©SOPHIABENNETT@2024-2025 Saturday, August 24, 2024 8:52 AM
Alabama State Insurance Exam FX Practice
Questions and Answers
If a producer changes his residential address who must he/she notify? -
Answer✔️✔️-This change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing
insurance policies in this state? - Answer✔️✔️-Minors at the age of 14 are
allowed to buy their own policies.
What is the penalty for IRA distributions that are below the required
minimum for the year? - Answer✔️✔️-50%
All of the following are business uses of life insurance EXCEPT -
Answer✔️✔️-Funding against general company financial loss.
Which of the following is called a "second-to-die" policy? - Answer✔️✔️-
Survivorship life
The term "fiduciary capacity" deals with a producer's - Answer✔️✔️-Position
of financial trust.
Which is NOT true about beneficiary designations? - Answer✔️✔️-The
beneficiary must have insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a -
Answer✔️✔️-
1
, ©SOPHIABENNETT@2024-2025 Saturday, August 24, 2024 8:52 AM
All of the following applicants for an insurance producer license are
exempt from prelicensing education requirements EXCEPT - Answer✔️✔️-
An applicant for a dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the
insured that there will not be a problem keeping the policy in force. This is
an example of what type of agent authority? - Answer✔️✔️-apparant
Which of the following determines the length of time that benefits will be
received under the Fixed-Amount settlement option? - Answer✔️✔️-Size of
each installment
What is a major problem with naming a trust as the beneficiary of a life
insurance policy? - Answer✔️✔️-They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party
on a take-it-or-leave-it basis are classified as - Answer✔️✔️-Contracts of
adhesion.
All of the following statements concerning the use of life insurance as an
Executive Bonus are correct EXCEPT - Answer✔️✔️-The policy is owned by
the company.
Which of the following is considered to be a morale hazard? - Answer✔️✔️-
Driving recklessly
When transacting business in this state an insurer formed under the laws of
another country is known as a/an - Answer✔️✔️-Alien Insurer
2
, ©SOPHIABENNETT@2024-2025 Saturday, August 24, 2024 8:52 AM
When a reduced-paid up nonforfeiture option is chosen, what happens to
the face amount of the policy? - Answer✔️✔️-It is reduced to the amount of
what the cash value would buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy
will pay a portion of the proceeds annually to his spouse, but that the
principal will be paid to their children when they reach a certain age.
Which settlement option should the policyowner choose? - Answer✔️✔️-
Interest only option
Under which nonforfeiture option does the company pay the surrender
value and have no further obligations to the policyowner? - Answer✔️✔️-
Cash surrender
An insured has a Modified Endowment Contract. He wants to withdraw
some money in order to pay medical bills. Which of the following is true? -
Answer✔️✔️-He will have to pay a penalty if he is younger than 59½.
When would a misrepresentation on the insurance application be
considered fraud? - Answer✔️✔️-If it is intentional and material
In Alabama, an insurance company certificate of authority is issued for
what period of time? - Answer✔️✔️-Perpetual
If an application for an annuity is gathered any way other than face-to-face,
within how many days after the insurer receives the completed application
must the applicant be given a Buyer's Guide? - Answer✔️✔️-5 business days
3
Alabama State Insurance Exam FX Practice
Questions and Answers
If a producer changes his residential address who must he/she notify? -
Answer✔️✔️-This change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing
insurance policies in this state? - Answer✔️✔️-Minors at the age of 14 are
allowed to buy their own policies.
What is the penalty for IRA distributions that are below the required
minimum for the year? - Answer✔️✔️-50%
All of the following are business uses of life insurance EXCEPT -
Answer✔️✔️-Funding against general company financial loss.
Which of the following is called a "second-to-die" policy? - Answer✔️✔️-
Survivorship life
The term "fiduciary capacity" deals with a producer's - Answer✔️✔️-Position
of financial trust.
Which is NOT true about beneficiary designations? - Answer✔️✔️-The
beneficiary must have insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a -
Answer✔️✔️-
1
, ©SOPHIABENNETT@2024-2025 Saturday, August 24, 2024 8:52 AM
All of the following applicants for an insurance producer license are
exempt from prelicensing education requirements EXCEPT - Answer✔️✔️-
An applicant for a dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the
insured that there will not be a problem keeping the policy in force. This is
an example of what type of agent authority? - Answer✔️✔️-apparant
Which of the following determines the length of time that benefits will be
received under the Fixed-Amount settlement option? - Answer✔️✔️-Size of
each installment
What is a major problem with naming a trust as the beneficiary of a life
insurance policy? - Answer✔️✔️-They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party
on a take-it-or-leave-it basis are classified as - Answer✔️✔️-Contracts of
adhesion.
All of the following statements concerning the use of life insurance as an
Executive Bonus are correct EXCEPT - Answer✔️✔️-The policy is owned by
the company.
Which of the following is considered to be a morale hazard? - Answer✔️✔️-
Driving recklessly
When transacting business in this state an insurer formed under the laws of
another country is known as a/an - Answer✔️✔️-Alien Insurer
2
, ©SOPHIABENNETT@2024-2025 Saturday, August 24, 2024 8:52 AM
When a reduced-paid up nonforfeiture option is chosen, what happens to
the face amount of the policy? - Answer✔️✔️-It is reduced to the amount of
what the cash value would buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy
will pay a portion of the proceeds annually to his spouse, but that the
principal will be paid to their children when they reach a certain age.
Which settlement option should the policyowner choose? - Answer✔️✔️-
Interest only option
Under which nonforfeiture option does the company pay the surrender
value and have no further obligations to the policyowner? - Answer✔️✔️-
Cash surrender
An insured has a Modified Endowment Contract. He wants to withdraw
some money in order to pay medical bills. Which of the following is true? -
Answer✔️✔️-He will have to pay a penalty if he is younger than 59½.
When would a misrepresentation on the insurance application be
considered fraud? - Answer✔️✔️-If it is intentional and material
In Alabama, an insurance company certificate of authority is issued for
what period of time? - Answer✔️✔️-Perpetual
If an application for an annuity is gathered any way other than face-to-face,
within how many days after the insurer receives the completed application
must the applicant be given a Buyer's Guide? - Answer✔️✔️-5 business days
3
