LIFE INSURANCE EXAM – ILLINOIS |
COMPREHENSIVE EXAM PREP, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, tax qualified plans contributions can be deducted
non qualified plans contributions cannot be deducted
tax deferred plans tax on the interest and/or earnings is postponed as it compounds and accumulates until it
is withdrawn
tax free no tax on benefits
cost basis total contributions made to the plan
Tax: premiums paid on individual life insurance policies... cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death... is usually not taxed (tax free)
Participating policy pays a dividend
Tax: dividends paid to the policyowner on participating are usually not taxed (tax free)
policies...
Modified Endowment Contract The IRS has written rules that define when a life insurance policy does not have a real,
valid life insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life modified endowment contract
insurance purpose, the IRS classifies it as a
Underwriter is an insurance company employee who reviews applications and additional information
and decides whether the applicant is acceptable and what the correct premium rate
should be
Application includes (7 items) age, sex, occupation, dangerous recreational activities, aviation, smoking, agent's report
Medical reports can be (3 items) health questionare, paramedic examiner's report, and physician's report
Who completes the health questionnaire? the agent and the applicant with questions about applicant's health history as well as the
applicant's parents' health history
COMPREHENSIVE EXAM PREP, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, tax qualified plans contributions can be deducted
non qualified plans contributions cannot be deducted
tax deferred plans tax on the interest and/or earnings is postponed as it compounds and accumulates until it
is withdrawn
tax free no tax on benefits
cost basis total contributions made to the plan
Tax: premiums paid on individual life insurance policies... cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death... is usually not taxed (tax free)
Participating policy pays a dividend
Tax: dividends paid to the policyowner on participating are usually not taxed (tax free)
policies...
Modified Endowment Contract The IRS has written rules that define when a life insurance policy does not have a real,
valid life insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life modified endowment contract
insurance purpose, the IRS classifies it as a
Underwriter is an insurance company employee who reviews applications and additional information
and decides whether the applicant is acceptable and what the correct premium rate
should be
Application includes (7 items) age, sex, occupation, dangerous recreational activities, aviation, smoking, agent's report
Medical reports can be (3 items) health questionare, paramedic examiner's report, and physician's report
Who completes the health questionnaire? the agent and the applicant with questions about applicant's health history as well as the
applicant's parents' health history
