LIFE INSURANCE PRACTICE- EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
term life insurance - temporary protection that lasts only for a specified period of time. if
the insured dies during the specified timeframe, the policy pays the death benefit to the
beneficiaries. Term policies provide the greatest amount of coverage for the lowest premiums. It
is pure death protection
level term life insurance - premiums remain the same thoughout the life of the policy
increasing term policy - level premium, as do all policies, but the face amount increases
every year of the policy term
face value - death benefit
decreasing term policy - level premium and a death benefit that decreases each year of
the policy. Most commonly used with mortgage
whole life insurance provides permanent protection - insurance is covered for life, as long
as the policy premiums are paid. Premiums and death benefits are both guaranteed, and they
will remain level, as long as the policy is in force
whole life build cash value - the premium paid by the policyowner also does not change
during the life of the policy or during the premium payment period
straight life - continuous premium whole life, charges a level annual premium for the
lifetime of the insured and provides a level, guaranteed death benefit. it build cash value.
straight life has the lowest annual premium among whole life policies.
limited pay whole life - specifies a set number of years during which the policyowner
must pay premiums. After premium is paid up, the policy remains in force for the insureds
lifetime. Limited pay policies have higher premiums than straight life policies because the
premium payment period is condensed.
,single premium whole life - one time lump sum premium payment to provide a level
death benefit to the maturity of the policy. Single premium policies generate immediate cash
value due to the size of the lump sum premium payment.
An insurer wants to obtain info on an applicant. What must insurer do? - Present the
insured with a Disclosure authorization notice
When would a 20 pay whole life policy endow? - a limited pay whole life policy would
endows for the face amount at age 100. the premium is completely paid off in 20 years.
An individual has been contributing to a retirement account after taxes are taken out of his
paycheck. His financial advisor told him that he will be allowed to make contributions after 70
1/2 . The account holder does not have to pay taxes on the growth of his account. What type of
retirement account is this? - ROTH IRA
The dividend option in which the policyowner uses dividends to purchase a term policy for one
year is referred to as - one year term option
the dividend is utilized to purchase one year term insurance.
The president of a manufacturing company has offered one of the company's officers a special
individual annuity plan that is unaavailble to lower echelon employees. this plan would be
funded with before tax corporate dollars, and it does not meet government approval standards.
This annuity plan is subject to: - a nonqualified annuity plan
Nonqualified plans are perfectly legal for selected employees to receive certain types of
benefits. Before tax corporate dollars can be used for these plans, and they are not subject to
government standards. Nonqualified plans are not tax deductible
joint life - a joint life policy would be the least expensive because the premiums are
based on the average age, and the death benefit would be paid out at the first death.
A provision in a life insurance policy that provides for the early payment of some portion of the
face value should the insured suffer from terminal illness is called - an accelerated benefit
provision
can be made in a lump sum or in monthly installments over a specific period of time. this
provision is given without an increase in premium
If a life insurance policy develops cash value faster than a 7 pay whole life contract, it is -
a modified endowment contract
which is the following provisions make a contract complete - entire contract
,which of the following riders would not cause a death benefit to increase? - payor benefit
rider
An adjustable life policyowner can change what? - the coverage period
insurance companies may be classified according to the legal form of their ownership. The type
of company organized to return any surplus money to their policyholders is - a mutual
insurer
For an individual who is not covered by an employer sponsored plan, IRA contributions are -
tax deductible
After an insurance company examination, the Commissioner or the Examiner appointed by the
Commissioner must file a written report of the examination within - 60 days
Variable annuities - The annuitant assumes the risks on investment
The insurer accumulates dividends at interest and then uses the accumulated dividends, plus
interest and the policy cash value, to pay the policy up early - paid up option
After and insurance company examination, the Commissioner or the examiner appointed by the
Commissioner must file a written report within - 60 days
The report relating to the examination must be filed no later than 60 days after the examination
is complete
Which is NOT true about beneficiary designations - The beneficiary must have insurable
interest in the insured.
A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death
of the insured. Beneficiaries do not have interest in the policy holder.
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is
an example of - A Stoli policy (Stranger originated life insurance policies are usually
purchased by people who have no relationship with the insured with the intention of selling
them for life settlements.
Which of the following defines a peril? - cause of loss
A peril is a specific cause of loss insured in a policy.
THe full premium was submitted with the app for life insurance, and the policy was issued two
weeks later as requested. When does coverage become effective? - As of the application
date.
, If the full premium was submitted with the application and the policy was issued as requested,
the policy coverage effective date would generally coincide with the date of application
Which of the following best describes fixed period settlement options? - Both the
principal and interest will be liquidated over a selected period of time.
Under the fixed period option (also called period certain), a specified period of years is selected,
and equal installments are paid to the recipient. Both the principal and interest are liquidated
together over the selected period of time.
Equity indexed annuities - seek higher returns
these are not securities. They invest on a relatively aggressive basis to aim for higher returns.
Like a fixed annuity, the equity indexed annuity has a guaranteed minimum interest rate. The
current interest rate that is actually credited is often tied to a familiar index like the Standard
and Poohs 500
Which of the following would be considered a nonqualified retirement plan? - split dollar
amount
Examples of nonqualified plans are individual annuities and deferred compensation plans for
highly paid executives, split dollar insurance Section 162 executive bonus plans.
A life insurance policy does not have a war clause. If the insured is killed during a time of war,
what will the beneficiary receive from the life insurance policy? - The full death benefit
War or Military Service Clause specifically excludes or limits the insurer's liability for losses
caused by war or active military service. If a life insurance policy does not have that exclusion,
the benefits are paid to the beneficiary, as if the insured dies of any other cause.
Which of the following is an example of a limited-pay life policy? - Life Paid-up at age 65
Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy
endows when the insured turns 100. It is the premium paying period that is limited, not the
maturity.
Which of the following is NOT true regarding a Certificate of Authority - It is issued to
group insurance participants.
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
term life insurance - temporary protection that lasts only for a specified period of time. if
the insured dies during the specified timeframe, the policy pays the death benefit to the
beneficiaries. Term policies provide the greatest amount of coverage for the lowest premiums. It
is pure death protection
level term life insurance - premiums remain the same thoughout the life of the policy
increasing term policy - level premium, as do all policies, but the face amount increases
every year of the policy term
face value - death benefit
decreasing term policy - level premium and a death benefit that decreases each year of
the policy. Most commonly used with mortgage
whole life insurance provides permanent protection - insurance is covered for life, as long
as the policy premiums are paid. Premiums and death benefits are both guaranteed, and they
will remain level, as long as the policy is in force
whole life build cash value - the premium paid by the policyowner also does not change
during the life of the policy or during the premium payment period
straight life - continuous premium whole life, charges a level annual premium for the
lifetime of the insured and provides a level, guaranteed death benefit. it build cash value.
straight life has the lowest annual premium among whole life policies.
limited pay whole life - specifies a set number of years during which the policyowner
must pay premiums. After premium is paid up, the policy remains in force for the insureds
lifetime. Limited pay policies have higher premiums than straight life policies because the
premium payment period is condensed.
,single premium whole life - one time lump sum premium payment to provide a level
death benefit to the maturity of the policy. Single premium policies generate immediate cash
value due to the size of the lump sum premium payment.
An insurer wants to obtain info on an applicant. What must insurer do? - Present the
insured with a Disclosure authorization notice
When would a 20 pay whole life policy endow? - a limited pay whole life policy would
endows for the face amount at age 100. the premium is completely paid off in 20 years.
An individual has been contributing to a retirement account after taxes are taken out of his
paycheck. His financial advisor told him that he will be allowed to make contributions after 70
1/2 . The account holder does not have to pay taxes on the growth of his account. What type of
retirement account is this? - ROTH IRA
The dividend option in which the policyowner uses dividends to purchase a term policy for one
year is referred to as - one year term option
the dividend is utilized to purchase one year term insurance.
The president of a manufacturing company has offered one of the company's officers a special
individual annuity plan that is unaavailble to lower echelon employees. this plan would be
funded with before tax corporate dollars, and it does not meet government approval standards.
This annuity plan is subject to: - a nonqualified annuity plan
Nonqualified plans are perfectly legal for selected employees to receive certain types of
benefits. Before tax corporate dollars can be used for these plans, and they are not subject to
government standards. Nonqualified plans are not tax deductible
joint life - a joint life policy would be the least expensive because the premiums are
based on the average age, and the death benefit would be paid out at the first death.
A provision in a life insurance policy that provides for the early payment of some portion of the
face value should the insured suffer from terminal illness is called - an accelerated benefit
provision
can be made in a lump sum or in monthly installments over a specific period of time. this
provision is given without an increase in premium
If a life insurance policy develops cash value faster than a 7 pay whole life contract, it is -
a modified endowment contract
which is the following provisions make a contract complete - entire contract
,which of the following riders would not cause a death benefit to increase? - payor benefit
rider
An adjustable life policyowner can change what? - the coverage period
insurance companies may be classified according to the legal form of their ownership. The type
of company organized to return any surplus money to their policyholders is - a mutual
insurer
For an individual who is not covered by an employer sponsored plan, IRA contributions are -
tax deductible
After an insurance company examination, the Commissioner or the Examiner appointed by the
Commissioner must file a written report of the examination within - 60 days
Variable annuities - The annuitant assumes the risks on investment
The insurer accumulates dividends at interest and then uses the accumulated dividends, plus
interest and the policy cash value, to pay the policy up early - paid up option
After and insurance company examination, the Commissioner or the examiner appointed by the
Commissioner must file a written report within - 60 days
The report relating to the examination must be filed no later than 60 days after the examination
is complete
Which is NOT true about beneficiary designations - The beneficiary must have insurable
interest in the insured.
A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death
of the insured. Beneficiaries do not have interest in the policy holder.
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is
an example of - A Stoli policy (Stranger originated life insurance policies are usually
purchased by people who have no relationship with the insured with the intention of selling
them for life settlements.
Which of the following defines a peril? - cause of loss
A peril is a specific cause of loss insured in a policy.
THe full premium was submitted with the app for life insurance, and the policy was issued two
weeks later as requested. When does coverage become effective? - As of the application
date.
, If the full premium was submitted with the application and the policy was issued as requested,
the policy coverage effective date would generally coincide with the date of application
Which of the following best describes fixed period settlement options? - Both the
principal and interest will be liquidated over a selected period of time.
Under the fixed period option (also called period certain), a specified period of years is selected,
and equal installments are paid to the recipient. Both the principal and interest are liquidated
together over the selected period of time.
Equity indexed annuities - seek higher returns
these are not securities. They invest on a relatively aggressive basis to aim for higher returns.
Like a fixed annuity, the equity indexed annuity has a guaranteed minimum interest rate. The
current interest rate that is actually credited is often tied to a familiar index like the Standard
and Poohs 500
Which of the following would be considered a nonqualified retirement plan? - split dollar
amount
Examples of nonqualified plans are individual annuities and deferred compensation plans for
highly paid executives, split dollar insurance Section 162 executive bonus plans.
A life insurance policy does not have a war clause. If the insured is killed during a time of war,
what will the beneficiary receive from the life insurance policy? - The full death benefit
War or Military Service Clause specifically excludes or limits the insurer's liability for losses
caused by war or active military service. If a life insurance policy does not have that exclusion,
the benefits are paid to the beneficiary, as if the insured dies of any other cause.
Which of the following is an example of a limited-pay life policy? - Life Paid-up at age 65
Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy
endows when the insured turns 100. It is the premium paying period that is limited, not the
maturity.
Which of the following is NOT true regarding a Certificate of Authority - It is issued to
group insurance participants.
