ARIZONA LIFE INSURANCE EXAM:
2026/2027, WITH CORRECT/ACCURATE
ANSWERS
100 QUESTIONS
With multiple-choice answers, correct answers, and rationales
Exam is devided into sections
ARIZONA LIFE INSURANCE
SECTION 1 — LIFE INSURANCE BASICS (20
QUESTIONS)
1. Life insurance is primarily designed to:
A) Create retirement income
B) Provide protection against financial loss due to death
C) Accumulate tax-free cash value
D) Act as an investment
Answer: B
Rationale: The main purpose of life insurance is to provide financial protection against premature death.
2. Which individual has the legal insurable interest in the insured?”
A) A business partner
B) A distant neighbor
C) A co-worker
D) A friend of the family
Answer: A
Rationale: Business partners have financial interest in each other, satisfying insurable interest.
3. The underwriting process begins when the agent:
A) Delivers the policy
B) Completes the application
,C) Collects the premium
D) Schedules the medical exam
Answer: B
Rationale: The application initiates underwriting.
4. A representation on a life insurance application is defined as:
A) A guarantee
B) A statement believed to be true
C) An absolute fact
D) A warranty
Answer: B
Rationale: Representations are statements the applicant believes are true.
5. The cost of life insurance is primarily based on:
A) The insurer’s profit margin
B) Interest rates
C) Mortality, interest, and expenses
D) State regulations
Answer: C
Rationale: These three factors determine premium pricing.
6. A policyowner decides to cancel a policy that is still within the free-look period. They are
entitled to:
A) A partial refund
B) Only the unused premium
C) A full refund of premium
D) No refund
Answer: C
Rationale: Free-look guarantees all premiums refunded.
7. The primary purpose of the agent’s report is to:
A) Collect additional medical information
B) Provide the insurer with the agent’s personal observations
C) Verify the MIB report
D) Approve the policy
, Answer: B
Rationale: The agent’s report gives insights about the applicant.
8. Which is a personal use of life insurance?
A) Key person insurance
B) Executive bonus plan
C) Income replacement
D) Buy-sell agreement
Answer: C
Rationale: Income replacement is an individual’s personal need.
9. The MIB is used to:
A) Determine premiums
B) Identify medical impairments
C) Provide credit scores
D) Approve applications
Answer: B
Rationale: MIB detects medical misrepresentation.
10. Which policy requires evidence of insurability?
A) Guaranteed issue
B) Credit life
C) Term life
D) Medicare supplement
Answer: C
Rationale: Most term policies require underwriting.
11. What is the purpose of field underwriting?
A) Deliver a policy
B) Prevent adverse selection
C) Determine policy loans
D) Evaluate beneficiaries
Answer: B
Rationale: Agents help prevent poor risks entering the pool.
2026/2027, WITH CORRECT/ACCURATE
ANSWERS
100 QUESTIONS
With multiple-choice answers, correct answers, and rationales
Exam is devided into sections
ARIZONA LIFE INSURANCE
SECTION 1 — LIFE INSURANCE BASICS (20
QUESTIONS)
1. Life insurance is primarily designed to:
A) Create retirement income
B) Provide protection against financial loss due to death
C) Accumulate tax-free cash value
D) Act as an investment
Answer: B
Rationale: The main purpose of life insurance is to provide financial protection against premature death.
2. Which individual has the legal insurable interest in the insured?”
A) A business partner
B) A distant neighbor
C) A co-worker
D) A friend of the family
Answer: A
Rationale: Business partners have financial interest in each other, satisfying insurable interest.
3. The underwriting process begins when the agent:
A) Delivers the policy
B) Completes the application
,C) Collects the premium
D) Schedules the medical exam
Answer: B
Rationale: The application initiates underwriting.
4. A representation on a life insurance application is defined as:
A) A guarantee
B) A statement believed to be true
C) An absolute fact
D) A warranty
Answer: B
Rationale: Representations are statements the applicant believes are true.
5. The cost of life insurance is primarily based on:
A) The insurer’s profit margin
B) Interest rates
C) Mortality, interest, and expenses
D) State regulations
Answer: C
Rationale: These three factors determine premium pricing.
6. A policyowner decides to cancel a policy that is still within the free-look period. They are
entitled to:
A) A partial refund
B) Only the unused premium
C) A full refund of premium
D) No refund
Answer: C
Rationale: Free-look guarantees all premiums refunded.
7. The primary purpose of the agent’s report is to:
A) Collect additional medical information
B) Provide the insurer with the agent’s personal observations
C) Verify the MIB report
D) Approve the policy
, Answer: B
Rationale: The agent’s report gives insights about the applicant.
8. Which is a personal use of life insurance?
A) Key person insurance
B) Executive bonus plan
C) Income replacement
D) Buy-sell agreement
Answer: C
Rationale: Income replacement is an individual’s personal need.
9. The MIB is used to:
A) Determine premiums
B) Identify medical impairments
C) Provide credit scores
D) Approve applications
Answer: B
Rationale: MIB detects medical misrepresentation.
10. Which policy requires evidence of insurability?
A) Guaranteed issue
B) Credit life
C) Term life
D) Medicare supplement
Answer: C
Rationale: Most term policies require underwriting.
11. What is the purpose of field underwriting?
A) Deliver a policy
B) Prevent adverse selection
C) Determine policy loans
D) Evaluate beneficiaries
Answer: B
Rationale: Agents help prevent poor risks entering the pool.
