Kentucky Life Insurance Exam
Questions and Detailed Answers
Elements of a Contract - 🧠ANSWER ✔✔Competent parties, legal purpose, offer
and acceptance, consideration
Waiver - 🧠ANSWER ✔✔Voluntary giving up of a known right or privilege, can be
express or implied
Estoppel - 🧠ANSWER ✔✔A person is prohibited by virtue of his own past actions
from claiming a right that would work to the detriment of another who relied
on the past conduct
Aleatory Contract - 🧠ANSWER ✔✔a contract where the values exchanged may
not be equal but depend on an uncertain event
Contracts of Adhesion - 🧠ANSWER ✔✔One-sided in regards to preparation
(prepared by the insurer)
Contract of Utmost Good Faith - 🧠ANSWER ✔✔Both parties bargain in good
faith when forming and entering into the contract. The two parties rely upon
the statements and promises of the other and assume no attempt to conceal or
deceive has been made.
Page 1 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Executory Contract - 🧠ANSWER ✔✔A contract that has not yet been fully
performed.
Mortality Rate - 🧠ANSWER ✔✔Determined by dividing the average number of
people who will die each year at each age by the entire population of people
that age (1980 CSO table)
Functions of Life Insurance - 🧠ANSWER ✔✔Create an immediate estate, requires
no management or physical upkeep, paid in installments, can be used as
collateral
Final Expenses - 🧠ANSWER ✔✔Medical and funeral expenses, outstanding debts
Total Needs Approach - 🧠ANSWER ✔✔Totaling the amount required to pay for
current and future expenses
Living Benefits of Life Insurance - 🧠ANSWER ✔✔Loan value (can be used as
collateral,) retirement benefits
Human Life Value - 🧠ANSWER ✔✔The monetary value of an individual's life
Tax Advantages of Life Insurance - 🧠ANSWER ✔✔Cash value earnings
accumulate tax free, proceeds at death pass income tax free
4 Types of Life Insurance - 🧠ANSWER ✔✔Permanent, Term, Industrial, Group
Page 2 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Permanent Life Insurance - 🧠ANSWER ✔✔Accumulates cash value, insurance
protection decreases as cash value increases
Term Life Insurance - 🧠ANSWER ✔✔Accumulates no cash value, only provides
death benefits
Whole Life Insurance - 🧠ANSWER ✔✔A permanent policy for which you pay a
specified premium each year for the rest of your life, cash value accumulates,
endows at age 100
Limited-Pay Life Policies - 🧠ANSWER ✔✔Premiums are paid to a specified age or
for a specified number of years and then stop. Protection remains for the rest of
the insured's life.
Endowment Policies - 🧠ANSWER ✔✔As of 1984, no policy can endow before age
95 because the CV and DB would be taxed
Single Premium Whole Life - 🧠ANSWER ✔✔Policy is completely paid up after
one premium, policyholder pays less than if premiums stretched out over
several years
Modified Endowment Contract (MEC) - 🧠ANSWER ✔✔TAMRA: All single
premium policies, any policy that does not satisfy the 7-pay test // money taken
Page 3 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
, from the policy is taxed as ordinary income // if policy owner is younger than 59
1/2 and not disabled 10% penalty is assigned
Joint Life Policies - 🧠ANSWER ✔✔First-to-die, contract comes to an end at the
first death, no further insurance protection for the other person or persons
covered by the policy
Survivorship Policies - 🧠ANSWER ✔✔Second-to-die, covers 2 lives and
guarantees payment only when second insured dies
Adjustable Life Policies - 🧠ANSWER ✔✔Policyholder can adjust face amount of
policy, amount/frequency of premium payments, period of insurance protection
Universal Life Insurance - 🧠ANSWER ✔✔Flexible premium, adjustable death
benefits, accumulates cash values: earlier models have front-end load, later
models have back end load. Insurance costs are debited and guaranteed and
excess interest are credited.
Universal Life Death Benefit Option A - 🧠ANSWER ✔✔Level death benefit
throughout life of policy (can be increased with proof of insurability, can also be
reduced.)
Universal Life Death Benefit Option B - 🧠ANSWER ✔✔Increasing death benefit
made up of the policy face value plus cash value account
Page 4 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Detailed Answers
Elements of a Contract - 🧠ANSWER ✔✔Competent parties, legal purpose, offer
and acceptance, consideration
Waiver - 🧠ANSWER ✔✔Voluntary giving up of a known right or privilege, can be
express or implied
Estoppel - 🧠ANSWER ✔✔A person is prohibited by virtue of his own past actions
from claiming a right that would work to the detriment of another who relied
on the past conduct
Aleatory Contract - 🧠ANSWER ✔✔a contract where the values exchanged may
not be equal but depend on an uncertain event
Contracts of Adhesion - 🧠ANSWER ✔✔One-sided in regards to preparation
(prepared by the insurer)
Contract of Utmost Good Faith - 🧠ANSWER ✔✔Both parties bargain in good
faith when forming and entering into the contract. The two parties rely upon
the statements and promises of the other and assume no attempt to conceal or
deceive has been made.
Page 1 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Executory Contract - 🧠ANSWER ✔✔A contract that has not yet been fully
performed.
Mortality Rate - 🧠ANSWER ✔✔Determined by dividing the average number of
people who will die each year at each age by the entire population of people
that age (1980 CSO table)
Functions of Life Insurance - 🧠ANSWER ✔✔Create an immediate estate, requires
no management or physical upkeep, paid in installments, can be used as
collateral
Final Expenses - 🧠ANSWER ✔✔Medical and funeral expenses, outstanding debts
Total Needs Approach - 🧠ANSWER ✔✔Totaling the amount required to pay for
current and future expenses
Living Benefits of Life Insurance - 🧠ANSWER ✔✔Loan value (can be used as
collateral,) retirement benefits
Human Life Value - 🧠ANSWER ✔✔The monetary value of an individual's life
Tax Advantages of Life Insurance - 🧠ANSWER ✔✔Cash value earnings
accumulate tax free, proceeds at death pass income tax free
4 Types of Life Insurance - 🧠ANSWER ✔✔Permanent, Term, Industrial, Group
Page 2 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Permanent Life Insurance - 🧠ANSWER ✔✔Accumulates cash value, insurance
protection decreases as cash value increases
Term Life Insurance - 🧠ANSWER ✔✔Accumulates no cash value, only provides
death benefits
Whole Life Insurance - 🧠ANSWER ✔✔A permanent policy for which you pay a
specified premium each year for the rest of your life, cash value accumulates,
endows at age 100
Limited-Pay Life Policies - 🧠ANSWER ✔✔Premiums are paid to a specified age or
for a specified number of years and then stop. Protection remains for the rest of
the insured's life.
Endowment Policies - 🧠ANSWER ✔✔As of 1984, no policy can endow before age
95 because the CV and DB would be taxed
Single Premium Whole Life - 🧠ANSWER ✔✔Policy is completely paid up after
one premium, policyholder pays less than if premiums stretched out over
several years
Modified Endowment Contract (MEC) - 🧠ANSWER ✔✔TAMRA: All single
premium policies, any policy that does not satisfy the 7-pay test // money taken
Page 3 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
, from the policy is taxed as ordinary income // if policy owner is younger than 59
1/2 and not disabled 10% penalty is assigned
Joint Life Policies - 🧠ANSWER ✔✔First-to-die, contract comes to an end at the
first death, no further insurance protection for the other person or persons
covered by the policy
Survivorship Policies - 🧠ANSWER ✔✔Second-to-die, covers 2 lives and
guarantees payment only when second insured dies
Adjustable Life Policies - 🧠ANSWER ✔✔Policyholder can adjust face amount of
policy, amount/frequency of premium payments, period of insurance protection
Universal Life Insurance - 🧠ANSWER ✔✔Flexible premium, adjustable death
benefits, accumulates cash values: earlier models have front-end load, later
models have back end load. Insurance costs are debited and guaranteed and
excess interest are credited.
Universal Life Death Benefit Option A - 🧠ANSWER ✔✔Level death benefit
throughout life of policy (can be increased with proof of insurability, can also be
reduced.)
Universal Life Death Benefit Option B - 🧠ANSWER ✔✔Increasing death benefit
made up of the policy face value plus cash value account
Page 4 of 36
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER:
619652435. TERMS OF USE. PRIVACY STATEMENT. ALL RIGHTS RESERVED
