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Free Arizona Examination for Life Insurance Producer Practice Questions

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Sample Practice Questions

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

  1. 1An Arizona resident applies for a life producer license. Which statement must the application contain?

    1. A. A declaration that the statements are true, correct, and complete to the applicant's best knowledge and belief
    2. B. A declaration that every prior employer approves the application
    3. C. A warranty that the applicant will never change business addresses
    4. D. A certification that the applicant has already received an insurer appointment

    Answer: A

    Explanation: A.R.S. § 20-285(A) requires the applicant to declare that the statements are "true, correct and complete to the best of the knowledge and belief of the applicant". The other declarations are not the statutory application declaration.

    Reference: 20-285 - Application for license — A.R.S. § 20-285(A)

  2. 2An insurer increases a life applicant's rate partly because of a consumer report. Under the FCRA, who must receive the adverse-action notice?

    1. A. The consumer whose rate was increased
    2. B. The consumer reporting agency that furnished the report
    3. C. The insurer's appointed producer on the application
    4. D. The state regulator that licenses the insurer

    Answer: A

    Explanation: "requires you to provide a notice of the adverse action to the consumer." The decision partly uses a consumer report, so the insurer owes the notice to the consumer.

    Reference: Federal Trade Commission — Official text, ftc-fcra-insurers.html.flow.txt lines 520-520

  3. 3A household buys life insurance so a death loss is financed through premiums paid into an insurer's pool. Which risk-handling method does this primarily illustrate?

    1. A. Transfer of financial risk through insurance
    2. B. Retention of financial risk by the household
    3. C. Avoidance of financial risk by ending exposure
    4. D. Reduction of financial risk by lowering frequency

    Answer: A

    Explanation: "transfer and diversify risk across a wider base of exposures and/or over time." Insurance transfers and diversifies pure financial loss; the other listed methods describe different handling of exposure.

    Reference: National Association of Insurance Commissioners — Official text, naic-regulator-introduction.pdf.flow.txt lines 468-476

  4. 4A person applies for life insurance on another adult. The benefit would be payable to the applicant. When must the applicant have an insurable interest in the insured?

    1. A. When the insurance contract is made
    2. B. Only when the insured person dies
    3. C. Only when the first claim is filed
    4. D. Whenever the beneficiary changes

    Answer: A

    Explanation: "at the time when the contract was made, an insurable interest in the individual insured." Arizona ties the required interest to contract formation in this third-party purchase.

    Reference: Arizona Revised Statutes — A.R.S. § 20-1104

  5. 5A client needs a fixed death benefit and fixed premium for a 20-year protection period. Which policy form best matches?

    1. A. Level term life
    2. B. Decreasing term life
    3. C. Adjustable life
    4. D. Variable universal life

    Answer: A

    Explanation: "Provides a fixed death benefit and premium amount throughout the term" Level term keeps both benefit and premium fixed during the selected term.

    Reference: National Association of Insurance Commissioners — Official text, naic-life-topic.html.flow.txt lines 576-576

  6. 6A life policy names an irrevocable beneficiary. The owner wants to change that designation. Whose consent is needed?

    1. A. Only the insured person's consent
    2. B. Only the insurer's producer's consent
    3. C. Only the new beneficiary's consent
    4. D. The irrevocable beneficiary's consent

    Answer: D

    Explanation: "the policy owner has the right to change the beneficiary designation only after obtaining the beneficiary's consent." The usual owner right is constrained by an irrevocable designation.

    Reference: National Association of Insurance Commissioners — Official text, naic-glossary.html.flow.txt lines 1125-1125

  7. 7An owner has finished contributing to an annuity and now receives regular income payments. Which contract phase has begun?

    1. A. The payout period rather than accumulation
    2. B. The accumulation period rather than payout
    3. C. The underwriting period before contract issue
    4. D. The surrender period after contract termination

    Answer: A

    Explanation: "During the payout period, the annuity makes income" Income payments identify the payout period; accumulation is when value builds.

    Reference: National Association of Insurance Commissioners — Official text, naic-annuity-buyers-guide.pdf.flow.txt lines 91-94

  8. 8A taxpayer pays premiums on a personal life policy covering the taxpayer's own life. How are those premiums treated for federal income-tax deduction?

    1. A. They are deductible as a charitable contribution.
    2. B. They are deductible as an investment management fee.
    3. C. They are not deductible personal life premiums.
    4. D. They are deductible as ordinary medical expense.

    Answer: C

    Explanation: "You can't deduct premiums you pay on your life insurance." Personal life premiums are not a federal income-tax deduction.

    Reference: Internal Revenue Service — IRS Publication 529, Life Insurance Premiums

  9. 9Before approving an individual Arizona producer application, which finding must the director make?

    1. A. The applicant has maintained an Arizona office for one year
    2. B. The applicant is at least eighteen years old
    3. C. The applicant has an insurer appointment in every requested line
    4. D. The applicant has completed one full license term as a trainee

    Answer: B

    Explanation: A.R.S. § 20-285(B)(1) says the director must find that the individual "is at least eighteen years of age."

    Reference: 20-285 - Application for license — A.R.S. § 20-285(B)(1)

  10. 10A life insurance seller plans to call a number on the National Do Not Call Registry. The seller has no established business relationship or written calling agreement. What is permitted?

    1. A. The call is allowed if made during daytime hours.
    2. B. The call is barred while those exceptions are absent.
    3. C. The call is allowed if made by a licensed producer.
    4. D. The call is allowed if it offers a policy review.

    Answer: B

    Explanation: "It’s against the law to call (or cause a telemarketer to call) any number on the registry" Neither stated exception applies, so the seller may not make the call.

    Reference: Federal Trade Commission — Official text, ftc-dnc.html.flow.txt lines 1258-1258

Topics in this practice bank

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

  • Insurance Regulation
    • Licensing
    • Licensing / License application requirements (20-285)
    • Licensing / Number of exam attempts 20-284(H)
    • Licensing / Licensing eligibility/lawful presence (41-1080)
    • Licensing / Types of licensees
    • Licensing / Types of licensees / Producers (20-281(5), 286)
    • Licensing / Types of licensees / Nonresidents (20-281(11))
    • Licensing / Types of licensees / Life Settlement Broker (ARS 20-3202)
    • Licensing / Types of licensees / Business entities (20-281(1), 285(D, E), 290(B))
    • Licensing / Types of licensees / Temporary (20-294)
    • Licensing / Types of licensees / Vending machines (20-293)
    • Licensing / Types of licensees / Lines of producer license authority (20-286, (A), 321, 331, 332, 411, 411.01, 1580, 1693.01, 2662)
    • Licensing / Types of licensees / Fingerprinting requirements (20-142(E), 285(E), 286(C), 289(D))
    • Licensing / Types of licensees / Assumed business name (20-297)
    • Licensing / Maintenance and duration
    • Licensing / Maintenance and duration / Expiration, surrender and renewal (20-289)
    • Licensing / Maintenance and duration / Inactive license status during military service (20-289.01)
    • Licensing / Maintenance and duration / Change of personal contact information (20-286(C))
    • Licensing / Maintenance and duration / Change of business information (20-286)(C))
    • Licensing / Maintenance and duration / Business information (20-286)(C))
    • Licensing / Maintenance and duration / Report of actions (20-301)
    • Licensing / Maintenance and duration / Continuing education (20-2902, 2903)
    • Licensing / Disciplinary actions
    • Licensing / Disciplinary actions / Denial, suspension, revocation or refusal to renew; civil penalties (20-295, 296)
    • Licensing / Disciplinary actions / Cease and desist order (20-292)
    • State regulation
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01)
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Negotiate (20-281(10))
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Sell (20-281(14))
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Solicit (20-281(15))
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Payment of premiums (20-191)
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Certificate of authority (20-217(A))
    • State regulation / Acts constituting insurance transaction (20-106, 282, 401.01) / Identification of Producer (20-229)
    • State regulation / Producer regulation
    • State regulation / Producer regulation / Sharing commissions (20-298)
    • State regulation / Producer regulation / Place of business and records (20-157, 290; AZ Const Art 14 s 16)
    • State regulation / Unfair practices and frauds
    • State regulation / Unfair practices and frauds / Unfair trade practices (20-442)
    • State regulation / Unfair practices and frauds / Misrepresentation (20-443, 443.01, 447; Rule R20-6-801(D))
    • State regulation / Unfair practices and frauds / False or deceptive advertising (20-444)
    • State regulation / Unfair practices and frauds / Defamation of insurer (20-445)
    • State regulation / Unfair practices and frauds / Boycott, coercion or intimidation (20-446)
    • State regulation / Unfair practices and frauds / False financial statements (20-447)
    • State regulation / Unfair practices and frauds / Unfair discrimination (20-448)
    • State regulation / Unfair practices and frauds / Gender discrimination (Rule R20-6-207)
    • State regulation / Unfair practices and frauds / Rebating (20-451)
    • State regulation / Unfair practices and frauds / Prohibited inducements (20-452)
    • State regulation / Unfair practices and frauds / Fees (20-465)
    • State regulation / Unfair practices and frauds / Unfair claims settlement practices (20-461; Rule R20-6-801)
    • State regulation / Unfair practices and frauds / Claims payment (20-462)
    • State regulation / Unfair practices and frauds / Insurance fraud (20-463, 466–466.04)
    • Insurance information and privacy protection (20-2101–2122)
  • Federal Laws and Regulations
    • Fair Credit Reporting Act (15 USC 1681–1681d)
    • National Do Not Call List
    • Gramm-Leach-Bliley Act (20-2121; Public Law 106-102)
    • Prohibited Persons in Insurance (18 United States Code (USC) Sections 1033 and 1034) waiver
    • CAN-SPAM Act of 2003 (15 USC 7701; 18 USC 1037)
    • Genetic Information Nondiscrimination Act (45 CFR Parts 144, 146, and 148; 45 CFR Parts 160 and 164; and 29 CFR Part 2590)
    • Mental Health Parity and Addiction Equity Act (45 CFR Parts 146 and 147)
    • Telemarketing Sales Rule (16 CFR 310; 15 USC 6101–6108; A.R.S. 44-1282)
  • General Insurance Concepts
    • Risk
    • Risk / Methods of Handling Risk (Avoidance, Retention, Sharing, Reduction, Transfer)
    • Risk / Elements of Insurable Risks
    • Risk / Definitions (Risk, Hazard, Peril, Loss)
    • Classifications of Insurers
    • Classifications of Insurers / Mutual, Stock, Fraternals
    • Classifications of Insurers / Admitted, Non-Admitted
    • Classifications of Insurers / Foreign, Domestic, Alien
    • Elements of a Contract
    • Elements of a Contract / Consideration
    • Elements of a Contract / Competent Parties
    • Elements of a Contract / Legal Purpose
    • Elements of a Contract / Offer
    • Elements of a Contract / Acceptance
    • Authority and Powers of Producers
    • Authority and Powers of Producers / Express
    • Authority and Powers of Producers / Implied
    • Authority and Powers of Producers / Apparent
    • Authority and Powers of Producers / The Law of Agency
    • Legal Interpretations Affecting Contracts
    • Legal Interpretations Affecting Contracts / Reasonable Expectations - good faith
    • Legal Interpretations Affecting Contracts / Indemnity
    • Legal Interpretations Affecting Contracts / Good Faith
    • Legal Interpretations Affecting Contracts / Fraud
    • Legal Interpretations Affecting Contracts / Warranties, Representations, Misrepresentations, and Concealment
  • Life Insurance Basics
    • Insurable Interest
    • Personal Uses of Life Insurance
    • Personal Uses of Life Insurance / Survivor Protection
    • Personal Uses of Life Insurance / Liquidity
    • Determining Amount of Personal Life Insurance
    • Determining Amount of Personal Life Insurance / Human Life Value Approach
    • Determining Amount of Personal Life Insurance / Needs Approach
    • Business Uses of Life Insurance
    • Business Uses of Life Insurance / Buy-Sell Funding
    • Business Uses of Life Insurance / Key Person
    • Business Uses of Life Insurance / Executive Bonuses
    • Factors in Premium Determination
    • Factors in Premium Determination / Mortality
    • Factors in Premium Determination / Interest
    • Factors in Premium Determination / Expense
    • Premium Frequency
    • Field Underwriting
    • Field Underwriting / Application Procedures
    • Field Underwriting / Warranties and Representations
    • Policy Delivery
    • Policy Delivery / Effective Date of Coverage
    • Policy Delivery / Policy Review
    • Policy Delivery / Premium Collection
    • Policy Delivery / Statement of Good Health
    • Company Underwriting
    • Company Underwriting / Sources of Information
    • Company Underwriting / Classifications of Risk (Preferred, Standard, Substandard, Declined)
  • Types of Life Insurance Policies
    • Term Life Insurance
    • Term Life Insurance / Level
    • Term Life Insurance / Decreasing
    • Term Life Insurance / Increasing Term
    • Whole (Permanent, Ordinary) Life Insurance
    • Whole (Permanent, Ordinary) Life Insurance / Single Premium
    • Whole (Permanent, Ordinary) Life Insurance / Continuous Premium
    • Whole (Permanent, Ordinary) Life Insurance / Limited Payment
    • Whole (Permanent, Ordinary) Life Insurance / Adjustable Life
    • Universal Life
    • Variable Life
    • Variable Universal
    • Indexed Universal Life
    • Specialized Policies
    • Specialized Policies / Joint Life
    • Specialized Policies / Survivorship Life
    • Specialized Policies / Juvenile
    • Group Life Insurance
    • Group Life Insurance / Eligible Groups
    • Group Life Insurance / Characteristics of Group Life Insurance
  • Life Insurance Policy Provisions, Options, and Riders
    • Standard Life Insurance Provisions
    • Standard Life Insurance Provisions / Ownership
    • Standard Life Insurance Provisions / Assignment
    • Standard Life Insurance Provisions / Right to Examine (Free Look)
    • Standard Life Insurance Provisions / Payment of Premiums
    • Standard Life Insurance Provisions / Grace Period
    • Standard Life Insurance Provisions / Misstatement of Age/Sex
    • Standard Life Insurance Provisions / Incontestability
    • Standard Life Insurance Provisions / Reinstatement
    • Standard Life Insurance Provisions / Entire Contract
    • Beneficiary Designation Options
    • Beneficiary Designation Options / Individuals
    • Beneficiary Designation Options / Classes
    • Beneficiary Designation Options / Minors
    • Types of Beneficiaries
    • Types of Beneficiaries / Primary and Contingent
    • Beneficiary-Related Clauses
    • Beneficiary-Related Clauses / Common Disaster
    • Settlement Options
    • Settlement Options / Cash Payment (Lump Sum)
    • Settlement Options / Interest Only
    • Settlement Options / Life Income
    • Settlement Options / Fixed-Period
    • Settlement Options / Fixed-Amount Installments
    • Settlement Options / Joint
    • Settlement Options / Last Survivor
    • Nonforfeiture Options
    • Nonforfeiture Options / Cash Surrender Value
    • Nonforfeiture Options / Extended Term
    • Nonforfeiture Options / Reduced Paid-Up Insurance
    • Policy Loan and Withdrawal Options
    • Policy Loan and Withdrawal Options / Loans
    • Policy Loan and Withdrawal Options / Automatic Premium Loans
    • Policy Loan and Withdrawal Options / Withdrawals Partial Surrenders
    • Dividend Options
    • Dividend Options / Paid-Up Additions
    • Dividend Options / Cash Payment (Lump Sum)
    • Dividend Options / One Year Term
    • Dividend Options / Reduction of Premium
    • Dividend Options / Accumulation at Interest
    • Disability Riders
    • Disability Riders / Waiver of Premium
    • Disability Riders / Disability Income Benefit
    • Disability Riders / Payor Benefit Life
    • Riders Covering Additional Insureds
    • Riders Covering Additional Insureds / Spouse
    • Riders Covering Additional Insureds / Children
    • Riders Covering Additional Insureds / Family term rider
    • Riders Affecting Death Benefit Amount
    • Riders Affecting Death Benefit Amount / Accidental Death
    • Riders Affecting Death Benefit Amount / Guaranteed Insurability
    • Riders Affecting Death Benefit Amount / Cost of Living
    • Riders Affecting Death Benefit Amount / Return of Premium
    • Riders Affecting Death Benefit Amount / Accelerated (Living) Benefit Provision Rider
    • Riders Affecting Death Benefit Amount / Long-Term Care Rider
    • Policy Exclusions
  • Annuities
    • Annuity Principles and Concepts
    • Annuity Principles and Concepts / Accumulation Period versus Annuity Period
    • Annuity Principles and Concepts / Owner, Annuitant, and Beneficiary
    • Immediate versus Deferred Annuities
    • Annuity (Benefit) Payment Options
    • Annuity (Benefit) Payment Options / Life Contingency Options
    • Annuity (Benefit) Payment Options / Annuities Certain
    • Annuity (Benefit) Payment Options / Pure Life versus Life with Guaranteed Minimum
    • Annuity (Benefit) Payment Options / Single Life versus Multiple Life
    • Annuity Products
    • Annuity Products / Fixed Annuities
    • Annuity Products / Equity Indexed Annuities
    • Annuity Products / Variable Annuities
    • Uses of Annuities
    • Uses of Annuities / Lump-Sum Settlements
    • Uses of Annuities / Retirement Income
    • Uses of Annuities / Long-Term Care Rider
    • Uses of Annuities / Guaranteed Minimum Withdrawal Benefit (GMWB)
  • Federal Tax Considerations for Life Insurance
    • Taxation of Personal Life Insurance and Annuities
    • Taxation of Personal Life Insurance and Annuities / Premiums
    • Taxation of Personal Life Insurance and Annuities / Dividends
    • Taxation of Personal Life Insurance and Annuities / Settlements
    • Taxation of Personal Life Insurance and Annuities / Last In First Out (LIFO) and First In First Out (FIFO)
    • Taxation of Personal Life Insurance and Annuities / Surrenders and Withdrawals
    • Modified Endowment Contracts (MECs)

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These are independent study questions, not actual examination items. For examination requirements and official information, view Arizona Examination for Life Insurance Producer details.