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Iowa Insurance Exam - Life Questions and
Correct Answers
purpose of life insurance Ans: pay a death benefit to beneficiaries
when the insured dies
life insurance for personal use Ans: death benefit serves to replace
the insured's future loss income and pay expenses that occur upon
death, living benefits
Group insurance vs. individual Ans: -covers many non-related
people
-less expensive per person
group insurance eligibility Ans: -group cannot be formed for the
express purpose of purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance Ans: covers one individual
ordinary life insurance Ans: face amounts grater than $25,000,
premiums are payable monthly, quarterly, semi annually, annually;
includes every type of life insurance and annuity product, flexible
options
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industrial life insurance Ans: "burial insurance", small face
amounts 1000 or 2500 to 10,000; premiums paid frequently, no
medical exam, agent meets personally with policy owner to collect
premium
permanent life insurance Ans: provides life ins for the insured's
entire life; coverage is provided until insured dies or reaches 120
years old
True or false: Level premium of permanent life insurance - once
the policy is issued premiums remain level for the full duration of
policy coverage Ans: true
Permanent life insurance accumulation element within the policy
is __________ ____________ Ans: cash value
Term life insurance Ans: coverage is temporary, time limit can be
as short as one year, as long as 20+ years or until the insured
reaches a specific age (ex. 65). No cash value, costs less than
permanent life, premiums increase with age
Participating vs nonparticipating life insurance Ans: par - issued
by mutual ins co's, policyowner is eligible for policy dividends
declared by the insurance co; dividends are paid from insurers
divisible surplus
non par - issued by stock ins co, no policy dividends
fixed life insurance Ans: insurer guarantees fixed death benefit
and min rate of return on policy's cash value, premiums are
invested in co's general account
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variable life insurance Ans: premiums are invested in investment
sub accounts managed by the insurer - guarantees min death
benefit (face amount of policy); cash values and death benefit raise
and fall based on sub accounts investment
Regulation of Variable products - what do the Securities Exchange
commission and financial Industry Regulatory authority do? Ans:
SEC - responsible for regulating the securities that make up an
insurer's separate account
FIRA - regulates producers who sell variable life products and
companies that sell investment products
Actuary base life insurance premiums based on 3 things Ans:
mortality, interest, expenses
Interest factor Ans: added to premium calculations to recognize
investment earnings, used as credit - higher rate = lower premium
Expense factor Ans: worked into premium calculation to reflect
costs that insurer expects to incur (rent, commissions, benefits)
Premium Tax Ans: levied on insurance companies when they
receive premiums
Net Single premium Ans: uses factors of mortality and interest -
theoretical amount (excludes expense factor) that would be needed
to fund the face amount for the duration of the policy with single
premium payment
Net level premium Ans: applying a factor to the net single
premium, spreads out premium for duration of premium paying
period
© 2025 All rights reserved
Iowa Insurance Exam - Life Questions and
Correct Answers
purpose of life insurance Ans: pay a death benefit to beneficiaries
when the insured dies
life insurance for personal use Ans: death benefit serves to replace
the insured's future loss income and pay expenses that occur upon
death, living benefits
Group insurance vs. individual Ans: -covers many non-related
people
-less expensive per person
group insurance eligibility Ans: -group cannot be formed for the
express purpose of purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance Ans: covers one individual
ordinary life insurance Ans: face amounts grater than $25,000,
premiums are payable monthly, quarterly, semi annually, annually;
includes every type of life insurance and annuity product, flexible
options
© 2025 All rights reserved
, 2 | Page
industrial life insurance Ans: "burial insurance", small face
amounts 1000 or 2500 to 10,000; premiums paid frequently, no
medical exam, agent meets personally with policy owner to collect
premium
permanent life insurance Ans: provides life ins for the insured's
entire life; coverage is provided until insured dies or reaches 120
years old
True or false: Level premium of permanent life insurance - once
the policy is issued premiums remain level for the full duration of
policy coverage Ans: true
Permanent life insurance accumulation element within the policy
is __________ ____________ Ans: cash value
Term life insurance Ans: coverage is temporary, time limit can be
as short as one year, as long as 20+ years or until the insured
reaches a specific age (ex. 65). No cash value, costs less than
permanent life, premiums increase with age
Participating vs nonparticipating life insurance Ans: par - issued
by mutual ins co's, policyowner is eligible for policy dividends
declared by the insurance co; dividends are paid from insurers
divisible surplus
non par - issued by stock ins co, no policy dividends
fixed life insurance Ans: insurer guarantees fixed death benefit
and min rate of return on policy's cash value, premiums are
invested in co's general account
© 2025 All rights reserved
, 3 | Page
variable life insurance Ans: premiums are invested in investment
sub accounts managed by the insurer - guarantees min death
benefit (face amount of policy); cash values and death benefit raise
and fall based on sub accounts investment
Regulation of Variable products - what do the Securities Exchange
commission and financial Industry Regulatory authority do? Ans:
SEC - responsible for regulating the securities that make up an
insurer's separate account
FIRA - regulates producers who sell variable life products and
companies that sell investment products
Actuary base life insurance premiums based on 3 things Ans:
mortality, interest, expenses
Interest factor Ans: added to premium calculations to recognize
investment earnings, used as credit - higher rate = lower premium
Expense factor Ans: worked into premium calculation to reflect
costs that insurer expects to incur (rent, commissions, benefits)
Premium Tax Ans: levied on insurance companies when they
receive premiums
Net Single premium Ans: uses factors of mortality and interest -
theoretical amount (excludes expense factor) that would be needed
to fund the face amount for the duration of the policy with single
premium payment
Net level premium Ans: applying a factor to the net single
premium, spreads out premium for duration of premium paying
period
© 2025 All rights reserved
