ALABAMA INSURANCE FINAL PAPER 2025/2026
QUESTIONS WITH SOLUTIONS RATED A+
✔✔Policy dividends for life insurance are: - ✔✔not guaranteed
✔✔What is a certificate of insurance? - ✔✔A certificate issued to each individual
covered by the group life insurance
✔✔Which is NOT true regarding Medicare Supplement policies? - ✔✔Must include a
minimum 20-day Free-Look provision
✔✔In Alabama, all Health Maintenance Organizations must: - ✔✔have a complaint
system to resolve written complaints from enrollees
✔✔Rick owns a $100,000 life insurance policy with a cash value of $10,000. How much
can he borrow up to? - ✔✔The accumulated cash value ($10,000 less interest)
✔✔Susan owns a life insurance policy that has accumulated $10,000 in cash value in
which she can no longer pay its premiums. If she elects to take the extended term
option, which of these actions would she take? - ✔✔Uses the $10,000 to buy term
insurance of the same face amount as her original policy
✔✔Jackie took out a Medicare supplement insurance policy and also has a preexisting
condition. In this situation, a preexisting condition is defined as a condition for which
medical advice was given or received within _____ of the effective date of coverage. -
✔✔6 months
✔✔Rodney applies for an insurance policy and pays the first premium. The receipt
given for the first premium is called a(n): - ✔✔conditional receipt
✔✔A policy owner with an automatic premium loan provision must: - ✔✔pay back the
loan amount to keep the policy's cash value at its maximum
✔✔Which of the following is NOT an example of insurable interest? - ✔✔An airline
insuring the lives of its passengers
✔✔With key employee life insurance, - ✔✔the company is the owner of the policy
✔✔A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding
partners. What would this agreement require if the agreement is funded with individual
life insurance? - ✔✔Each partner must own a policy on the other partners
, ✔✔The Notice of Claim Provision states that the insured notify the insurance company
within __ days of a claim. - ✔✔20
✔✔Which of the following is NOT a factor typically used by insurers to classify risk? -
✔✔Education level
✔✔The agreement between a producer and the insurance company specifies the
authority given to a producer to act on behalf of the insurer. This is called: -
✔✔expressed authority
✔✔Under a Health Maintenance Organization (HMO), service providers are paid a fixed
monthly fee for each member. This concept is called: - ✔✔capitation
✔✔The Commissioner of Insurance may NOT do which of the following? - ✔✔Change
insurance laws
✔✔Within how many days of a written demand must the Commissioner of Insurance
hold a hearing? - ✔✔30
✔✔The life and health insurance marketing system utilizing non-employee agents that
represent just one insurance company and are often paid an allowance to cover office
expense and staffing is the: - ✔✔general agency system
✔✔Which provision allows a disability income policy to remain in force without further
payments when the insured has become totally and permanently disabled? - ✔✔Waiver
of premium
✔✔Which of the following is considered the "automatic" Nonforfeiture Option that most
insurers will use? - ✔✔Extended term
✔✔An insurance premium can be defined as: - ✔✔money paid to an insurance
company for benefits provided in the policy
✔✔Which of these statements accurately portray a whole life policy? - ✔✔Endows at
age 100 and paid up at a stated time
✔✔John is an annuitant who has surrendered his annuity at age 55. What will he pay? -
✔✔Tax on the interest earned
✔✔A Preferred Provider Organization (PPO) contract typically uses which payment
arrangement? - ✔✔Negotiated fee-for-service
QUESTIONS WITH SOLUTIONS RATED A+
✔✔Policy dividends for life insurance are: - ✔✔not guaranteed
✔✔What is a certificate of insurance? - ✔✔A certificate issued to each individual
covered by the group life insurance
✔✔Which is NOT true regarding Medicare Supplement policies? - ✔✔Must include a
minimum 20-day Free-Look provision
✔✔In Alabama, all Health Maintenance Organizations must: - ✔✔have a complaint
system to resolve written complaints from enrollees
✔✔Rick owns a $100,000 life insurance policy with a cash value of $10,000. How much
can he borrow up to? - ✔✔The accumulated cash value ($10,000 less interest)
✔✔Susan owns a life insurance policy that has accumulated $10,000 in cash value in
which she can no longer pay its premiums. If she elects to take the extended term
option, which of these actions would she take? - ✔✔Uses the $10,000 to buy term
insurance of the same face amount as her original policy
✔✔Jackie took out a Medicare supplement insurance policy and also has a preexisting
condition. In this situation, a preexisting condition is defined as a condition for which
medical advice was given or received within _____ of the effective date of coverage. -
✔✔6 months
✔✔Rodney applies for an insurance policy and pays the first premium. The receipt
given for the first premium is called a(n): - ✔✔conditional receipt
✔✔A policy owner with an automatic premium loan provision must: - ✔✔pay back the
loan amount to keep the policy's cash value at its maximum
✔✔Which of the following is NOT an example of insurable interest? - ✔✔An airline
insuring the lives of its passengers
✔✔With key employee life insurance, - ✔✔the company is the owner of the policy
✔✔A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding
partners. What would this agreement require if the agreement is funded with individual
life insurance? - ✔✔Each partner must own a policy on the other partners
, ✔✔The Notice of Claim Provision states that the insured notify the insurance company
within __ days of a claim. - ✔✔20
✔✔Which of the following is NOT a factor typically used by insurers to classify risk? -
✔✔Education level
✔✔The agreement between a producer and the insurance company specifies the
authority given to a producer to act on behalf of the insurer. This is called: -
✔✔expressed authority
✔✔Under a Health Maintenance Organization (HMO), service providers are paid a fixed
monthly fee for each member. This concept is called: - ✔✔capitation
✔✔The Commissioner of Insurance may NOT do which of the following? - ✔✔Change
insurance laws
✔✔Within how many days of a written demand must the Commissioner of Insurance
hold a hearing? - ✔✔30
✔✔The life and health insurance marketing system utilizing non-employee agents that
represent just one insurance company and are often paid an allowance to cover office
expense and staffing is the: - ✔✔general agency system
✔✔Which provision allows a disability income policy to remain in force without further
payments when the insured has become totally and permanently disabled? - ✔✔Waiver
of premium
✔✔Which of the following is considered the "automatic" Nonforfeiture Option that most
insurers will use? - ✔✔Extended term
✔✔An insurance premium can be defined as: - ✔✔money paid to an insurance
company for benefits provided in the policy
✔✔Which of these statements accurately portray a whole life policy? - ✔✔Endows at
age 100 and paid up at a stated time
✔✔John is an annuitant who has surrendered his annuity at age 55. What will he pay? -
✔✔Tax on the interest earned
✔✔A Preferred Provider Organization (PPO) contract typically uses which payment
arrangement? - ✔✔Negotiated fee-for-service
