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Sample Practice Questions

Try these 10 sample questions from the Life practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1A client wants lifetime death protection, premiums that remain level throughout the premium-paying lifetime, and guaranteed cash values stated in advance. Which basic policy structure best matches these requirements?

    1. A. Ordinary whole life
    2. B. Level term life
    3. C. Universal life
    4. D. Variable whole life

    Answer: A

    Explanation: The DISB guide states, "Whole Life Insurance covers you for as long as you live if your premiums are paid." Ordinary whole life combines lifetime protection with the traditional level-premium and guaranteed-value structure. Term is temporary; universal life has flexible funding, and variable cash values depend on investments.

    Reference: D.C. DISB / NAIC Life Insurance Buyer's Guide — What Is the Right Kind of Life Insurance?, p. 6, Whole Life Insurance

  2. 2An insured qualifies as totally disabled under a life policy's waiver-of-premium rider, including its age and waiting-period requirements. How does that rider maintain the policy during the qualifying disability?

    1. A. It deducts the unpaid premiums from cash value as withdrawals from the policy.
    2. B. It continues the policy without premium payments while qualifying disability continues.
    3. C. It applies cash value to purchase a smaller paid-up policy with no further premiums.
    4. D. It pays a monthly disability income that the insured may apply toward policy premiums.

    Answer: B

    Explanation: The regulator explains, "Waiver of premium provides that your policy will be kept in force by the company, without further payment of premiums, if you become totally disabled before age 60 or 65, after an initial waiting period." Once the rider conditions are met, premiums are waived. This is not a cash-value withdrawal, reduced paid-up election or disability-income payment.

    Reference: New York DFS: Life Insurance Information for Consumers — Optional Riders—Waiver of Premium

  3. 3An applicant answers an ordinary DC life policy's health-history questions honestly to the best of the applicant's knowledge. In the absence of fraud, how does the required policy provision characterize these statements?

    1. A. Warranties
    2. B. Covenants
    3. C. Representations
    4. D. Conditions precedent

    Answer: C

    Explanation: D.C. Code states, "All statements made by the insured shall, in the absence of fraud, be considered representations and not warranties." Health-history assertions are therefore representations. They are not absolute warranties of exact truth, future-performance covenants, or the events that constitute conditions precedent.

    Reference: D.C. Code § 31-4703: Life policies—Required provisions — Life policies—Required provisions, paragraph (a)(3)(A)(ii); derived text line 35

  4. 4A grandmother owns a life policy on her adult son and names her granddaughter as revocable beneficiary. No assignment or special consent restriction applies. The family wants to change the beneficiary. Who holds the contractual authority to request that change?

    1. A. The insured son
    2. B. The selling producer
    3. C. The granddaughter
    4. D. The grandmother

    Answer: D

    Explanation: DISB states, "The Owner is responsible for paying premiums and controls the ability to make changes to the policy." The grandmother is the owner. Being the insured, revocable beneficiary or servicing producer does not itself convey the owner’s change authority.

    Reference: D.C. DISB: Frequently Asked Questions—Life Insurance — Who Are the Parties to a Life Insurance Policy?

  5. 5Which action may the DC insurance Commissioner take while enforcing the insurance laws?

    1. A. Issue only nonbinding recommendations
    2. B. Conduct investigations and require relevant records
    3. C. Investigate only after jury authorization
    4. D. Investigate only domestic mutual insurers

    Answer: B

    Explanation: The statute permits “public or private investigations inside or outside of the District.” Therefore, conducting an enforcement investigation is permitted.

    Reference: § 31–233. Investigations and administrative and judicial enforcement. | D.C. Law Library — Commissioner's investigative powers

  6. 6What minimum premium grace period must a standard individual life insurance policy provide under DC law?

    1. A. At least 10 days
    2. B. At least 15 days
    3. C. At least 30 days or one month
    4. D. At least 60 days

    Answer: C

    Explanation: The required provision grants “a grace period of at least 30 days or of 1 month.” The policy must meet that minimum.

    Reference: § 31–4703. Life policies — Required provisions. | D.C. Law Library — individual life grace period

  7. 7The owner has completed every premium required by a 20-pay whole life policy. Two years later, the insured dies. The policy has a $150,000 face amount, $30,000 cash value and $40,000 in total premiums paid. There are no loans or riders. What death benefit is payable?

    1. A. $0
    2. B. $30,000
    3. C. $40,000
    4. D. $150,000

    Answer: D

    Explanation: The regulator explains that limited-payment whole life "gives you lifetime protection but requires only a limited number of premium payments." Completing the 20 payments makes the policy paid up; it does not terminate coverage. The $150,000 face amount is payable, rather than the surrender value or a premium refund.

    Reference: New York DFS: Life Insurance Information for Consumers — Types of Life Insurance Policies—Traditional Whole Life—Limited Payment Whole Life

  8. 8A policyowner wants the right to purchase a stated amount of additional life coverage on specified option dates even if a later illness makes the insured uninsurable. Which rider supplies that right?

    1. A. Guaranteed insurability
    2. B. Cost of living
    3. C. Accidental death benefit
    4. D. Disability income

    Answer: A

    Explanation: The regulator states, "The guaranteed insurability rider gives you the option to buy a stated amount of additional insurance at specified intervals up to a maximum age, usually 40, without presenting evidence of insurability." This protects the future purchase option against deteriorating health. Inflation-linked increases, accident benefits and disability income address different triggers or benefits.

    Reference: New York DFS: Life Insurance Information for Consumers — Optional Riders—Guaranteed Insurability

  9. 9An applicant submits a life application and initial premium on June 1 and completes the required medical examination on June 5. The conditional receipt specifies the later of those dates if the applicant qualifies for the requested coverage on that date. Underwriting confirms that qualification on June 12; the policy is issued June 20. When does receipt coverage become effective?

    1. A. June 5
    2. B. June 1
    3. C. June 12
    4. D. June 20

    Answer: A

    Explanation: The regulator explains, "If the applicant meets the conditions, the coverage becomes effective as of the date on the receipt." The receipt identifies the later of the application/premium date and examination date, which is June 5. The applicant qualified then, so later confirmation and policy issuance do not replace that specified effective date.

    Reference: Washington OIC: A Consumer's Insurance Glossary — Conditional Receipt (refers to life insurance)

  10. 10An owner sells an entire life policy in a life settlement, with no retained ownership, beneficiary interest or special premium-payment arrangement. Under the standard fully transferred transaction, who pays future premiums and collects the death benefit?

    1. A. Premiums: original owner; death benefit: original owner
    2. B. Premiums: purchaser; death benefit: original owner
    3. C. Premiums: purchaser; death benefit: purchaser
    4. D. Premiums: original owner; death benefit: purchaser

    Answer: C

    Explanation: NAIC explains that the provider "becomes the policy owner, must pay any premiums that are due, and eventually collects the full amount of the death benefit from the insurance company." With the stated complete transfer, both responsibilities and the eventual proceeds belong to the purchaser. Neither remains with the seller under these facts.

    Reference: NAIC: Understanding Life Settlements — Defining the Terms—Life Settlement Provider, p. 2

Topics in this practice bank

These topics describe the available practice for Life. Review the examination outline and its sources for scope and allocation details.

  • Life General Knowledge — I. TYPES OF POLICIES (15 scored questions)
    • Traditional whole life products
    • Traditional whole life products / Ordinary whole life
    • Traditional whole life products / Limited-pay and single-premium life
    • Interest/market-sensitive/adjustable life products
    • Interest/market-sensitive/adjustable life products / Universal life
    • Interest/market-sensitive/adjustable life products / Variable whole life
    • Interest/market-sensitive/adjustable life products / Variable universal life
    • Interest/market-sensitive/adjustable life products / Interest-sensitive whole life
    • Interest/market-sensitive/adjustable life products / Indexed life
    • Term life
    • Term life / Types
    • Term life / Types / Level
    • Term life / Types / Decreasing
    • Term life / Types / Return of premium
    • Term life / Types / Annually renewable
    • Term life / Special features
    • Term life / Special features / Renewable
    • Term life / Special features / Convertible
    • Annuities
    • Annuities / Single and flexible premium
    • Annuities / Immediate and deferred
    • Annuities / Fixed and variable
    • Annuities / Indexed
    • Annuities / Accumulation and Annuity Periods
    • Annuities / Payout options
    • Combination plans and variations
    • Combination plans and variations / Joint life (first to die)
    • Combination plans and variations / Survivorship life (second to die)
  • Life General Knowledge — II. POLICY RIDERS, PROVISIONS, OPTIONS, AND EXCLUSIONS (15 scored questions)
    • Policy riders
    • Policy riders / Waiver of premium and waiver of monthly deduction
    • Policy riders / Guaranteed insurability
    • Policy riders / Payor benefit
    • Policy riders / Accidental death and/or accidental death and dismemberment
    • Policy riders / Term riders
    • Policy riders / Other insureds
    • Policy riders / Long term care
    • Policy riders / Return of premium
    • Policy riders / Disability
    • Policy riders / Cost of Living
    • Policy provisions and options
    • Policy provisions and options / Entire contract
    • Policy provisions and options / Insuring clause
    • Policy provisions and options / Free look
    • Policy provisions and options / Consideration
    • Policy provisions and options / Owner’s rights
    • Policy provisions and options / Beneficiary designations
    • Policy provisions and options / Beneficiary designations / Primary and contingent
    • Policy provisions and options / Beneficiary designations / Revocable and irrevocable
    • Policy provisions and options / Beneficiary designations / Common disaster
    • Policy provisions and options / Beneficiary designations / Minor beneficiaries
    • Policy provisions and options / Beneficiary designations / Designation by class
    • Policy provisions and options / Premium Payment
    • Policy provisions and options / Premium Payment / Modes
    • Policy provisions and options / Premium Payment / Grace period
    • Policy provisions and options / Premium Payment / Automatic premium loan
    • Policy provisions and options / Premium Payment / Level or flexible
    • Policy provisions and options / Reinstatement
    • Policy provisions and options / Policy loans, withdrawals, partial surrenders
    • Policy provisions and options / Non-forfeiture options
    • Policy provisions and options / Dividends and dividend options (e.g. participating, non-participating)
    • Policy provisions and options / Incontestability
    • Policy provisions and options / Assignments
    • Policy provisions and options / Suicide
    • Policy provisions and options / Misstatement of age and gender
    • Policy provisions and options / Settlement options
    • Policy provisions and options / Accelerated death benefits
    • Policy exclusions
    • Policy exclusions / War
    • Policy exclusions / Aviation
    • Policy exclusions / Dangerous Occupation
  • Life General Knowledge — III. COMPLETING THE APPLICATION, UNDERWRITING, AND DELIVERING THE POLICES (12 scored questions)
    • Completing the application
    • Completing the application / Required signatures
    • Completing the application / Changes in the application
    • Completing the application / Consequences of incomplete applications
    • Completing the application / Warranties and representations
    • Completing the application / Collecting the initial premium and issuing the receipt
    • Completing the application / Replacement
    • Completing the application / Disclosures at point of sale (e.g., HIPAA, HIV consent)
    • Completing the application / USA PATRIOT Act/anti-money laundering
    • Completing the application / Gramm-Leach-Bliley Act (GLBA) Privacy
    • Underwriting
    • Underwriting / Insurable interest
    • Underwriting / Medical information and consumer reports
    • Underwriting / Fair Credit Reporting Act
    • Underwriting / Risk classification
    • Underwriting / Stranger/Investor-owned life insurance (STOLI/IOLI)
    • Delivering the policy
    • Delivering the policy / When coverage begins
    • Delivering the policy / Explaining the policy and its provisions, riders, exclusions, and ratings to the client
    • Contract law
    • Contract law / Elements of a contract
    • Contract law / Elements of a contract / Consideration
    • Contract law / Elements of a contract / Offer and Acceptance
    • Contract law / Elements of a contract / Competent parties
    • Contract law / Elements of a contract / Legal purpose
    • Contract law / Unique aspects of the insurance contract
    • Contract law / Unique aspects of the insurance contract / Conditional
    • Contract law / Unique aspects of the insurance contract / Unilateral
    • Contract law / Unique aspects of the insurance contract / Adhesion
    • Contract law / Unique aspects of the insurance contract / Aleatory
  • Life General Knowledge — IV. RETIREMENT AND OTHER INSURANCE CONCEPTS (8 scored questions)
    • Third-party ownership
    • Life Settlements
    • Group life insurance
    • Group life insurance / Conversion privilege
    • Group life insurance / Contributory vs. noncontributory
    • Retirement plans
    • Retirement plans / Qualified plans
    • Retirement plans / Nonqualified plans
    • Life insurance needs analysis/suitability
    • Life insurance needs analysis/suitability / Personal insurance needs
    • Life insurance needs analysis/suitability / Business insurance needs
    • Life insurance needs analysis/suitability / Business insurance needs / Key person
    • Life insurance needs analysis/suitability / Business insurance needs / Buy sell
    • Social Security benefits
    • Tax treatment of insurance premiums, proceeds, and dividends
    • Tax treatment of insurance premiums, proceeds, and dividends / Individual life
    • Tax treatment of insurance premiums, proceeds, and dividends / Group life
    • Tax treatment of insurance premiums, proceeds, and dividends / Modified Endowment Contracts (MECs)
  • Life District of Columbia Specific — I. DISTRICT OF COLUMBIA LAWS, RULES, AND REGULATIONS COMMON TO LIFE, ACCIDENT AND HEALTH, PROPERTY, AND CASUALTY INSURANCE (20 scored questions)
    • Commissioner of Insurance, Securities and Banking
    • Commissioner of Insurance, Securities and Banking / Broad Powers & Duties
    • Commissioner of Insurance, Securities and Banking / Examination of Records
    • Commissioner of Insurance, Securities and Banking / Notice of Hearings
    • General Insurance Definitions
    • General Insurance Definitions / Domestic, Foreign, Alien
    • General Insurance Definitions / Stock & Mutual Companies
    • General Insurance Definitions / Certificate of Authority
    • Licensing Requirements
    • Licensing Requirements / Producer
    • Licensing Requirements / License denial, nonrenewal, suspension or revocation
    • Licensing Requirements / Appointments
    • Licensing Requirements / Commissions
    • Licensing Requirements / Reporting of actions
    • Licensing Requirements / License Renewal
    • Unfair Trade Practices
    • Unfair Trade Practices / False Advertising
    • Unfair Trade Practices / Rebating
    • Unfair Trade Practices / Misrepresentation
    • Unfair Trade Practices / Defamation
    • Unfair Trade Practices / Discrimination
    • Unfair Trade Practices / Twisting
    • Unfair Trade Practices / Penalties
    • Unfair Trade Practices / Claims
    • Fiduciary Capacity of Licensee
    • AIDS Law
    • Insurance Guaranty Associations
  • Life District of Columbia Specific — II. DISTICT OF COLUMBIA LAWS, RULES, AND REGULATIONS PERTINENT TO LIFE INSURANCE ONLY (10 scored questions)
    • Required Provisions
    • Required Provisions / Grace Period
    • Required Provisions / Reinstatement
    • Other Provisions
    • Other Provisions / Policy Loan
    • Other Provisions / Benefits Protected from Creditors
    • Group Life
    • Group Life / Termination Rights
    • Annuities
    • Annuities / Variable Annuities
    • Variable Life
    • Credit Life
    • Standard Nonforfeiture Law

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