Alabama life and health Questions and Answers
Passed 2025
Billy is the owner of a life insurance policy and has chosen a policy settlement option
under which the company will pay the beneficiary (his widow) an income each month for
as long as she lives. Payment stops at her death. Which settlement option has Billy
selected?
A. Fixed amount option
B. Fixed period option
C. Interest only option
D. Life income option -ANSWER-D. Life income option
A man with an Accidental Death & Dismemberment (AD&D) policy having a Principal
Sum of $100,000 and a Capital Sum of $50,000 loses a leg due to a blood clot which
was not due to an accident. The policy will pay
A. $0
Your Answer
B. $50,000
C. $100,000
D. $150,000 -ANSWER-0
According to Required Health Policy Provisions, the insured is prevented from filing suit
against the insurer for at least
A. 20 days and not longer than one year from the date of proof of loss.
B. 30 days and not longer than three years from the date of proof of loss.
C. 60 days and not longer than three years from the date of proof of loss.
D. 90 days and not longer than five years from the date of proof of loss. -ANSWER-60
days
The fact that insurance is more likely to be purchased by people who expect to
experience a loss is known as
A. the law of large numbers.
B. estoppel.
C. adverse selection.
D. the risk selection process. -ANSWER-adverse selection
If Louise allows her whole life policy to lapse, which nonforfeiture option should she
elect to obtain the most life insurance protection?
A. Cash surrender value option
B. Reduced paid-up insurance option
C. Guaranteed monthly income option
D. Extended term option -ANSWER-extended term option
,the kind of life insurance that acquires no cash value is
A. variable life.
B. whole life.
C. term life.
D. universal life. -ANSWER-term life
If administrative action is taken against you, or you are criminally prosecuted in another
jurisdiction, you have how long to submit notice to the Alabama Commissioner?
A. 30 days
B. 60 days
C. The end of the license period
D. Immediately -ANSWER-30 days
An immediate annuity with quarterly payments will begin making payments
A. 1 month after the annuity is purchased.
B. 3 months after the annuity is purchased.
C. 6 months after the annuity is purchased.
D. 1 year after the annuity is purchased. -ANSWER-. 3 months after the annuity is
purchased.
A disability income policy typically covers
A. the children but not the parents.
B. the parents but not the children.
C. every member of the family.
D. just the wage earners. -ANSWER-just wage earners
All of the following would likely be eligible for group life insurance EXCEPT:
A. all the uninsured residents of the Golden Years Nursing Home.
B. all the state's public school teachers.
C. employees of a nuclear power plant.
D. members of a coal miner's union. -ANSWER-all the uninsured residents of the
golden years nursing home
If the consideration clause states that the premium payment keeps the policy in force
until the next premium is due plus 30 days thereafter, the policy
A. is not authorized to be sold in most states.
B. must be modified only by an authorized agent of the company.
C. contains a grace period.
D. must be approved by an officer of the company. -ANSWER-contains a grace period
The settlement option under which the principal never decreases unless the beneficiary
makes withdrawals is the
A. interest only option.
, B. fixed period option.
C. fixed amount option.
D. life income option. -ANSWER-interest only option
Dividend options are defined as ways in which the policyowner can:
A. pay taxes on insurance dividends.
B. use or collect policy dividends.
C. pay the loan against the policy.
D. receive dividends paid on any stock held. -ANSWER-use or collect policy dividends.
The legal doctrine that prevents one from exercising a right of privilege is called
A. aleatory.
B. estoppel.
C. unilateral.
D. waiver. -ANSWER-estoppel
a defined contribution plan
A. guarantees a specified retirement benefit to the employee.
B. promises a specified payment to the plan by the employer.
Your Answer
C. promises to never change the retirement payments.
D. allows the employer to discriminate amongst employees. -ANSWER-promises a
specified payment to the plan by the employer
The Accidental Death Rider pays double the face amount (or another multiple of the
face) if death is caused by what?
A. Accidental cause and within 90 days of the accident.
B. Auto accident.
C. Any cause other than sickness and/or disease.
D. Any suspicious cause -ANSWER-Accidental cause and within 90 days of the
accident.
Which of the following is CORRECT regarding a Health Maintenance Organization
(HMO) operating in Alabama?
A. The Insurance Commissioner cannot examine an HMO every year.
B. Every HMO must have a complaint system to resolve written complaints from
enrollees.
C. HMOs are not subject to regulation by the Insurance Commissioner.
D. HMOs are regulated by the Insurance Commissioner but cannot be assessed an
administrative penalty for violations of the law. -ANSWER-Every HMO must have a
complaint system to resolve written complaints from enrollees
When an insurer cedes part of an insured's coverage to another insurance company,
retaining only part of the risk for itself, the insurer is engaging in
A. expense loading.
B. reinsurance.
Passed 2025
Billy is the owner of a life insurance policy and has chosen a policy settlement option
under which the company will pay the beneficiary (his widow) an income each month for
as long as she lives. Payment stops at her death. Which settlement option has Billy
selected?
A. Fixed amount option
B. Fixed period option
C. Interest only option
D. Life income option -ANSWER-D. Life income option
A man with an Accidental Death & Dismemberment (AD&D) policy having a Principal
Sum of $100,000 and a Capital Sum of $50,000 loses a leg due to a blood clot which
was not due to an accident. The policy will pay
A. $0
Your Answer
B. $50,000
C. $100,000
D. $150,000 -ANSWER-0
According to Required Health Policy Provisions, the insured is prevented from filing suit
against the insurer for at least
A. 20 days and not longer than one year from the date of proof of loss.
B. 30 days and not longer than three years from the date of proof of loss.
C. 60 days and not longer than three years from the date of proof of loss.
D. 90 days and not longer than five years from the date of proof of loss. -ANSWER-60
days
The fact that insurance is more likely to be purchased by people who expect to
experience a loss is known as
A. the law of large numbers.
B. estoppel.
C. adverse selection.
D. the risk selection process. -ANSWER-adverse selection
If Louise allows her whole life policy to lapse, which nonforfeiture option should she
elect to obtain the most life insurance protection?
A. Cash surrender value option
B. Reduced paid-up insurance option
C. Guaranteed monthly income option
D. Extended term option -ANSWER-extended term option
,the kind of life insurance that acquires no cash value is
A. variable life.
B. whole life.
C. term life.
D. universal life. -ANSWER-term life
If administrative action is taken against you, or you are criminally prosecuted in another
jurisdiction, you have how long to submit notice to the Alabama Commissioner?
A. 30 days
B. 60 days
C. The end of the license period
D. Immediately -ANSWER-30 days
An immediate annuity with quarterly payments will begin making payments
A. 1 month after the annuity is purchased.
B. 3 months after the annuity is purchased.
C. 6 months after the annuity is purchased.
D. 1 year after the annuity is purchased. -ANSWER-. 3 months after the annuity is
purchased.
A disability income policy typically covers
A. the children but not the parents.
B. the parents but not the children.
C. every member of the family.
D. just the wage earners. -ANSWER-just wage earners
All of the following would likely be eligible for group life insurance EXCEPT:
A. all the uninsured residents of the Golden Years Nursing Home.
B. all the state's public school teachers.
C. employees of a nuclear power plant.
D. members of a coal miner's union. -ANSWER-all the uninsured residents of the
golden years nursing home
If the consideration clause states that the premium payment keeps the policy in force
until the next premium is due plus 30 days thereafter, the policy
A. is not authorized to be sold in most states.
B. must be modified only by an authorized agent of the company.
C. contains a grace period.
D. must be approved by an officer of the company. -ANSWER-contains a grace period
The settlement option under which the principal never decreases unless the beneficiary
makes withdrawals is the
A. interest only option.
, B. fixed period option.
C. fixed amount option.
D. life income option. -ANSWER-interest only option
Dividend options are defined as ways in which the policyowner can:
A. pay taxes on insurance dividends.
B. use or collect policy dividends.
C. pay the loan against the policy.
D. receive dividends paid on any stock held. -ANSWER-use or collect policy dividends.
The legal doctrine that prevents one from exercising a right of privilege is called
A. aleatory.
B. estoppel.
C. unilateral.
D. waiver. -ANSWER-estoppel
a defined contribution plan
A. guarantees a specified retirement benefit to the employee.
B. promises a specified payment to the plan by the employer.
Your Answer
C. promises to never change the retirement payments.
D. allows the employer to discriminate amongst employees. -ANSWER-promises a
specified payment to the plan by the employer
The Accidental Death Rider pays double the face amount (or another multiple of the
face) if death is caused by what?
A. Accidental cause and within 90 days of the accident.
B. Auto accident.
C. Any cause other than sickness and/or disease.
D. Any suspicious cause -ANSWER-Accidental cause and within 90 days of the
accident.
Which of the following is CORRECT regarding a Health Maintenance Organization
(HMO) operating in Alabama?
A. The Insurance Commissioner cannot examine an HMO every year.
B. Every HMO must have a complaint system to resolve written complaints from
enrollees.
C. HMOs are not subject to regulation by the Insurance Commissioner.
D. HMOs are regulated by the Insurance Commissioner but cannot be assessed an
administrative penalty for violations of the law. -ANSWER-Every HMO must have a
complaint system to resolve written complaints from enrollees
When an insurer cedes part of an insured's coverage to another insurance company,
retaining only part of the risk for itself, the insurer is engaging in
A. expense loading.
B. reinsurance.
