LIFE INSURANCE PRACTICE- EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
common disaster clause - Pat is insured with a life insurance policy and Karen is his
primary beneficiary. They are both involved in an automobile accident where Pat dies instantly
and Karen dies 5 days later. Which policy provision will protect the rights of the contingent
beneficiary to receive the policy benefits?
A beneficiary has just received a claim payment for a life insurance policy. Which of the
following is TRUE regarding the federal income tax liability owed? - no fed income tax is
owed on income tax proceeds
vA policyowner can receive a percentage payment of the death benefits prior to death by using
what kind of contract? - Viatical settlement agreements typically include a percentage
payment of the death benefits to the policyowner prior to the death of the insured.
Question 4
Select the appropriate response
Which of these factors help determine an insured's life insurance premium? - avocation
(hobby)
Question 5
Select the appropriate response
Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in
payments of $10,000 per month until the principal and interest has been paid out. Which
option was chosen? - fixed amount
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This
transaction is called a(n) - A 1035 tax free Exchange is the IRS tax code that allows for the
rollover of a non-qualified annuity (or transfer of a life insurance policy) to a new annuity or life
policy of equal or greater value.
,Question 7
Select the appropriate response
A policyowner is prohibited from making any changes to the policy without the beneficiary's
written consent under which beneficiary designation? - irrevocable beneficiary
What does a life insurance policy guarantee to the stated beneficiary upon the death of the
insured? - specified amount of money
Which settlement option involves having the proceeds remain with the insurer and earnings
paid on a monthly basis to the beneficiary? - interest only
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in
the same accident? - contingent beneficiary
Naming a contingent beneficiary as "all surviving children" is described by which term? -
class designation
What would be an expense factor in an insurance program? - mortality costs
A beneficiary change can occur - normally at any time during the policy term
How is the cost of a policy affected when a policyowner pays premiums more frequently? -
increases
Insurance premium is determined by each of the following factors EXCEPT - liquidity
Which of these is considered to be a document that describes the critical segments of a life
insurance policy? - policy summary
What is the purpose of the Medical Information Bureau (MIB)?
q- to help underwriters eval risk
All of these are considered sources of information that can assist an underwriter in determining
whether or not to accept a risk EXCEPT - National Association of Insurance Underwriters
All of these are typically sources of underwriting information for life or health insurance EXCEPT
- disclosure authorization response
An applicant's character and personal habits can be obtained for underwriting purposes from
which source? - investigative consumer repor
,Which of the following pertains to the analysis of an applicant's personal information and
determining whether insurance should be issued or declined? - underwriting
Which of the following does a life insurance policy summary normally include? - policys
cash value
What would happen if a life insurance applicant is given a conditional receipt from an insurance
agent and then dies the next day? - the claim will be paid if the application is approved.
In which of the following relationships would there NOT be an insurable interest? -
business owner to business customer
Which of these is likely to occur when life or health insurance is being applied for? -
Medical history from the insured may be reviewed and reported
When calculating the amount of life insurance needed for an income earner, what has to be
determined when using the Needs Approach? - The family's financial objectives if the
income earner were to die or become disabled
All of the following are considered appropriate uses of life insurance for business purposes
EXCEPT - Protecting the business by covering entry level employees with life insurance
Which of these is a method of determining the level of funds required for ongoing support in
the event of the breadwinner's death? - human life value
Question 4
Select the appropriate response
Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this
called? - estate conversion
All of the following are examples of a Business Continuation Plan EXCEPT
Key person insurance
Cross-purchase agreement
Stock Redemption Plan - deferred compensation
Question 1
Select the appropriate response
Fixed period settlement options are considered to be a form of a(n) - annuity
, Which settlement option pays a stated amount to an annuitant, but no residual value to a
beneficiary? - life income
Which of these statements regarding the annuitant is CORRECT? - The annuitant's life
expectancy determines the annuity payments
Which type of annuity guarantees a stated number of income payments, whether or not the
annuitant is still alive to receive them?lif - life annuity certain
Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this
income will become payable to their children for the remainder of the period. Kristi has what
kind of annuity? - temporary annuity certain
What happens to interest earned if the annuitant dies before the payout start date? - it is
taxable
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE
statement? - Premiums paid plus interest earned is returned to the beneficiary
How do interest earnings accumulate in a deferred annuity? - on a tax deferred basis
Maria would like an annuity that provides a guaranteed accumulation or payout. The type of
annuity she is seeking is called - annuity certain
Which of the following is considered to be the period when the accumulated value in an annuity
is paid out? - annuitization phase
What will the beneficiary receive if an annuitant dies during the accumulation period? -
The greater of the accumulated cash value or the total premium paid
Which type of annuity stops all payments upon the death of the annuitant? - life annuity
Which of these will have the highest monthly payout upon annuitization? - straight life
An annuitant is guaranteed to NOT outlive their benefits with a(n - guaranteed lifetime
withdrawal benefit
Fixed annuities provide each of the following EXCEPT - hedge against inflation
Which of the following would disqualify a company's retirement plan from receiving favorable
tax treatment? - it is temporary
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
common disaster clause - Pat is insured with a life insurance policy and Karen is his
primary beneficiary. They are both involved in an automobile accident where Pat dies instantly
and Karen dies 5 days later. Which policy provision will protect the rights of the contingent
beneficiary to receive the policy benefits?
A beneficiary has just received a claim payment for a life insurance policy. Which of the
following is TRUE regarding the federal income tax liability owed? - no fed income tax is
owed on income tax proceeds
vA policyowner can receive a percentage payment of the death benefits prior to death by using
what kind of contract? - Viatical settlement agreements typically include a percentage
payment of the death benefits to the policyowner prior to the death of the insured.
Question 4
Select the appropriate response
Which of these factors help determine an insured's life insurance premium? - avocation
(hobby)
Question 5
Select the appropriate response
Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in
payments of $10,000 per month until the principal and interest has been paid out. Which
option was chosen? - fixed amount
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This
transaction is called a(n) - A 1035 tax free Exchange is the IRS tax code that allows for the
rollover of a non-qualified annuity (or transfer of a life insurance policy) to a new annuity or life
policy of equal or greater value.
,Question 7
Select the appropriate response
A policyowner is prohibited from making any changes to the policy without the beneficiary's
written consent under which beneficiary designation? - irrevocable beneficiary
What does a life insurance policy guarantee to the stated beneficiary upon the death of the
insured? - specified amount of money
Which settlement option involves having the proceeds remain with the insurer and earnings
paid on a monthly basis to the beneficiary? - interest only
Where would policy proceeds be paid if both the insured and primary beneficiary were killed in
the same accident? - contingent beneficiary
Naming a contingent beneficiary as "all surviving children" is described by which term? -
class designation
What would be an expense factor in an insurance program? - mortality costs
A beneficiary change can occur - normally at any time during the policy term
How is the cost of a policy affected when a policyowner pays premiums more frequently? -
increases
Insurance premium is determined by each of the following factors EXCEPT - liquidity
Which of these is considered to be a document that describes the critical segments of a life
insurance policy? - policy summary
What is the purpose of the Medical Information Bureau (MIB)?
q- to help underwriters eval risk
All of these are considered sources of information that can assist an underwriter in determining
whether or not to accept a risk EXCEPT - National Association of Insurance Underwriters
All of these are typically sources of underwriting information for life or health insurance EXCEPT
- disclosure authorization response
An applicant's character and personal habits can be obtained for underwriting purposes from
which source? - investigative consumer repor
,Which of the following pertains to the analysis of an applicant's personal information and
determining whether insurance should be issued or declined? - underwriting
Which of the following does a life insurance policy summary normally include? - policys
cash value
What would happen if a life insurance applicant is given a conditional receipt from an insurance
agent and then dies the next day? - the claim will be paid if the application is approved.
In which of the following relationships would there NOT be an insurable interest? -
business owner to business customer
Which of these is likely to occur when life or health insurance is being applied for? -
Medical history from the insured may be reviewed and reported
When calculating the amount of life insurance needed for an income earner, what has to be
determined when using the Needs Approach? - The family's financial objectives if the
income earner were to die or become disabled
All of the following are considered appropriate uses of life insurance for business purposes
EXCEPT - Protecting the business by covering entry level employees with life insurance
Which of these is a method of determining the level of funds required for ongoing support in
the event of the breadwinner's death? - human life value
Question 4
Select the appropriate response
Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this
called? - estate conversion
All of the following are examples of a Business Continuation Plan EXCEPT
Key person insurance
Cross-purchase agreement
Stock Redemption Plan - deferred compensation
Question 1
Select the appropriate response
Fixed period settlement options are considered to be a form of a(n) - annuity
, Which settlement option pays a stated amount to an annuitant, but no residual value to a
beneficiary? - life income
Which of these statements regarding the annuitant is CORRECT? - The annuitant's life
expectancy determines the annuity payments
Which type of annuity guarantees a stated number of income payments, whether or not the
annuitant is still alive to receive them?lif - life annuity certain
Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this
income will become payable to their children for the remainder of the period. Kristi has what
kind of annuity? - temporary annuity certain
What happens to interest earned if the annuitant dies before the payout start date? - it is
taxable
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE
statement? - Premiums paid plus interest earned is returned to the beneficiary
How do interest earnings accumulate in a deferred annuity? - on a tax deferred basis
Maria would like an annuity that provides a guaranteed accumulation or payout. The type of
annuity she is seeking is called - annuity certain
Which of the following is considered to be the period when the accumulated value in an annuity
is paid out? - annuitization phase
What will the beneficiary receive if an annuitant dies during the accumulation period? -
The greater of the accumulated cash value or the total premium paid
Which type of annuity stops all payments upon the death of the annuitant? - life annuity
Which of these will have the highest monthly payout upon annuitization? - straight life
An annuitant is guaranteed to NOT outlive their benefits with a(n - guaranteed lifetime
withdrawal benefit
Fixed annuities provide each of the following EXCEPT - hedge against inflation
Which of the following would disqualify a company's retirement plan from receiving favorable
tax treatment? - it is temporary
