ExamFX: Life Insurance Practice
Exam 2025 Questions and Answers
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of
the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how
much will be paid out? - ANSWER✔✔-$50,000
Which of the following documents must be provided to the policyowner or applicant during policy
replacement? - ANSWER✔✔-Notice Regarding Replacement.
The president of a manufacturing company has offered one of the company's officers a special
individual annuity plan that is unavailable 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 - ANSWER✔✔-A nonqualified annuity plan.
During replacement of life insurance, a replacing insurer must do which of the following? -
ANSWER✔✔-Obtain a list of all life insurance policies that will be replaced
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring
monthly payments. What type of life insurance policy would be best suited to this situation? -
ANSWER✔✔-Decreasing term.
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,An insurance policy that only requires a payment of premium at its inception, provides insurance
protection for the life of the insured, and matures at the insured's age 100 is called - ANSWER✔✔-
Single premium whole life.
Which of the following statements is TRUE concerning the Accidental Death Rider? -
ANSWER✔✔-It will pay double or triple the face amount.
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is
INCORRECT? - ANSWER✔✔-SEPs are suitable for large companies.
In insurance, an offer is usually made when - ANSWER✔✔-An applicant submits an application to
the insurer.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this
is all the insurance that he can afford at this time, he wants to be sure that additional coverage will
be available in the future. Which of the following options should be included in the policy? -
ANSWER✔✔-Guaranteed insurability option
Who can make a fully deductible contribution to a traditional IRA? - ANSWER✔✔-An individual
not covered by an employer-sponsored plan who has earned income
A producer is helping a married couple determine the financial needs of their children in the event
one or both should die prematurely. This is a personal use of life insurance known as -
ANSWER✔✔-Survivor protection.
When is the earliest a policy may go into effect? - ANSWER✔✔-When the application is signed and
a check is given to the agent
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
,Which of the following is a key distinction between variable whole life and variable universal life
products? - ANSWER✔✔-Variable whole life has a guaranteed death benefit.
When an insured makes truthful statements on the application for insurance and pays the required
premium, it is known as which of the following? - ANSWER✔✔-Consideration
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and
nothing if death occurs after the 20-year period. What type of policy is this? - ANSWER✔✔-Level
term
A Return of Premium term life policy is written as what type of term coverage? - ANSWER✔✔-
Increasing
All of the following are duties and responsibilities of producers at the time of application EXCEPT -
ANSWER✔✔-Change any incorrect statement on the application by personally initialing next to the
corrected statement.
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable
dividend check each year. She has decided that she would rather use the dividends to help pay for
her next premium. What option would allow her to do this? - ANSWER✔✔-Reduction of premium
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises
to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? -
ANSWER✔✔-Aleatory
The proposed insured makes the premium payment on a new insurance policy. If the insured should
die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an
example of what kind of contract? - ANSWER✔✔-Conditional
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
, What does "level" refer to in level term insurance? - ANSWER✔✔-Face amount
What is the purpose of a free-look period in insurance policies? - ANSWER✔✔-It allows the
insured to reject the policy with a full refund.
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of
the insured, and to whom the benefits will be paid? - ANSWER✔✔-Insuring clause
Which of the following best describes annually renewable term insurance? - ANSWER✔✔-It is level
term insurance.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT -
ANSWER✔✔-An insured borrows money from the bank and makes a collateral assignment of a
part of the death benefit to secure the loan.
All of the following are true regarding the guaranteed insurability rider EXCEPT - ANSWER✔✔-
This rider is available to all insureds with no additional premium.
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The
policy contained an accidental death rider, offering a double indemnity benefit. The insured was
severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries.
What amount would his beneficiary receive as a settlement? - ANSWER✔✔-$200,000
Which of the following statements is TRUE about a policy assignment? - ANSWER✔✔-It transfers
rights of ownership from the owner to another person.
Which of the following named beneficiaries would NOT be able to receive the death benefit directly
from the insurer in the event of the insureds' death? - ANSWER✔✔-A minor son of the insured
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 4
Exam 2025 Questions and Answers
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of
the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how
much will be paid out? - ANSWER✔✔-$50,000
Which of the following documents must be provided to the policyowner or applicant during policy
replacement? - ANSWER✔✔-Notice Regarding Replacement.
The president of a manufacturing company has offered one of the company's officers a special
individual annuity plan that is unavailable 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 - ANSWER✔✔-A nonqualified annuity plan.
During replacement of life insurance, a replacing insurer must do which of the following? -
ANSWER✔✔-Obtain a list of all life insurance policies that will be replaced
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring
monthly payments. What type of life insurance policy would be best suited to this situation? -
ANSWER✔✔-Decreasing term.
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,An insurance policy that only requires a payment of premium at its inception, provides insurance
protection for the life of the insured, and matures at the insured's age 100 is called - ANSWER✔✔-
Single premium whole life.
Which of the following statements is TRUE concerning the Accidental Death Rider? -
ANSWER✔✔-It will pay double or triple the face amount.
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is
INCORRECT? - ANSWER✔✔-SEPs are suitable for large companies.
In insurance, an offer is usually made when - ANSWER✔✔-An applicant submits an application to
the insurer.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this
is all the insurance that he can afford at this time, he wants to be sure that additional coverage will
be available in the future. Which of the following options should be included in the policy? -
ANSWER✔✔-Guaranteed insurability option
Who can make a fully deductible contribution to a traditional IRA? - ANSWER✔✔-An individual
not covered by an employer-sponsored plan who has earned income
A producer is helping a married couple determine the financial needs of their children in the event
one or both should die prematurely. This is a personal use of life insurance known as -
ANSWER✔✔-Survivor protection.
When is the earliest a policy may go into effect? - ANSWER✔✔-When the application is signed and
a check is given to the agent
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
,Which of the following is a key distinction between variable whole life and variable universal life
products? - ANSWER✔✔-Variable whole life has a guaranteed death benefit.
When an insured makes truthful statements on the application for insurance and pays the required
premium, it is known as which of the following? - ANSWER✔✔-Consideration
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and
nothing if death occurs after the 20-year period. What type of policy is this? - ANSWER✔✔-Level
term
A Return of Premium term life policy is written as what type of term coverage? - ANSWER✔✔-
Increasing
All of the following are duties and responsibilities of producers at the time of application EXCEPT -
ANSWER✔✔-Change any incorrect statement on the application by personally initialing next to the
corrected statement.
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable
dividend check each year. She has decided that she would rather use the dividends to help pay for
her next premium. What option would allow her to do this? - ANSWER✔✔-Reduction of premium
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises
to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? -
ANSWER✔✔-Aleatory
The proposed insured makes the premium payment on a new insurance policy. If the insured should
die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an
example of what kind of contract? - ANSWER✔✔-Conditional
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
, What does "level" refer to in level term insurance? - ANSWER✔✔-Face amount
What is the purpose of a free-look period in insurance policies? - ANSWER✔✔-It allows the
insured to reject the policy with a full refund.
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of
the insured, and to whom the benefits will be paid? - ANSWER✔✔-Insuring clause
Which of the following best describes annually renewable term insurance? - ANSWER✔✔-It is level
term insurance.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT -
ANSWER✔✔-An insured borrows money from the bank and makes a collateral assignment of a
part of the death benefit to secure the loan.
All of the following are true regarding the guaranteed insurability rider EXCEPT - ANSWER✔✔-
This rider is available to all insureds with no additional premium.
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The
policy contained an accidental death rider, offering a double indemnity benefit. The insured was
severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries.
What amount would his beneficiary receive as a settlement? - ANSWER✔✔-$200,000
Which of the following statements is TRUE about a policy assignment? - ANSWER✔✔-It transfers
rights of ownership from the owner to another person.
Which of the following named beneficiaries would NOT be able to receive the death benefit directly
from the insurer in the event of the insureds' death? - ANSWER✔✔-A minor son of the insured
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 4
