unaware that her frequent headache is caused by her being hypertensive. In her
application form for life insurance for herself, she did not disclose that she is suffering
from hypertension, believing that because of her active lifestyle, being hypertensive is a
remote possibility. While hiking, [Link] collapsed and was declared dead on arrival
at the hospital. Her death certificate stated that she suffered a massive heart attack. Will
the beneficiary of [Link] be entitled to the proceeds of the life insurance under the
circumstances, despite the non-disclosure of a material fact at the time of application?
Choose the correct answer.
a. The beneficiaries may not be entitled to the proceeds of the life insurance
because of the non-disclosure of the ailment regardless the date of the
procurement of the policy and the date of her death
b. The beneficiaries are entitled to the proceeds of the life insurance,
regardless of the non-disclosure of the ailment if [Link] died within
2 years from the time she procured the policy.
c. The beneficiaries are not entitled to the proceeds of the life insurance,
regardless of the non-disclosure of the ailment if [Link] died after
 2 years from the time she procured the policy and the insurer may rescind
the contract
d. The beneficiaries are not entitled to the proceeds of the life
insurance, regardless of the non-disclosure of the ailment if
[Link] died within 2 years from the time she procured the
policy and the insurer may rescind the contract.

89. What if [Link] died in an accident instead of a heart attack, would the fact of
[Link]’s failure to disclose that she is hypertensive be considered as material
information?
a. Yes. Her failure to disclose that she is hypertensive will still be
considered as material information regardless of whether she died
of heart attack or in an accident.
b. Yes. Section 32 of the insurance code provides that materiality is to be
determined not by event, but solely by the probable and reasonable
influence of the facts upon the party whom the communication is due, in
forming his estimate of the advantages of the proposed contract, or in
making his inquiries.
c. No. [Link] was unaware that her hypertension was due to her
frequent headaches.
d. No. [Link]’s death was caused by an accident so the non-
disclosure of her ailment cannot be considered as material information to
the decision making of the insurance company.

90. Rizza Cha-cha, an owner of a pharmaceutical warehouse which supplies

pharmaceutical drug stores in the region, secured an insurance policy against possible
losses or damage to property as it uses active ingredients, chemicals and substances in
manufacturing legal drugs and medicines. After the effectivity date of the policy, it was
found out that the warehouse is accustomed to burning of the non-biodegradable wastes
of the pharmaceutical warehouse such as plastics and medical waste at its backyard near
its flammable supplies which was known to [Link]. Days after, the insurance
company filed a cancellation of contract under the grounds of discovery of willful or
reckless acts of omissions increasing the hazard insured against. Which of the following
is not a requirement that the insurer must satisfy in order to rescind the insurance policy?
a. Prior notice of cancellation must be given to the insured
b. Notice must be done orally or in writing, mailed or delivered to the
named insured at the address shown in the policy.
c. Grounds should have existed after the effectivity date of the policy.
d. Notice must state which of the grounds 4 is relied upon and upon request
of the insured, the insurer must furnish facts on which the cancellation is
based.

91. Saranghaeyo decided to obtain variable life insurance with Bogoshipda Insurance
Company. Part of the premium paid was invested in stocks of a commercial company.
The policy of the contract guaranteed the death benefit, which will not fall below a
minimum amount even if the invested assets devalue significantly but the value of
investment can fluctuate according to the investment portfolio's performance. The value
of Saranghaeyo’s investment decreases after experiencing economic downturns. Who
will take the burden of the loss of investment, the insured or the insurer?
a. The insured will lose reduced value of her initial investment as it is
written in the policy of the contract but the death benefits will not
be affected
b. The insured, as long as he will compel the insurer to recover the loss
c. The insurance company, because the insurer will always bear the risk of
loss of an investment in a variable life insurance
d. The insurance company, because the policy written in the contract shall
not take effect

92. While on a vacation, Rowena is wearing a two-piece swimsuit, drinking orange

juice with caramel drizzle and Ginkgo Biloba topped with mint leaf that is freshly picked
from the high mountains of Italy. Because of her sexy body, a guy named Jose, fell in
love with her and asked her to marry him. Five days later, they got married and have been
cohabiting happily as husband and wife. So, Jose decided to take out an insurance on
Rowena’s life for P1,200,000 with him as a sole beneficiary, since he has always
depended on Rowena. But during the term of the insurance, Rowena died without Jose
knowing the cause so he asked to conduct an autopsy. It was found out that Rowena died
of a natural cause. Also, it was also known that Rowena was a transgender — an
information undisclosed to Jose. Can Jose still claim the insurance benefit?
a. No. Jose cannot claim the insurance benefit since his marriage with
Rowena is null and void due to the subsequent discovery that Rowena
was a transgender.
b. No. Jose cannot claim the insurance benefit since in life insurance, the
insurable interest must exist when the loss occurs.
c. Yes. Jose can claim the insurance benefit since he, as the husband
of Rowena, has an insurable interest in the life of the latter at the
time he took out the life insurance.
d. Yes. Jose can claim the insurance benefit since he did not know the fact
that Rowena was a transgender.

93. On January 5, 2019, Mary applied for a life insurance policy with Naroca Insurance
Co. The policy was issued to Mary on January 9, 2019. On January 15 of the same year,
Mary realized that she somehow gave incorrect answers in the insurance application. So,
she immediately gave the correct information about her health status to the insurance
company. But unfortunately, her letter was lost in the mail. Mary died February 1, 2021.
Can the insurance company rescind the contract and refuse to pay Mary’s beneficiary?
a. The insurance company can rescind the contract and refuse to pay
Mary’s beneficiary since the latter misrepresented the state of her health
at the time of her application.
b. The insurance company can no longer rescind the contract since
the policy has become incontestable. They cannot refuse to pay
Mary’s beneficiary since they are liable to do such.
 c. The insurance company can rescind and refuse to pay Mary’s beneficiary
since Mary did not send the correct information on the same day as her
date of application.
d. The insurance company cannot rescind the contract because they didn’t
know that Mary misrepresented any information about her. So, the latter
is still liable to pay Mary’s beneficiary.

94. Leni Robredo was announced that she was promoted on her work starting today.
With the promotion she got, her salary doubled up. While having lunch that day,
Rastaman offered her an insurance with an investment on various funds at the same time.
Thinking it was a good offer plus she has an increased salary, she entered the contract.
She allocated a portion of her premium to a fixed account, which unlike a mutual fund,
pays a fixed rate of interest. Also, on the policy was the face amount and the accumulated
cash value will form part of the death benefit. Leni paid P100,000 in premiums for a
variable life policy and, due to positive market performance, after sometime, it rocketed
up to P150,000. Upon learning this, she decided to tell this to her husband Diokno but on
her way home, she accidentally stomped on a banana peel, and fell down the stairs
causing her death. If the face amount of her insurance is P1,000,000, what benefits can
Diokno get after the variable insurance of Leni?
a. Diokno, being the beneficiary, can get the face amount excluding the
portion allocated for a fixed account: P1,000,000
b. Diokno will be able to get the full initial payment paid by Leni for the
variable contract which is P100,000.
c. Diokno will received face amount plus the premium payments:
P1,100,000
d. Diokno will receive the face amount plus the cash value of your
account: P1,150,000

95. After a disaster, maria wants to get back to normal as soon as possible. Just in
time, an adjuster came and inspected the damage to her home and offered a certain sum
of money for repairs, based on the terms and limits of the policy. She got an on-the-spot
check as settlement, and accepted the check right away. Later, she found other damage,
so she reopened the claim and file for an additional amount. Juan refused to provide any
additional claim settlement and argued that the check given was all maria can have as
part of her claim settlement. Is Juan's argument proper?
a. Yes. The initial payment of settlement is conclusive to be the final
payment as well.
b. No. Juan failed to acknowledge with reasonable promptness
pertinent communications with respect to claims arising under its
policies, therefore he should provide the additional claims after
performing necessary procedures.
c. No. The insurer knowingly misrepresented to claimant’s pertinent facts
or policy provisions relating to coverage at issue.
d. Yes. The inspection was acted upon with good faith and so as the check
for the claim settlement is enough to cover up the damage that is initially
identified and any other damages that may be found later.
96. Hector was about to be discharged in the hospital due to diabetes when he met
his friend, Mike. Hector told Mike the reason for his hospitalization. A week later, Hector
sought for an insurance covering serious illness from Moonlife Insurance Co., where
Mike was working as a corporate manager. Hector did no longer answer a question on
the application form about his hospitalization because he had already told Mike about it.
Would this be considered concealment?
a. Yes, it would be a case of Hector's concealment that amounts to
misrepresentation.
b. Yes, because Hector's previous hospitalization would affect the
insurer's decision on whether or not to approve his application.
c. No, because the previous illness is not a relevant factor in determining
insurance coverage.
d. No, because Mike, the corporate manager, was aware of Hector’s
previous hospitalization.

97. On May 15, 2015, Daisy took out a life insurance policy from XYZ Insurance Co.,
with Rose, her niece, as the beneficiary. After the medical examination and payment of
the premium, XYZ Insurance Co. issued the insurance policy in favor of Daisy on June
30, 2015. On April 20, 2018, Daisy died. With this, Rose filed a claim for the insurance
proceeds three months after. But, XYZ Insurance Co. conducted an investigation into
the claim and it found out that Daisy did not sign the application for insurance and Rose
is the one who filed the insurance application and made herself as the beneficiary.
Hence, the insurer denied the claim for the proceeds. Can XYZ Insurance Co. use the
investigation findings in order to rescind the contract and deny the claim?
a. Since the investigation findings suggest that Rose filed the insurance
application to perform fraud, XYZ Insurance Co. can validly rescind the
contract and deny the former’s claim for proceeds.
b. Because the insurer failed to prove the alleged fraud within 2
years, he can no longer rescind the contract and make use of
these findings as evidence to prove such. So, Rose is still entitled
to claim the proceeds under this policy.
c. XYZ Insurance Co. cannot rescind the contract because in this case,
there is no proof that the designation of Rose as the beneficiary was not
made in good faith, so the latter can still validly claim for the proceeds.
d. Since the results show that Daisy did not sign the insurance application,
and Rose is the one who filed it and designated herself as the
beneficiary, this can be a good defense for the insurer to rescind the
contract and deny the claims of the beneficiary.

98. A was addicted to painkillers. D, the doctor of A knew his condition thus no
prescription was given to A. For A, to satisfied his addiction, stole and forged prescription
forms from his doctor's office. A went to his insurance company to claim for his health
insurance to pay the drugs. Upon the thorough investigation of the insurer, they found out
that A forged the prescription form. Which of the following is correct?
 a. A shall be punished by a fine not exceedingly twice the amount
claimed or imprisonment of two years, or both, at the discretion of
the court.
b. A shall be punished by a fine not exceedingly twice the amount claimed
or 100,000 whichever is lower, or imprisonment of two years, or both, at
the discretion of the court.
b. A shall be punished by a fine of 250, 000 or imprisonment of two years,
or both, at the discretion of the court.
c. None of the above.

99. Arny and Mhikee worked for Trendy Chic Company. Mhikee was placed on
preventive suspension awaiting an investigation after Trendy Chic Company submitted a
complaint for serious misconduct. Despite the lapse of three months, the investigating
committee has yet to make a decision. Mhikee was never asked to return to work nor was
he paid his wages. He later filed a complaint alleging improper suspension and dismissal.
Mhikee was offered reinstatement by Trendy Chic, but he declined due to his ongoing
love feud with Arny. Was Mhikee illegally dismissed?
a. No, because the investigation has not yet been concluded.
b. Yes, since there was insufficient evidence for his serious misconduct.
c. Yes, however since Trendy Chic Company offered to reinstate him, the
lawsuit can no longer be pursued, and his reluctance to accept the offer
may be construed as a resignation from his position.
d. Yes, his preventive suspension should not have lasted longer than
30 days.

100. Chief Hong is an employee in a restaurant located on the seaside village in

Gongjin. Chief Hong was terminated by Hye-jin, the restaurant's owner, because she was
upset when she witnessed Chief Hong served two gorgeous customers named Mau and
Rowena with a flirtatious look. Chief Hong complained to his employer about the wrongful
dismissal, but Hye-jin argued that Hong doesn't have enough proof to indicate that the
termination was unfair. Chief Hong won't accept the termination so he decided to file a
complaint petition to the National Labor Relations Commission against Hye-jin. The labor
arbiters of the NLRC, having an exclusive jurisdiction to hear and decide upon the case,
denied the termination of the aggrieved party. Is the commission correct?
a. Yes. When there is doubt between the evidence submitted by the
employer and that submitted by the employee, the scales of justice
must be tilted in favor of the employee.
b. No, the complainant which is the employee should provide more
evidence and convince the commission that the termination was unlawful,
this is predicated to the principle of preponderance of evidence that the
burden of proof lies with the party who asserts his/her right.
c. Yes. The argument of Hye-jin is unjustifiable as she did not present any
evidences that would exceed to secure a guilty verdict beyond
reasonable doubt.
d. No, the employer has the power to solely terminate his/her employees
regardless of the reason for dismissal?