Free Life Practice Questions

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 permanent life coverage but wants scheduled premium payments to end well before retirement. Which policy structure fits that request?

   1. A. Ordinary whole life with premiums due throughout the insured's lifetime
   2. B. Limited-payment whole life with premiums ending after a shorter period
   3. C. Annually renewable term with premiums recalculated each policy year
   4. D. Single-premium whole life funded with the entire premium at issue

   Answer: B

   Explanation: "Premiums are paid over a shorter time, but coverage lasts a lifetime." Limited-payment whole life separates the premium-paying period from lifetime protection. Ordinary whole life continues scheduled premiums, annual term is temporary, and single-premium life requires one payment at issue.

   Reference: NAIC Life Insurance — Whole Life Insurance, limited payment whole life

2. 2A life insured becomes disabled by a condition specifically covered under an attached waiver-of-premium rider. What may the rider permit?

   1. A. Premium payments stop while the rider's covered condition applies.
   2. B. The death benefit is advanced to pay for long-term care.
   3. C. The insured can increase coverage without a medical examination.
   4. D. A larger death benefit is paid when death results from an accident.

   Answer: A

   Explanation: "With a waiver of premium rider, you can stop paying your life insurance premium if you develop a covered illness or disability named in the rider." This rider suspends premiums for the covered illness or disability; the alternatives describe different riders.

   Reference: NAIC Life Insurance Consumer Guide — Life Insurance Riders, waiver of premium

3. 3Before signing a life-insurance application, an applicant notices a materially false answer entered on the form. What should the applicant do?

   1. A. Leave the answer because the insurer must verify every application fact.
   2. B. Sign the form and correct the answer only after policy delivery.
   3. C. Initial the false answer so it becomes an accepted warranty.
   4. D. Correct the answer before signing to avoid coverage consequences.

   Answer: D

   Explanation: "insurance company discovers false statements on your application after it issues your policy, it could reduce or cancel your coverage." Correcting the material answer before signature avoids presenting a false application; delaying correction risks loss or reduction of coverage.

   Reference: NAIC Life Insurance Buyer's Guide — Life Insurance Buyer's Guide, application answers

4. 4An older policy owner sells a life policy for cash to an unrelated buyer, who takes ownership and expects to collect the later death benefit. What transaction is this?

   1. A. A life settlement transferring the existing policy to a third party
   2. B. A collateral assignment securing the owner's unpaid policy loan
   3. C. A beneficiary change naming the buyer without transferring ownership
   4. D. A policy replacement terminating the old policy for new insurance

   Answer: A

   Explanation: "A life settlement is the sale of a life insurance policy to a third party." Sale of an existing policy to a third party is a life settlement; assignment as collateral and beneficiary changes do not describe the sale.

   Reference: NAIC Life Insurance Consumer Guide — Life Insurance, life settlements

5. 5Which Iowa official has general control, supervision, and direction over insurance business conducted in the state?

   1. A. Secretary of State
   2. B. State Treasurer
   3. C. Attorney General
   4. D. Commissioner of Insurance

   Answer: D

   Explanation: Iowa Code §505.8 assigns the commissioner "general control, supervision, and direction over all insurance business transacted in the state." Therefore the Commissioner of Insurance is the controlling official.

   Reference: Iowa Code 505 (2026) — Iowa Code §505.8(1)

6. 6When initiating an Iowa life or annuity application, what replacement-status statement must the producer submit with the application?

   1. A. A statement signed only by the beneficiary about the producer's appointment
   2. B. A statement signed only by the insurer about the applicant's credit score
   3. C. A statement signed by both applicant and producer about existing policies or contracts
   4. D. A statement signed by the commissioner approving the premium

   Answer: C

   Explanation: Iowa Administrative Code 191—16.24 requires "a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts."

   Reference: Iowa Administrative Code — Agency 191 — Iowa Administrative Code §16.24(1)

7. 7An owner of a universal life policy wants to pay less than the illustrated premium this year. What determines whether the policy can remain active?

   1. A. The death benefit is automatically reduced whenever a premium is skipped.
   2. B. The insurer must advance the skipped premium without using policy value.
   3. C. The cash value must be sufficient to cover ongoing insurance costs.
   4. D. The owner must first convert the policy to annually renewable term.

   Answer: C

   Explanation: "The policy remains active as long as the cash value is enough to cover insurance costs." Universal life allows flexible payments, but continuing coverage depends on value available for insurance charges.

   Reference: NAIC Life Insurance — Universal Life Insurance

8. 8A healthy insured worries that a later illness could prevent buying more life insurance. Which rider can preserve a right to increase the death benefit at specified future times without a medical exam?

   1. A. A waiver-of-premium rider triggered by covered disability
   2. B. A term rider adding temporary coverage to a base policy
   3. C. A cost-of-living rider adjusting coverage by an index
   4. D. A guaranteed-insurability rider allowing specified increases

   Answer: D

   Explanation: "A guaranteed insurability rider lets you increase your death benefit at certain times in the future without a medical exam." Guaranteed insurability addresses future increases despite health changes; the other riders concern different changes.

   Reference: NAIC Life Insurance Consumer Guide — Life Insurance Riders, guaranteed insurability

9. 9An applicant pays the initial premium and receives a receipt that makes coverage effective as of the receipt date only if stated applicant conditions are satisfied. What kind of receipt is it?

   1. A. A conditional premium receipt
   2. B. A binding premium receipt
   3. C. A policy-delivery receipt
   4. D. An inspection-only receipt

   Answer: A

   Explanation: "If the applicant meets the conditions, the coverage becomes effective as of the date on the receipt." This describes a conditional receipt; the condition is essential to its effective-date rule.

   Reference: Washington OIC Insurance Glossary — Insurance Glossary, conditional receipt

10. 10Employees are asked to pay a portion of their employer's group life premium. How is that funding arrangement classified?

    1. A. Noncontributory group life
    2. B. Contributory group life
    3. C. Voluntary individual life
    4. D. Employer-owned key-person life

    Answer: B

    Explanation: "Contributory Plan - A group life insurance plan in which participants (or insured members) pay a portion of the cost." Member contributions make the employer's group plan contributory, unlike a plan funded wholly by the employer.

    Reference: Virginia SCC Life Insurance Guide — Virginia Life Insurance Guide, group plans