ALABAMA INSURANCE PRACTICE EXAM 2025/2026
QUESTIONS WITH SOLUTIONS RATED A+
✔✔Policy Summary (specific) - ✔✔is given at policy delivery.
✔✔Term insurance is pure protection, - ✔✔a death benefit for a specified period of time.
It is normally both Renewable and Convertible When an Annually Renewable Term
policy renews, the premium increases due to the advancing age of the insured.
✔✔Level Premium Term policy - ✔✔keeps the premium level over the length of the
policy by overcharging in the early years so that they can undercharge later on.
✔✔The death benefit of a Term policy - ✔✔can be level, decreasing or increasing.
✔✔When a Term policy converts - ✔✔When to a permanent form of insur- ance like
Whole Life, The premium will go up. Whole Life costs" more, and the insured is older.
However, if the conversion is made during the period allotted by the policy, the insured's
health is not a factor. Buying Convertible Term ((protects your insurabil- ity, but it does
not freeze your age)).
✔✔Whole Life policies - ✔✔are permanent protection...((until death or age 100)). The
premiums are level throughout and the policy builds cash value at a guaranteed rate so
that it would ((equal the death benefit when the insured reaches age 100.))
✔✔WHOLE LIFE - ✔✔Whole Life contracts can be purchased with a ((Single
Premium)), by installments paid over a period of years...((Limited Pay)), or paid over
your lifetime...((Straight Life)). But no matter how short or long the payment period, the
coverage is good for the whole of life.
✔✔WHOLE LIFE - ✔✔The ((higher the cost per/thousand)), the ((faster the growth of
cash value)). Single Premium cash value growth starts out the fastest, followed by
Limited Pay and Straight Life brings up the rear, but they all equal the same number at
the insured's age of 100, the face amount of the contract.
✔✔Entire Contract - ✔✔clause = policy +application + (riders)
✔✔Insuring clause - ✔✔Insuring clause = the heart of the policy, what the company
brings to the table
✔✔Ownership clause - ✔✔the owner has all the rights
✔✔Beneficiary clause - ✔✔primary first, contingent thereafter
✔✔Revocable beneficiary - ✔✔can be changed by the owner
, ✔✔Irrevocable beneficiary - ✔✔cannot be changed by the owner with beneficiary
permersia
✔✔Incontestable clause - ✔✔stuck with misstatements after 2 years
✔✔Misstatement of Age/Gender - ✔✔make it right
✔✔Suicide - ✔✔company will pay after 2 years
✔✔Free Look - ✔✔send it back; 100% refund AL 10 days for Life
✔✔Grace Period - ✔✔still time to pay
✔✔Reinstatement - ✔✔back premium + interest, pay off loans, prove insurability...and
we'll take you back. ((Policy must be in full force))
✔✔Automatic Premium Loan - ✔✔company takes a loan from your cash value and pays
your premium, it's a loan...there's interest
✔✔Assignment - ✔✔Assignment change of ownership; collateral = temporarily,
absolute = permanently
✔✔Time Limit on Lawsuits - ✔✔1 to 3 years
✔✔Accelerated Death Benefit - ✔✔get some of the money from your company early
✔✔Viatical - ✔✔the money comes from anothen company
✔✔Section 1035 Exchange: - ✔✔No tax or Life for Annuity. The exception is
consequences if you exchange Life for Life, Annuity for Annuity exchanging an Annuity
for a Life policy.
✔✔Dividend Options-triggered by company declaring a dividend; policyowner has
option of how to be paid: - ✔✔*Cash-send me a check
*Accumulate at Interest-start me a savings account
*Reduced Premium-use this to reduce my next
*Paid-Up Additions-buy automatic option (default) lautomatic) me more, at net premium
rates-the
*One-Year Term-buy me some Term
QUESTIONS WITH SOLUTIONS RATED A+
✔✔Policy Summary (specific) - ✔✔is given at policy delivery.
✔✔Term insurance is pure protection, - ✔✔a death benefit for a specified period of time.
It is normally both Renewable and Convertible When an Annually Renewable Term
policy renews, the premium increases due to the advancing age of the insured.
✔✔Level Premium Term policy - ✔✔keeps the premium level over the length of the
policy by overcharging in the early years so that they can undercharge later on.
✔✔The death benefit of a Term policy - ✔✔can be level, decreasing or increasing.
✔✔When a Term policy converts - ✔✔When to a permanent form of insur- ance like
Whole Life, The premium will go up. Whole Life costs" more, and the insured is older.
However, if the conversion is made during the period allotted by the policy, the insured's
health is not a factor. Buying Convertible Term ((protects your insurabil- ity, but it does
not freeze your age)).
✔✔Whole Life policies - ✔✔are permanent protection...((until death or age 100)). The
premiums are level throughout and the policy builds cash value at a guaranteed rate so
that it would ((equal the death benefit when the insured reaches age 100.))
✔✔WHOLE LIFE - ✔✔Whole Life contracts can be purchased with a ((Single
Premium)), by installments paid over a period of years...((Limited Pay)), or paid over
your lifetime...((Straight Life)). But no matter how short or long the payment period, the
coverage is good for the whole of life.
✔✔WHOLE LIFE - ✔✔The ((higher the cost per/thousand)), the ((faster the growth of
cash value)). Single Premium cash value growth starts out the fastest, followed by
Limited Pay and Straight Life brings up the rear, but they all equal the same number at
the insured's age of 100, the face amount of the contract.
✔✔Entire Contract - ✔✔clause = policy +application + (riders)
✔✔Insuring clause - ✔✔Insuring clause = the heart of the policy, what the company
brings to the table
✔✔Ownership clause - ✔✔the owner has all the rights
✔✔Beneficiary clause - ✔✔primary first, contingent thereafter
✔✔Revocable beneficiary - ✔✔can be changed by the owner
, ✔✔Irrevocable beneficiary - ✔✔cannot be changed by the owner with beneficiary
permersia
✔✔Incontestable clause - ✔✔stuck with misstatements after 2 years
✔✔Misstatement of Age/Gender - ✔✔make it right
✔✔Suicide - ✔✔company will pay after 2 years
✔✔Free Look - ✔✔send it back; 100% refund AL 10 days for Life
✔✔Grace Period - ✔✔still time to pay
✔✔Reinstatement - ✔✔back premium + interest, pay off loans, prove insurability...and
we'll take you back. ((Policy must be in full force))
✔✔Automatic Premium Loan - ✔✔company takes a loan from your cash value and pays
your premium, it's a loan...there's interest
✔✔Assignment - ✔✔Assignment change of ownership; collateral = temporarily,
absolute = permanently
✔✔Time Limit on Lawsuits - ✔✔1 to 3 years
✔✔Accelerated Death Benefit - ✔✔get some of the money from your company early
✔✔Viatical - ✔✔the money comes from anothen company
✔✔Section 1035 Exchange: - ✔✔No tax or Life for Annuity. The exception is
consequences if you exchange Life for Life, Annuity for Annuity exchanging an Annuity
for a Life policy.
✔✔Dividend Options-triggered by company declaring a dividend; policyowner has
option of how to be paid: - ✔✔*Cash-send me a check
*Accumulate at Interest-start me a savings account
*Reduced Premium-use this to reduce my next
*Paid-Up Additions-buy automatic option (default) lautomatic) me more, at net premium
rates-the
*One-Year Term-buy me some Term
