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Free Life Insurance Producer Practice Questions

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Sample Practice Questions

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

  1. 1A client needs affordable death protection for a 20-year mortgage and has no need to accumulate policy cash value. Which policy type best fits that purpose?

    1. A. Term life insurance
    2. B. Ordinary whole life insurance
    3. C. Universal life insurance
    4. D. Variable whole life insurance

    Answer: A

    Explanation: "Most term policies don’t build up cash values that you can" Term provides protection for a specified period and generally lacks accessible cash value.

    Reference: NAIC Life Insurance Buyer's Guide — p. 5, Term vs. cash value

  2. 2The insured on a life policy develops a disability named in an attached rider. Which rider can suspend required premium payments under its terms?

    1. A. Waiver-of-premium rider
    2. B. Guaranteed-insurability rider
    3. C. Accidental-death rider
    4. D. Cost-of-living rider

    Answer: A

    Explanation: "you can stop paying your life insurance premium if you develop a covered illness or disability named in the rider." A waiver-of-premium rider addresses premiums after the specified covered illness or disability.

    Reference: NAIC Life Insurance consumer guide — Life Insurance Riders, waiver of premium

  3. 3A life applicant knowingly leaves an important health answer false on the signed application. After issue, the insurer discovers the false statement. What coverage consequence may follow?

    1. A. Adjust the benefit to the amount that the premium would buy at a corrected age
    2. B. Deduct the amount of any outstanding policy loan from death proceeds
    3. C. Return premiums after the owner uses the policy's timely review right
    4. D. Reduce or cancel coverage after the false application answer is discovered

    Answer: D

    Explanation: "insurance company discovers false statements on your application after it issues your policy, it could reduce or cancel your coverage." A false health answer found after issue can reduce or cancel coverage. The other outcomes belong to age correction, policy debt, or a timely return.

    Reference: NAIC Life Insurance Buyer's Guide — p. 6, Understand the Application Process

  4. 4A policyowner sells an existing life policy to a life-settlement provider for cash. After ownership is transferred, who generally pays future premiums and receives the death benefit?

    1. A. The seller retains ownership, pays premiums, and receives the benefit
    2. B. The broker acquires ownership, pays premiums, and receives the benefit
    3. C. The provider acquires ownership, pays premiums, and receives the benefit
    4. D. The beneficiary acquires ownership, pays premiums, and receives the benefit

    Answer: C

    Explanation: "owner then pays future premiums and collects the death benefit when the insured person dies." In the described life settlement, the provider purchases the policy and becomes the new owner; it pays future premiums and receives the benefit.

    Reference: NAIC Viatical Settlements Model Regulation, Appendix A — Viatical Settlements Model Regulation, Appendix A, What is a Life Settlement?

  5. 5Which action falls within the Missouri Director of Commerce and Insurance's express rulemaking authority?

    1. A. Prescribing procedures for proceedings before the Department
    2. B. Enacting a new criminal insurance statute
    3. C. Setting federal securities registration standards
    4. D. Overriding a conflicting Missouri statute by regulation

    Answer: A

    Explanation: RSMo 374.045 authorizes this function: "To prescribe forms and procedures to be followed in proceedings before the department of commerce and insurance." A rule may not conflict with Missouri law, and the Director does not enact statutes or federal securities standards.

    Reference: Missouri Revisor of Statutes - Revised Statutes of Missouri, RSMo Section 374.045 — RSMo 374.045.1(2), .3

  6. 6At the time of a life insurance application, what replacement-related statement must the producer and applicant complete in Missouri?

    1. A. A signed statement indicating whether the applicant has existing policies or contracts
    2. B. A consumer's refusal to provide suitability-profile information
    3. C. A written agreement for compensation paid directly by an applicant
    4. D. A notice describing proposed credit-life coverage

    Answer: A

    Explanation: The rule requires a statement signed by both participants stating whether the applicant has "existing policies or contracts."

    Reference: Missouri Secretary of State: Code of State Regulations — 20 CSR 400-5.400(3)(A)

  7. 7A client wants a 20-year term policy whose premium and death benefit remain unchanged throughout that term. Which benefit structure should the producer select?

    1. A. A decreasing death benefit with a level premium
    2. B. A level death benefit with a level premium
    3. C. A level death benefit with annual renewal premiums
    4. D. An increasing death benefit with a level premium

    Answer: B

    Explanation: "Provides a fixed death benefit and premium amount throughout the term" A level term policy keeps both stated quantities fixed during its term.

    Reference: NAIC Life Insurance topic — Term Life Insurance, Level term insurance

  8. 8A client wants a rider that can increase the life policy's payable benefit if the insured dies in a covered accident. Which rider serves that purpose?

    1. A. Waiver-of-premium rider
    2. B. Accidental-death-benefit rider
    3. C. Guaranteed-insurability rider
    4. D. Long-term-care rider

    Answer: B

    Explanation: "your policy will pay more than the death benefit if you die in an accident." The accidental-death rider pays an additional benefit for a covered accidental death.

    Reference: NAIC Life Insurance consumer guide — Life Insurance Riders, accidental death benefit

  9. 9A Missouri group-life policyholder's application contains statements from insured members. Under the required policy provision, how are those statements characterized?

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

    Answer: A

    Explanation: "representations and not warranties" The Missouri group-life provision expressly classifies the application statements as representations; the other terms address different legal functions.

    Reference: Missouri Revised Statutes § 376.697 — RSMo § 376.697(3)

  10. 10A Missouri group-life insured loses coverage when employment ends and wants the statutory individual-policy conversion privilege. What is the latest deadline for both the application and first premium?

    1. A. 15 days after group coverage ends
    2. B. 30 days after group coverage ends
    3. C. 45 days after group coverage ends
    4. D. 31 days after group coverage ends

    Answer: D

    Explanation: "within thirty-one days after such termination" The conversion application and first premium must be completed within 31 days of termination. Q069 only tested assignability.

    Reference: Missouri Revised Statutes § 376.697 — RSMo § 376.697(8)

Topics in this practice bank

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

  • I. TYPES OF POLICIES (15 questions)
    • A. Traditional whole life products
    • A. Traditional whole life products / 1. Ordinary whole life
    • A. Traditional whole life products / 2. Limited-pay and single-premium life
    • B. Interest/market-sensitive/adjustable life products
    • B. Interest/market-sensitive/adjustable life products / 1. Universal life
    • B. Interest/market-sensitive/adjustable life products / 2. Variable whole life
    • B. Interest/market-sensitive/adjustable life products / 3. Variable universal life
    • B. Interest/market-sensitive/adjustable life products / 4. Interest-sensitive whole life
    • B. Interest/market-sensitive/adjustable life products / 5. Indexed life
    • C. Term life
    • C. Term life / 1. Types
    • C. Term life / 1. Types / a. Level
    • C. Term life / 1. Types / b. Decreasing
    • C. Term life / 1. Types / c. Return of premium
    • C. Term life / 1. Types / d. Annually renewable
    • C. Term life / 2. Special features
    • C. Term life / 2. Special features / a. Renewable
    • C. Term life / 2. Special features / b. Convertible
    • D. Annuities
    • D. Annuities / 1. Single and flexible premium
    • D. Annuities / 2. Immediate and deferred
    • D. Annuities / 3. Fixed and variable
    • D. Annuities / 4. Indexed
    • E. Combination plans and variations
    • E. Combination plans and variations / 1. Joint life (first to die)
    • E. Combination plans and variations / 2. Survivorship life (second to die)
  • II. LIFE PROVISIONS, RIDERS, OPTIONS, AND EXCLUSIONS (15 questions)
    • A. Policy riders
    • A. Policy riders / 1. Waiver of premium and waiver of monthly deduction
    • A. Policy riders / 2. Guaranteed insurability
    • A. Policy riders / 3. Payor benefit
    • A. Policy riders / 4. Accidental death and/or accidental death and dismemberment
    • A. Policy riders / 5. Term riders
    • A. Policy riders / 6. Other insureds
    • A. Policy riders / 7. Long term care
    • A. Policy riders / 8. Return of premium
    • A. Policy riders / 9. Disability
    • A. Policy riders / 10. Cost of Living
    • B. Policy provisions and options
    • B. Policy provisions and options / 1. Entire contract
    • B. Policy provisions and options / 2. Insuring clause
    • B. Policy provisions and options / 3. Free look
    • B. Policy provisions and options / 4. Consideration
    • B. Policy provisions and options / 5. Owner’s rights
    • B. Policy provisions and options / 6. Beneficiary designations
    • B. Policy provisions and options / 6. Beneficiary designations / a. Primary and contingent
    • B. Policy provisions and options / 6. Beneficiary designations / b. Revocable and irrevocable
    • B. Policy provisions and options / 6. Beneficiary designations / c. Common disaster
    • B. Policy provisions and options / 6. Beneficiary designations / d. Minor beneficiaries
    • B. Policy provisions and options / 6. Beneficiary designations / e. Designation by class
    • B. Policy provisions and options / 7. Premium Payment
    • B. Policy provisions and options / 7. Premium Payment / a. Modes
    • B. Policy provisions and options / 7. Premium Payment / b. Grace period
    • B. Policy provisions and options / 7. Premium Payment / c. Automatic premium loan
    • B. Policy provisions and options / 7. Premium Payment / d. Level or flexible
    • B. Policy provisions and options / 8. Reinstatement
    • B. Policy provisions and options / 9. Policy loans, withdrawals, partial surrenders
    • B. Policy provisions and options / 10. Non-forfeiture options
    • B. Policy provisions and options / 11. Dividends and dividend options (eg. participating, non-participating)
    • B. Policy provisions and options / 12. Incontestability
    • B. Policy provisions and options / 13. Assignments
    • B. Policy provisions and options / 14. Suicide
    • B. Policy provisions and options / 15. Misstatement of age and gender
    • B. Policy provisions and options / 16. Settlement options
    • B. Policy provisions and options / 17. Accelerated death benefits
    • C. Policy exclusions
  • III. COMPLETING THE APPLICATION, UNDERWRITING, AND DELIVERING THE POLICES…. (12 questions)
    • A. Completing the application
    • A. Completing the application / 1. Required signatures
    • A. Completing the application / 2. Changes in the application
    • A. Completing the application / 3. Consequences of incomplete applications
    • A. Completing the application / 4. Warranties and representations
    • A. Completing the application / 5. Collecting the initial premium and issuing the receipt
    • A. Completing the application / 6. Replacement
    • A. Completing the application / 7. Disclosures at point of sale (e.g., HIPAA, HIV consent)
    • A. Completing the application / 8. USA PATRIOT Act/anti-money laundering
    • A. Completing the application / 9. Gramm-Leach-Bliley Act (GLBA) Privacy
    • B. Underwriting
    • B. Underwriting / 1. Insurable interest
    • B. Underwriting / 2. Medical information and consumer reports
    • B. Underwriting / 3. Fair Credit Reporting Act
    • B. Underwriting / 4. Risk classification
    • B. Underwriting / 5. Stranger/Investor-owned life insurance (STOLI/IOLI)
    • C. Delivering the policy
    • C. Delivering the policy / 1. When coverage begins
    • C. Delivering the policy / 2. Explaining the policy and its provisions, riders, exclusions, and ratings to the client
    • D. Contract law
    • D. Contract law / 1. Elements of a contract
    • D. Contract law / 1. Elements of a contract / a. Consideration
    • D. Contract law / 1. Elements of a contract / b. Offer and Acceptance
    • D. Contract law / 1. Elements of a contract / c. Competent parties
    • D. Contract law / 1. Elements of a contract / d. Legal purpose
    • D. Contract law / 2. Unique aspects of the insurance contract
    • D. Contract law / 2. Unique aspects of the insurance contract / a. Conditional
    • D. Contract law / 2. Unique aspects of the insurance contract / b. Unilateral
    • D. Contract law / 2. Unique aspects of the insurance contract / c. Adhesion
    • D. Contract law / 2. Unique aspects of the insurance contract / d. Aleatory
  • IV. RETIREMENT AND OTHER INSURANCE CONCEPTS (8 questions)
    • A. Third-party ownership
    • B. Viatical Settlements
    • C. Life Settlements
    • D. Group life insurance
    • D. Group life insurance / 1. Conversion privilege
    • D. Group life insurance / 2. Contributory vs. noncontributory
    • E. Retirement plans
    • E. Retirement plans / 1. Qualified plans
    • E. Retirement plans / 2. Nonqualified plans
    • F. Life insurance needs analysis/suitability
    • F. Life insurance needs analysis/suitability / 1. Personal insurance needs
    • F. Life insurance needs analysis/suitability / 2. Business insurance needs
    • F. Life insurance needs analysis/suitability / 2. Business insurance needs / a. Key person
    • F. Life insurance needs analysis/suitability / 2. Business insurance needs / b. Buy sell
    • G. Social Security benefits
    • H. Tax treatment of insurance premiums, proceeds, and dividends
    • H. Tax treatment of insurance premiums, proceeds, and dividends / 1. Individual life
    • H. Tax treatment of insurance premiums, proceeds, and dividends / 2. Group life
    • H. Tax treatment of insurance premiums, proceeds, and dividends / 3. Modified Endowment Contracts (MECs)
  • MISSOURI STATUTES, RULES, AND REGULATIONS COMMON TO ALL LINES (20 questions)
    • I. DIRECTOR OF COMMERCE AND INSURANCE
    • I. DIRECTOR OF COMMERCE AND INSURANCE / A. General powers and duties
    • I. DIRECTOR OF COMMERCE AND INSURANCE / B. Examination of records
    • I. DIRECTOR OF COMMERCE AND INSURANCE / C. Cease and desist orders
    • I. DIRECTOR OF COMMERCE AND INSURANCE / D. Interstate Insurance Product Regulatory Commission (aka, “The Compact”)
    • II. LICENSING REQUIREMENTS
    • II. LICENSING REQUIREMENTS / A. Persons required to be licensed
    • II. LICENSING REQUIREMENTS / A. Persons required to be licensed / 1. Producer
    • II. LICENSING REQUIREMENTS / A. Persons required to be licensed / 2. Nonresident producer
    • II. LICENSING REQUIREMENTS / B. Obtaining a license
    • II. LICENSING REQUIREMENTS / B. Obtaining a license / 1. Qualifications
    • II. LICENSING REQUIREMENTS / B. Obtaining a license / 2. Examinations
    • II. LICENSING REQUIREMENTS / C. Maintaining a license
    • II. LICENSING REQUIREMENTS / C. Maintaining a license / 1. Continuing education
    • II. LICENSING REQUIREMENTS / C. Maintaining a license / 2. Change of address
    • II. LICENSING REQUIREMENTS / C. Maintaining a license / 3. Renewal
    • II. LICENSING REQUIREMENTS / C. Maintaining a license / 4. Temporary
    • II. LICENSING REQUIREMENTS / D. License suspension, revocation, denial, cancellation
    • III. MARKETING PRACTICES
    • III. MARKETING PRACTICES / A. Unfair and deceptive practices
    • III. MARKETING PRACTICES / B. Rebating
    • III. MARKETING PRACTICES / C. Misrepresentation
    • III. MARKETING PRACTICES / D. Defamation
    • III. MARKETING PRACTICES / E. Unfair discrimination
    • IV. CERTIFICATE OF AUTHORITY
    • V. FIDUCIARY RESPONSIBILITIES
    • VI. COMMISSIONS AND COMPENSATION
    • VII. MISSOURI INSURANCE GUARANTY ASSOCIATION
  • MISSOURI STATUTES, RULES, AND REGULATION PERTINENT TO LIFE INSURANCE ONLY (20 questions)
    • I. POLICY REPLACEMENT
    • I. POLICY REPLACEMENT / A. Replacement forms
    • I. POLICY REPLACEMENT / B. Duties of producer
    • I. POLICY REPLACEMENT / C. Duties of replacing insurance company
    • II. POLICY PROVISIONS
    • II. POLICY PROVISIONS / A. Policy loan rates
    • II. POLICY PROVISIONS / B. Assignability
    • II. POLICY PROVISIONS / C. Suicide Exclusion
    • II. POLICY PROVISIONS / D. War and Aviation Exclusion
    • III. VARIABLE PRODUCTS
    • IV. GROUP INSURANCE
    • V. CREDIT LIFE INSURANCE
    • VI. GRADED DEATH BENEFITS
    • VII. UNIVERSAL LIFE
    • VIII. SUITABILITY / BEST INTEREST STANDARD
    • IX. ADVERTISING

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