1
INS 101 Insurance Practice Exam Questions and
Answers
Practice exam questions:
1. The paid-addition option uses the divided:
A. To purchase a one-year term insurance in the amount of the cash value.
B. To purchase a smaller amount of the same type of insurance as the original policy.
[correct answer]
C. to accumulate additional saving additional savings for retirement.
D. To reduce the next year’s premium.
E.
2. An individual purchased a life insurance policy on his life naming his wife as primary
beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the
daughter collect the death benefit?
A. With the primary beneficiary's written consent
B. If the primary beneficiary predeceases the insured. [correct answer]
C. If the insured dies from an accident
D. The primary and contingent beneficiaries share death benefits equally.
3. what would be an advantage to naming a contingent ( or secondary) beneficiary in a life insurance
policy?
A. It determines who receives policy benefits if the primary beneficiary is decreased.
[correct answer]
B. it requires that someone who is not the primary beneficiary handles the estate C. It ensures
that the policy proceeds will be split between the primary and contingent
beneficiaries.
4. If a policy has an automatic premium loan provision, what happens if the insured dies before the
loan is paid back?
A. the policy is rendered null and void
B. the policy beneficiary receives the full death benefit.
C. the balance of the loan will be taken out of the death benefit [correct answer] D. the policy
beneficiary takes over the loan payment
5. What is the benefit of choosing an extended term as a nonforfeiture option?
A. It can be converted to a fixed annuity
B. It has the highest amount of insurance protection [correct answer]
C. it mutates at age 100
D. it allows for coverage to continue beyond the maturity date
6. Which of the following statements is TRUE about a policy assignment?
A. It is the same as a beneficiary designation
B. It transfers the right of ownership from the owner to another person [correct answer]
C. it authorizes an agent to modify the policy
pg. 1
,2
D. it permits the beneficiary to designate the person to receive the benefits.
8. An insured died by suicide one year after the life insurance policy was issued. The insurer will
A. pay nothing
B. pay the policy’s cash value,
C. Redund the premium paid [correct answer]
D. pay the full death benefit to the beneficiary
9. The automatic premium loan provision is activated at the end of the
A. Eliminate period
B. Policy period
C. Free-look period
D. Grace period [correct answer]
10. Which of the following statements best describes the effect of the Accelerated benefit What
would the provision have on the benefits paid to the beneficiary?
A. It will not affect the benefit paid to the beneficiary
B. It will increase the benefits paid to the beneficiary
C. it will decrease the benefits paid to the beneficiary [correct answer]
D. it will reduce the benefits by 70%
11. An insured purchased a 15-year level term life insurance policy with a face amount of
$100,000. The policy contained an accidental death rider offering a double indemnity
benefit. The insured was severely injured in an auto accident, and after 10 weeks of
hospitalization, died from the injuries. How much will the beneficiary receive from the
policy? A. $100,000
B. $0
C. $200,000 [correct answer]
D. $100,000 plus the total of paid premiums
12. Which of the following riders added to a life insurance policy can be part of the death benefit to
the insured to cover expenses incurred in a nursing or convalescent home?
A. Payor benefit
B. Guaranteed insurability
C. Long-term care [correct answer]
D. Accidental death
13. All of the following are the responsibilities of every long-term care insurer in California EXCEPT:
A. Establish marketing procedures to assure that any comparison of policies will be fair and accurate.
B. Submit to the Commissioner a list of all agents authorized to solicit individual consumers for the sale
of long-term care insurance.
C. Provide enough business to solicit long-term care insurance [correct answer]
D. Establish marketing procedures to assure excessive insurance is not sold or issued.
14. The insured under a $100,00 life insurance policy with a triple indemnity rider for accidental
death was killed in a car accident. It was determined that the accident was his fault. The triple
indemnity rider in the policy specifies that the death must not be contributed to by this insured in
any manner. In this case, what will the policy beneficiary receive?
A. $0
B. $100,000 [correct answer]
pg. 2
, 3
C. $50,000 (50% of the policy value)
D. $300,000 (triple the amount of policy value)
15. Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement
option?
A. The beneficiary receives the remainder of the principal amount upon the annuitant’s death
B. It is a life contingency option.
C. It does not guarantee that the entire principal amount will be paid out. [correct answer]
D. Payments can be made in installments and as a single cash refund.
16. Who breaks all of the investment risks in a fixed annuity?
A. The insurance company [correct answer]
B. the owner
C. the beneficiary
D. the annuitant
17. All of the following statements are true regarding the installment for a fix. Annual settlement
option EXCEPT:
A. the payments are not regulated for life
B. The insurer determines the amount of each payment
C. It is a life contingency option [Correct answer]
D. It will pay the benefits only for the designated period of time
18. Which of the following will not be an appropriate use of a deferred annuity?
A. Funding a child’s college education
B. Creating an estate [correct answer Creating an estate correct answer]
C. Accumulating retirement funds
D. Accumulating funds in an IRS
19. Which of the following is not a term for the period of time during which the annuitant or the
beneficiary receives income?
A.Payout period
B. Annualization period
C. Liquidation period
D. perception period [correct answer]
20. What of the following statements are true of a non-qualified retirement plan What of the following
statements are true of a non-qualified retirement plan except EXECPT
A. increases of funds are not taxed to receive
B. Contribution or tax-exempt [correct answer]
C. They do not qualify for special tax retirement by the IRS
D. Contribution grow tax-deferred
21. When an annuity is written, who is life expectancy is taken into account?
A. Beneficiary
B. Owner
D. Annuitant [correct answer]
22. What determines the penalty of surrendering a market value-adjusted annuity prematurely A.
The fat three are reminded by an index of interest gain and the amount of time and would mature
B. There are no penalties imposed for renting There are no penalties imposed for renting prematurely
C. The current interest rate at the time of the surrender [correct answer]
D. The guaranteed minimum interest rate provided in the contract
pg. 3
, 4
23. Did the annuitant die while the annuity is still in the accumulation stage? Which of the following is
true
A. The insurance company will retain the cash value and pay back the premium to the owner’s
estate
B. The money will continue to grow tax-deferred until the liquidation period and then will be paid
to the beneficiary. The money will continue to grow tax-deferred until the liquidation period
and then will be paid to the beneficiary
C. The owners of the state who received the money paid into the annuity
D. The beneficiary will receive the greater of the money paid into an annuity or the cash value
[correct answer]
24. During the free look. The premium for a variable annuity may be invested in all of the
following, except. A. Money market funds
B.Fixexedd income investment
C. Mutual funds (only upon the investor's request)
D. Value funds [correct answer]
25. Which of the following is true regarding a policy with a face value of less than $10,000?
A. If it’s returned during the free look. The agreement will be void. [coorect answer
B. An insured cannot return the policy
C. If it’s returned during the free period the contract will be canceled, but the insurance will be
remaining the premium paid
D. The policy can be canceled with a full refund of the premium at any time
26. A legally acceptable attempt by an exiting insurer to dissuade a current policy owner from the
replacement of existing life insurance is called
A. Solicitation
B. Rebating
C. Conservation [correct answer]
D.Retention
27. During the cancellation period, an insurer must refund any premiums and policy fees within how
many days of written cancellation by the insured?
A. 60
B. 10
C. 20
D. 30 [correct answer]
28. The notice to senior consumers regarding their to cancel to policy must be printed on the cover or
policy jacket in at least what type of print?
A. 14-point standard print
B. 12-point bold print [Correct answer]
C. 12-point standard print
D. 14-point bold print
29. During the replacement of life insurance, a replacing insurer must do which of the following?
A. Obtain a list of all insurance policies that will be replaced. [correct answer]
B. Guarantee a replacement for each existing policy.
C. designate a new producer for a replacement policy
D. send a copy of the notice regarding replacement to the Department of Insurance.
30. Every individual life insurance policy must provide for a free-look provision that lasts for at least
A. 10 Days [correct answer]
pg. 4
INS 101 Insurance Practice Exam Questions and
Answers
Practice exam questions:
1. The paid-addition option uses the divided:
A. To purchase a one-year term insurance in the amount of the cash value.
B. To purchase a smaller amount of the same type of insurance as the original policy.
[correct answer]
C. to accumulate additional saving additional savings for retirement.
D. To reduce the next year’s premium.
E.
2. An individual purchased a life insurance policy on his life naming his wife as primary
beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the
daughter collect the death benefit?
A. With the primary beneficiary's written consent
B. If the primary beneficiary predeceases the insured. [correct answer]
C. If the insured dies from an accident
D. The primary and contingent beneficiaries share death benefits equally.
3. what would be an advantage to naming a contingent ( or secondary) beneficiary in a life insurance
policy?
A. It determines who receives policy benefits if the primary beneficiary is decreased.
[correct answer]
B. it requires that someone who is not the primary beneficiary handles the estate C. It ensures
that the policy proceeds will be split between the primary and contingent
beneficiaries.
4. If a policy has an automatic premium loan provision, what happens if the insured dies before the
loan is paid back?
A. the policy is rendered null and void
B. the policy beneficiary receives the full death benefit.
C. the balance of the loan will be taken out of the death benefit [correct answer] D. the policy
beneficiary takes over the loan payment
5. What is the benefit of choosing an extended term as a nonforfeiture option?
A. It can be converted to a fixed annuity
B. It has the highest amount of insurance protection [correct answer]
C. it mutates at age 100
D. it allows for coverage to continue beyond the maturity date
6. Which of the following statements is TRUE about a policy assignment?
A. It is the same as a beneficiary designation
B. It transfers the right of ownership from the owner to another person [correct answer]
C. it authorizes an agent to modify the policy
pg. 1
,2
D. it permits the beneficiary to designate the person to receive the benefits.
8. An insured died by suicide one year after the life insurance policy was issued. The insurer will
A. pay nothing
B. pay the policy’s cash value,
C. Redund the premium paid [correct answer]
D. pay the full death benefit to the beneficiary
9. The automatic premium loan provision is activated at the end of the
A. Eliminate period
B. Policy period
C. Free-look period
D. Grace period [correct answer]
10. Which of the following statements best describes the effect of the Accelerated benefit What
would the provision have on the benefits paid to the beneficiary?
A. It will not affect the benefit paid to the beneficiary
B. It will increase the benefits paid to the beneficiary
C. it will decrease the benefits paid to the beneficiary [correct answer]
D. it will reduce the benefits by 70%
11. An insured purchased a 15-year level term life insurance policy with a face amount of
$100,000. The policy contained an accidental death rider offering a double indemnity
benefit. The insured was severely injured in an auto accident, and after 10 weeks of
hospitalization, died from the injuries. How much will the beneficiary receive from the
policy? A. $100,000
B. $0
C. $200,000 [correct answer]
D. $100,000 plus the total of paid premiums
12. Which of the following riders added to a life insurance policy can be part of the death benefit to
the insured to cover expenses incurred in a nursing or convalescent home?
A. Payor benefit
B. Guaranteed insurability
C. Long-term care [correct answer]
D. Accidental death
13. All of the following are the responsibilities of every long-term care insurer in California EXCEPT:
A. Establish marketing procedures to assure that any comparison of policies will be fair and accurate.
B. Submit to the Commissioner a list of all agents authorized to solicit individual consumers for the sale
of long-term care insurance.
C. Provide enough business to solicit long-term care insurance [correct answer]
D. Establish marketing procedures to assure excessive insurance is not sold or issued.
14. The insured under a $100,00 life insurance policy with a triple indemnity rider for accidental
death was killed in a car accident. It was determined that the accident was his fault. The triple
indemnity rider in the policy specifies that the death must not be contributed to by this insured in
any manner. In this case, what will the policy beneficiary receive?
A. $0
B. $100,000 [correct answer]
pg. 2
, 3
C. $50,000 (50% of the policy value)
D. $300,000 (triple the amount of policy value)
15. Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement
option?
A. The beneficiary receives the remainder of the principal amount upon the annuitant’s death
B. It is a life contingency option.
C. It does not guarantee that the entire principal amount will be paid out. [correct answer]
D. Payments can be made in installments and as a single cash refund.
16. Who breaks all of the investment risks in a fixed annuity?
A. The insurance company [correct answer]
B. the owner
C. the beneficiary
D. the annuitant
17. All of the following statements are true regarding the installment for a fix. Annual settlement
option EXCEPT:
A. the payments are not regulated for life
B. The insurer determines the amount of each payment
C. It is a life contingency option [Correct answer]
D. It will pay the benefits only for the designated period of time
18. Which of the following will not be an appropriate use of a deferred annuity?
A. Funding a child’s college education
B. Creating an estate [correct answer Creating an estate correct answer]
C. Accumulating retirement funds
D. Accumulating funds in an IRS
19. Which of the following is not a term for the period of time during which the annuitant or the
beneficiary receives income?
A.Payout period
B. Annualization period
C. Liquidation period
D. perception period [correct answer]
20. What of the following statements are true of a non-qualified retirement plan What of the following
statements are true of a non-qualified retirement plan except EXECPT
A. increases of funds are not taxed to receive
B. Contribution or tax-exempt [correct answer]
C. They do not qualify for special tax retirement by the IRS
D. Contribution grow tax-deferred
21. When an annuity is written, who is life expectancy is taken into account?
A. Beneficiary
B. Owner
D. Annuitant [correct answer]
22. What determines the penalty of surrendering a market value-adjusted annuity prematurely A.
The fat three are reminded by an index of interest gain and the amount of time and would mature
B. There are no penalties imposed for renting There are no penalties imposed for renting prematurely
C. The current interest rate at the time of the surrender [correct answer]
D. The guaranteed minimum interest rate provided in the contract
pg. 3
, 4
23. Did the annuitant die while the annuity is still in the accumulation stage? Which of the following is
true
A. The insurance company will retain the cash value and pay back the premium to the owner’s
estate
B. The money will continue to grow tax-deferred until the liquidation period and then will be paid
to the beneficiary. The money will continue to grow tax-deferred until the liquidation period
and then will be paid to the beneficiary
C. The owners of the state who received the money paid into the annuity
D. The beneficiary will receive the greater of the money paid into an annuity or the cash value
[correct answer]
24. During the free look. The premium for a variable annuity may be invested in all of the
following, except. A. Money market funds
B.Fixexedd income investment
C. Mutual funds (only upon the investor's request)
D. Value funds [correct answer]
25. Which of the following is true regarding a policy with a face value of less than $10,000?
A. If it’s returned during the free look. The agreement will be void. [coorect answer
B. An insured cannot return the policy
C. If it’s returned during the free period the contract will be canceled, but the insurance will be
remaining the premium paid
D. The policy can be canceled with a full refund of the premium at any time
26. A legally acceptable attempt by an exiting insurer to dissuade a current policy owner from the
replacement of existing life insurance is called
A. Solicitation
B. Rebating
C. Conservation [correct answer]
D.Retention
27. During the cancellation period, an insurer must refund any premiums and policy fees within how
many days of written cancellation by the insured?
A. 60
B. 10
C. 20
D. 30 [correct answer]
28. The notice to senior consumers regarding their to cancel to policy must be printed on the cover or
policy jacket in at least what type of print?
A. 14-point standard print
B. 12-point bold print [Correct answer]
C. 12-point standard print
D. 14-point bold print
29. During the replacement of life insurance, a replacing insurer must do which of the following?
A. Obtain a list of all insurance policies that will be replaced. [correct answer]
B. Guarantee a replacement for each existing policy.
C. designate a new producer for a replacement policy
D. send a copy of the notice regarding replacement to the Department of Insurance.
30. Every individual life insurance policy must provide for a free-look provision that lasts for at least
A. 10 Days [correct answer]
pg. 4
