State Exam Questions & Answers

1) Which of the following statement describes an

insurable interest?
A. The policy owners must expect to
benefit from the insured’s death
B. The policy owner must expect to
suffer a loss when the insured dies
C. The beneficiary, by definition, has an
insurable interest in the insured
D. The insured must have a personal or
Business relationship with the beneficiaries
2) The statements made by the application on an
application for life insurance are considered to
be
A. Warranties
B. Affirmations
C. Representations
 D. Declarations
3) Who must sign an application?
A. The Producer and the owner
B. The insurer and the producer
C. The applicant and the insurer
D. The insured and the beneficiary
4) If an applicant asks for the highest coverage
for the least cost, the agent should recommend
which kind of insurance?
A. Term Life
B. Whole Life
C. Adjustable Life
D. Universal Life
5) Which policy would be most appropriate for
protecting the balance of a loan or mortgage?
A. Level Term
B. Decreasing Term
C. Universal Life
D. Variable Life
6) How long does coverage continue for a limited-
pay whole life policy?
A. 20 years on a 20-pay policy
B. 65 years on a life paid at 65 policy
C. Death or age 100
D. 10 years on a 10 pay policy
7) An insured has purchased a $100,000 Whole
life policy. After a period of years, the cash
value of the policy has grown to $42,000. If the
insured dies at the time, how much will the
beneficiary receive?
A. $100,000 ( only receive face amount not
Cash value)
B. $142,000
C. $42,000
D. $58,000
8) Which of the following is incorrect about
universal life?
 A. The policy owner may increase or
decrease the face amount
B. The insurance portion is whole life
insurance (Annual Renewable Term not
WL)
C. These policies allow for partial
withdrawals or surrenders
D. There are two death benefit options,
Option A and Option B
9) Premiums will be paid on a Straight life whole
life policy until
A. 20 years or death, whichever occurs first
B. Age 65
C. Age 100
D. Death or age 100, whichever occurs first
10) A policy that insures 2 or more lives and
pays on the death of the last insured is a (n)
A. Joint Life
B. Group Life
 C. Survivorship Life
D. Family Protection Life
11) Which of the following is true about a
limited- pay whole life policy?
A. Coverage will end when premium Payments
stop.
B. The cash value will stop growing when
premium payments stop.
C. The interest rate on the cash value will be
reduced when payments stop.
D. Coverage will continue until death or age
100, whichever occurs first
12) Which type of policy builds cash value that
is placed in a separate account where it is
invested in stocks, bonds, and other securities?
A. Variable Life (the opposite of this is
General account with a fixed rate of return)
B. Universal Life
C. Index Life
D. Term Life
13) All things being equal, which policy will
have the highest annual premium?
A. Level Term
B. Straight Life
C. 25-pay Life
D. 20-pay Life
14) All of the following are true about a fixed
annuity except
A. The Interest rate is guaranteed
B. The premium is invested in the insurers
general account
C. It does not protect against inflation
D. The owner assumes the investment risk
15) An immediate annuity has no
accumulation Period, which means it can only
be purchased with a
A. Level Premium
B. Flexible Premium
 C. Single Premium
D. Variable Premium
16) A Producer who intentionally misleads a
client by stating that the policy will pay
dividends is guilty of
A. Defamation
B. False Advertising
C. Misrepresentation
D. Coercion
17) Which of the following is incorrect about
variable Annuities?
A. A producer must hold a securities and an
insurance license to sell them
B. There is no guarantee of annuity values or
benefit amount
C. Premiums are invested in conservative
investments such as real estate and
mortgages
D. Premiums are held in a separate account
18) If the annuitant should die during the
accumulation phase, what will the beneficiary
receive?
A. Benefit amount minus payments due
B. Cash value only
C. Premiums paid or cash value, whichever
is greater
D. Only refund of premiums paid
19) What nonprofit association protects the
owners of policies issued by insurers that
become insolvent?
A. Department of insurance
B. Guaranty Association
C. Department of Banking and finance
D. Policy owner protection Association
20) If a Policy owner should return a policy 7
days after the policy was delivered, the insurer
will refund
A. A Prorated portion of the premium paid
 B. Premium Paid minus expenses
C. Nothing because the insured was covered for
7 days
D. The full premium Paid
21) If an insured dies during the grace period,
the insurer will pay
A. The full face amount
B. The face amount minus premium due and
interest
C. The face amount minus a surrender charge
D. Nothing, the contract is null and void
22) Which of the following is not a
requirement of the reinstatement provision?
A. Submit the reinstatement application within
3 years of the policy lapsing
B. Proof of insurability
C. Pay back any loans
D. Pay back premium at current attained
age
23) If an insured dies 3 years after the policy
was issued and understated his age on the
application, what will the insurer do?
A. Adjust the death benefit
B. Pay the full death benefit
C. Adjust the premium
D. Pay no death benefit and return the premium
paid
24) If an individual commits suicide within six
months after purchasing an insurance policy,
the insurer will
A. Return the premium paid
B. Pay nothing
C. Pay the face value minus the suicide
deduction
D. Pay no death benefit and return the premium
paid