ALABAMA LIFE INSURANCE EXAM PRACTICE QUESTIONS WITH WELL DETAILED
SOLUTIONS- GRADED A+
After failing the Alabama licensing exam twice, how long must an applicant wait before
retaking the exam?
3 months
The Commissioner suspects that Producer X is committing acts in violation of Alabama
insurance law. To determine if a cease and desist order is necessary, the commissioner
sends notice of a hearing to Producer X to review the allegations. Within how many days of
receiving the demand must the Commissioner hold the hearing?
30 days
In Alabama, an Industrial life insurance policy typically has a face amount of?
$2,500 or less
In a legal sense, the insurance premium is?
The insured consideration
Buy-sell agreement life insurance premiums are?
Not deductible and proceeds are income tax free
,Employer-paid premiums for employee group term life do not constitute taxable income to
the employee for life insurance coverage up to what amount?
$50,000
Sam has a home with a mortgage. Sam needs life insurance to protect the family but also
wants to leave them without a mortgage payment if Sam dies. Which of the following term
policies should Sam Acquire?
Decreasing Term
Which rating classification is typically used in the senior marketplace so that policies can
be issued without a medical exam?
Graded (Lien) Plan
Which of the following statements is not correct about the Automatic Premium Loan (APL)
provision?
The is an additional premium for the APL
If an applicant fails to present all material facts, or a producer fails to fully describe the
terms of the contract, which principle has been violated?
Utmost Good Faith
What are the tax ramifications when a corporation owns an annuity contract?
There is no tax benefit
,Which of the following is a characteristic of a mutual insurance company?
Members are provided insurance by the company
A general report of the applicants finances, character, morals, work, hobbies, and other
habits is referred to as a(n)?
Investigative Consumer Report
A accounting measure used to determine a contract owner's interest in the separate
account of a variable annuity before payments begin is called a(n)?
Accumulation unit
Group life insurance is a contract between what parties?
The sponsor and the insurer
In terms of planning out a company's budget, what must be taken into consideration if a
group life insurance plan is in place?
The insurer can increase the premium at renewal
If a client owns an equity-indexed life insurance product with a minimum guaranteed
interest rate, what happens if the market falls in value significantly?
, The policy's values can never be impaired due to negative index performance
A temporary producer license may be issued for which of the following reasons?
Either due to the disruption of existing business, or in the case of on-the-job training
Under Alabama law, a producer cannot pay any valuable consideration to a person if they
are not licensed as a producer. If a producer violates this provision, they are subject to a
fine of up to?
3 times the commission paid
What is a postmortem dividend?
A dividend earned, but not yet paid, in the year of the insured's death and paid with the
death claim
In a whole life policy, cash value must be made available to borrow against after how many
years?
3 years
The life insurance nonforfeiture option that provides coverage for the shortest duration is?
Extended term
SOLUTIONS- GRADED A+
After failing the Alabama licensing exam twice, how long must an applicant wait before
retaking the exam?
3 months
The Commissioner suspects that Producer X is committing acts in violation of Alabama
insurance law. To determine if a cease and desist order is necessary, the commissioner
sends notice of a hearing to Producer X to review the allegations. Within how many days of
receiving the demand must the Commissioner hold the hearing?
30 days
In Alabama, an Industrial life insurance policy typically has a face amount of?
$2,500 or less
In a legal sense, the insurance premium is?
The insured consideration
Buy-sell agreement life insurance premiums are?
Not deductible and proceeds are income tax free
,Employer-paid premiums for employee group term life do not constitute taxable income to
the employee for life insurance coverage up to what amount?
$50,000
Sam has a home with a mortgage. Sam needs life insurance to protect the family but also
wants to leave them without a mortgage payment if Sam dies. Which of the following term
policies should Sam Acquire?
Decreasing Term
Which rating classification is typically used in the senior marketplace so that policies can
be issued without a medical exam?
Graded (Lien) Plan
Which of the following statements is not correct about the Automatic Premium Loan (APL)
provision?
The is an additional premium for the APL
If an applicant fails to present all material facts, or a producer fails to fully describe the
terms of the contract, which principle has been violated?
Utmost Good Faith
What are the tax ramifications when a corporation owns an annuity contract?
There is no tax benefit
,Which of the following is a characteristic of a mutual insurance company?
Members are provided insurance by the company
A general report of the applicants finances, character, morals, work, hobbies, and other
habits is referred to as a(n)?
Investigative Consumer Report
A accounting measure used to determine a contract owner's interest in the separate
account of a variable annuity before payments begin is called a(n)?
Accumulation unit
Group life insurance is a contract between what parties?
The sponsor and the insurer
In terms of planning out a company's budget, what must be taken into consideration if a
group life insurance plan is in place?
The insurer can increase the premium at renewal
If a client owns an equity-indexed life insurance product with a minimum guaranteed
interest rate, what happens if the market falls in value significantly?
, The policy's values can never be impaired due to negative index performance
A temporary producer license may be issued for which of the following reasons?
Either due to the disruption of existing business, or in the case of on-the-job training
Under Alabama law, a producer cannot pay any valuable consideration to a person if they
are not licensed as a producer. If a producer violates this provision, they are subject to a
fine of up to?
3 times the commission paid
What is a postmortem dividend?
A dividend earned, but not yet paid, in the year of the insured's death and paid with the
death claim
In a whole life policy, cash value must be made available to borrow against after how many
years?
3 years
The life insurance nonforfeiture option that provides coverage for the shortest duration is?
Extended term
