LIFE INSURANCE EXAM QUESTIONS WITH CORRECT ANSWERS LATEST 2024-2025 LATEST UPDATED QUEST, Exams of Nursing

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LIFE INSURANCE EXAM QUESTIONS WITH

CORRECT ANSWERS LATEST 2024 - 2025

LATEST UPDATED QUESTIONS

What is the purpose of the Wisconsin State Life Insurance Fund? a) to offer low-cost life insurance to state residents b) To protect insured against insolvent insurers c) To advertise different types of life insurance policies available in the state d) To provide life insurance through licensed intermediaries - CORRECT ANSWER>>a An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The premium for individual coverage will be based upon the insured's attained age b) The insured may choose to convert to term or permanent individual coverage c) The insured would not need to prove insurability for a conversion policy d) The insured may convert coverage to an individual

policy within 31 days - CORRECT ANSWER>>b During a life insurance policy replacement, the insurer is required to provide the policyowner a free-look period of at least a) 10 days b) 20 days c) 30 days d) 90 days - CORRECT ANSWER>>c 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? a) the former wife of the deceased insured b) a minor son of the insured c) a business partner of the insured d) the wife of the deceased insured - CORRECT ANSWER>>b All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) The policy is owned by the company b) Any type of insurance policy may be used

c) The employer pays a bonus to a selected employee to fund the policy d) It is considered a nonqualified employee benefit - CORRECT ANSWER>>a Which of the following is NOT true regarding policy loans? a) Policy loans can be repaid at death b) an insurer can charge interest on outstanding policy loans c) a policy loan may be repaid after the policy is surrendered d) Money borrowed from the cash value is taxable - CORRECT ANSWER>>d A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a) The amount of the distribution is reduced by the amount of a 20% withholding tax b) No taxes are due since the plan participant is over age 59 1/ c) There is a 10% early withdrawal penalty d) The amount distributed is subject to ordinary income

tax

• CORRECT ANSWER>>a All of the following are true regarding the guaranteed insurability rider EXCEPT a) this rider is available to all insureds with no additional premium b) The insured may purchase additional coverage at the attained age c) The insured may purchase additional insurance up to the amount specified in the base policy d) It allows the insured to purchase additional amounts of insurance without providing insurability only at specified dates or events - CORRECT ANSWER>>a A claimant, whi is totally and permanently disabled, is eligible for Social Security Disability benefits after an elimination period of a) 24 months b) 0 months c) 5 months d) 12 months - CORRECT ANSWER>>c

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to a) the policy owner b) the insurance company c) The contingent beneficiary d) the insured's spouse - CORRECT ANSWER>>c All of the following are beneficiary designations EXCEPT a) Contingent b) primary c) specified d) tertiary - CORRECT ANSWER>>c If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? a) 50% of the death benefit b) the face amount minus the premiums that would have been collected until the insured reached the age of 100 c) a full death benefit d) a death benefit equal to the cash value of the policy -

CORRECT ANSWER>>c What type of account will most likely be established for a minor? a) Trust b) Annuity c) Credit life d) Estate planning - CORRECT ANSWER>>a The interest earned on policy dividends is a) non taxable b) tax deductible c) 40% taxable, similar to a capital gain d) taxable - CORRECT ANSWER>>d All of the following entities regulate variable life policies EXCEPT a) the Guaranty Association b) Federal Government c) the SEC d) the Insurance Department - CORRECT ANSWER>>a

What is the latest point that a Buyer's Guide can be issued? a) when the applicant turns in the application b) Up until the day before policy delivery c) on the day of policy delivery d) 30 days after policy delivery - CORRECT ANSWER>>a Life insurance ppolicy illustration riles apply to which of the following types of policies? a) Whole life insurance b) Variable life insurance c) Individual annuity contracts d) Life insurance with a face amount of less than $10,

CORRECT ANSWER>>a The dividend option in which the policyowner uses dividends to purchase a term policy or one year is referred to as the a) accelerated endowment b) Paid-up additions c) One-year term option

d) Paid-up option - CORRECT ANSWER>>c Which of the following is true regarding a market value adjusted annuity? a) the insurer bears all the market risk of changing interest rates b) there are no penalties for a premature surrender of the annuity c) it provides a level benefit payment d) the ownder is guaranteed a fixed interest rate for a specific period of time - CORRECT ANSWER>>d Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives? a) Medical information b) Inspection report c) Agent's report d) General information - CORRECT ANSWER>>a Which of the following is NOT an example of an insurable interest? a) Employer in employee

b) child in parent c) Debtor in creditor d) business partners in each other - CORRECT ANSWER>>c All of the following statements are true regarding taxqualified annuities EXCEPT a) annuity earnings are tax deferred b) they must be approved by the IRS c) withdrawals are taxed d) employer contributions are not tax deductible - CORRECT ANSWER>>d All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity? a) a 60-year-old man b) a 60-year-old woman c) a 50-year-old man d) a 50-year-old woman - CORRECT ANSWER>>a If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

a) upon issuance of the policy b) within 30 days after the first premium payment was collected c) prior to filling out an application for insurance d) with the policy - CORRECT ANSWER>>d The two types of assignments are a) absolute and partial b) complete and partial c) complete and proportionate d) absolute and collateral - CORRECT ANSWER>>d An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? a) reduction of premium b) accumulation at interest c) cash option d) flexible premium - CORRECT ANSWER>>a

Which of the following statements regarding HIV testing for life insurance purposes is NOT true? a) The testing practices must meet the criteria of the U.S. Department of Health and Human Services b) HIV testing is regulated at the state level c) insurers are barred from requesting HIV testing d) Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant - CORRECT ANSWER>>c Who does the Interstate Insurance Product Regulation Compact serve? a) Commissioner b) NAIC c) Insurers d) Insured - CORRECT ANSWER>>c Which is TRUE about the cash surrender nonforfeiture option? a) After the cash surrender, the insured is covered for a grace period of one month b) the policy remains active for some time after the policyholder opts for cash surrender

c) the policyholder receives the original cash value of the policy d) funds exceeding the premium paid are taxable as ordinary income - CORRECT ANSWER>>d Which of the following applicants would NOT qualify for a Keogh plan? a) someone who works 400 hours per year b) someone who has been employed for more than 12 months c) someone who is over 25 years of age d) someone who works for a self-employed individual - CORRECT ANSWER>>a An individual buys a flexible premium deferred life annuity with a 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a) payments for 15 years b) payments for 20 years c) payments for life d) nothing - CORRECT ANSWER>>a

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a) interest-sensitive whole life b) life annuity with period certain c) increasing term d) limited pay whole life - CORRECT ANSWER>>d For how long is an insurance company allowed to defer policy loan requests? a) 30 days b) 60 days c) 6 months d) 1 year - CORRECT ANSWER>>c An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will the coverage begin? a) When the agent submits the application to the company and the company issues a conditional receipt

b) when the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health c) on the designated effective date d) on the application date - CORRECT ANSWER>>b If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT a) erase the inCORRECT ANSWERand record the correct answer b) Draw a line through the first answer, record the correct answer, and have the applicant initial the change c) note on the application the reason for change d) destroy the application and complete a new one - CORRECT ANSWER>>a Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? a) Withdrawn amounts are taxed on a last in, first out basis b) Withdrawn amounts are taxed on a first in, last out basis

c) taxes are deferred on withdrawn amounts, but a flat penalty is charged d) taxes are deferred on withdrawn amounts - CORRECT ANSWER>>a Which of the following is NOT an allowable 1035 exchange? a) A whole life insurance policy is exchanged for a term insurance policy b) A whole life insurance policy is exchanged for a Universal life insurance policy c) an annuity is exchanged for another annuity d) a life insurance policy is exchanged for an annuity - CORRECT ANSWER>>a The Ownership provision entitles the policyowner to do all of the following EXCEPT a) set premium rates b) receive a policy loan c) assign the policy d) designate a beneficiary - CORRECT ANSWER>>a

All of the following statements concerning dividends are true EXCEPT a) dividend amounts are guaranteed in the policy b) lower insurance company costs generate higher dividends c) they stem from favorable underwriting experience d) favorable investment results generate higher dividends

• CORRECT ANSWER>>a 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? a) joint and survivor b) fixed amount option c) Interest only option d) life income with period certain - CORRECT ANSWER>>c The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be

determined by taking into account all of the following EXCEPT a) the beneficiary's life expectancy b) projected interest rates c) face amount of the policy d) the insured's age at death - CORRECT ANSWER>>d Which type of life insurance policy generates immediate cash value? a) continuous premium b) single premium c) level term d) decreasing term - CORRECT ANSWER>>b Equity indexed annuities a) seek higher premiums b) are more risky than variable annuities c) are security instruments d) invest conservatively - CORRECT ANSWER>>a Which of the following is TRUE regarding variable annuities? a) the company guarantees a minimum interest rate

b) a person selling variable c) the annuitant assumes the risks on investment d) the funds are invested in the company's general account - CORRECT ANSWER>>c Which of the following is NOT true regarding Equity Indexed Annuities? a) the insurance company keeps a percentage of the returns b) they have guaranteed minimum interest rates c) they are less risky than variable annuities d) they earn lower interest rates than fixed annuities - CORRECT ANSWER>>d All of the following statements are true regarding installments for a fixed amount EXCEPT a) value of the account and future earnings will determine the time period for the benefits b) this option pays a specific amount until the funds are exhausted c) the annuitant may select how big the payments will be d) the payments will stop when the annuitant dies -

CORRECT ANSWER>>d Which of the following us used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are comparatively priced? a) policy cost guides b) consumer price indices c) policy cost indices d) cost comparison methods - CORRECT ANSWER>>d What determines the penalty for surrendering a market value adjusted annuity prematurely? a) the current interest rate at the time of surrender b) the flat fee determined by an index of interest gains and the amount of time the annuity would take to mature c) there are no penalties imposed for surrendering annuities prematurely d) the guaranteed minimum interest rate provided in the contract - CORRECT ANSWER>>a An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? a) 401(k) plan

b) Tax-sheltered account plan c) HR 10 plan d) profit sharing plan - CORRECT ANSWER>>d Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a) premiums are not tax-deductible as a business expense b) premiums are tax-deductible as a business expense c) premiums are tax-deductible by the key employee d) premiums are taxable to the employee - CORRECT ANSWER>>a Which of the following settlement options in life insurance is known as straight life? a) single life b) life with period certain c) fixed amount d) life income - CORRECT ANSWER>>d According to the entire contract provision, a policy must contain a) a declarations page with a summary of insureds b) Buyer's guide to life insurance

c) listing of the insured's former insurer(s) for incontestability provisions d) a copy of the original application for insurance - CORRECT ANSWER>>d An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a) reduction of premiums b) paid-up additions c) one-year term purchase d) accumulation at interest - CORRECT ANSWER>>b An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? a) $10,000, no tax consequence b) $8,000, no tax consequence c) $8,000, tax on growth only d) $10,000, tax on growth only - CORRECT ANSWER>>a

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in a) recession of the policy b) adjustment in the amount of death benefit c) no change whatsoever d) automatic laps - CORRECT ANSWER>>b A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a) Revocable beneficiary b) Secondary beneficiary c) Contingent beneficiary d) Irrevocable beneficiary - CORRECT ANSWER>>a If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an a) Nonqualified annuity b) Modified endowment contract c) Accelerated benefit policy

d) Endowment - CORRECT ANSWER>>b The mode of premium payment a) is the factor that determines the amount of dividends in a policy b) is the method used to compute the cash surrender value of the policy c) does not affect the amount of premium paid d) is defined as the frequency and the amount of the premium payment - CORRECT ANSWER>>d The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage begin? a) as of the policy delivery date b) as of the first month after the policy issue c) as of the policy issue date d) as of the application date - CORRECT ANSWER>>d All of the following information about a customer must be used in determining annuity suitability EXCEPT a) financial experience

b) annual income c) beneficiary's age d) tax status - CORRECT ANSWER>>c Concerning Juvenile Life insurance, which of the following statements is INCORRECT? a) usually a parent or guardian is the applicant for insurance on the life of a minor b) it can be a limited premium payment policy c) juvenile life is classified as any life insurance written on the life of a minor d) juvenile life is classified as any life insurance purchased by a minor - CORRECT ANSWER>>d A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a) pay the policy proceeds up to an established unit b) not pay the policy proceeds under any circumstances c) automatically pay the policy proceeds d) pay the policy proceeds only if it would have issued the policy - CORRECT ANSWER>>d 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? a) reduction of premium b) paid-up addition c) accumulation at interest d) cash option - CORRECT ANSWER>>a All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) the annual dividend is retained by the company b) the interest is credited at a rate specified by the policy c) the policyholder has the right to withdraw the accumulations at any time d) the interest is not taxable since it remains inside the insurance policy - CORRECT ANSWER>>d Which of the following is the best reason to purchase life insurance rather than annuities? a) to create regular income payments b) to liquidate a sum of money over time c) to create an estate