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Sample Practice Questions

Try these 10 sample questions from the Life Producer 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 with a scheduled premium that stays level throughout life. Which basic policy design meets that request?

    1. A. Limited-payment whole life
    2. B. Ordinary level-premium whole life
    3. C. Flexible-premium universal life
    4. D. Single-premium whole life

    Answer: B

    Explanation: "Premiums stay the same throughout the insured’s life" Ordinary whole life keeps the scheduled premium level for the insured's life; the other designs use a shorter payment period, flexibility, or a single payment.

    Reference: NAIC Life Insurance Topics — Whole Life Insurance—Ordinary level premium whole life insurance

  2. 2A covered disability prevents a life policyowner from working, and the policy has a waiver-of-premium rider. How are life premiums treated while the rider's condition is met?

    1. A. They are paid through automatic loans from available cash value
    2. B. They remain due while separate disability income is paid
    3. C. They are waived for the duration of the qualifying disability
    4. D. They are deducted from cash value as monthly insurance charges

    Answer: C

    Explanation: "you can stop paying your life insurance premium if you develop a covered illness or disability named in the rider." The waiver of premium rider can stop life premium payments for an illness or disability named in the rider.

    Reference: NAIC Life Insurance Consumer Guide — Life insurance riders—Waiver of premium rider

  3. 3An adult proposed insured and a separate policyowner complete a life application. Which pair of signatures is required for those roles under the cited standard?

    1. A. The adult proposed insured and the separate policyowner
    2. B. The adult proposed insured and the named beneficiary
    3. C. The separate policyowner and the producer as witness
    4. D. The named beneficiary and the producer as witness

    Answer: A

    Explanation: "signature of each proposed insured of the age of majority required by the state where the policy is issued for delivery" and "signature of owner if other than the proposed insured" identify both signatures when the adult insured and owner differ.

    Reference: Insurance Compact Individual Life Application Standards — Section 3, Signatures

  4. 4A policyowner sells an existing life policy to an unrelated company for cash that is less than the policy's death benefit. What transaction is this?

    1. A. A policy loan against the insurer's accumulated cash value
    2. B. A life settlement transferring the policy to a purchaser
    3. C. A surrender of the policy directly to its issuing insurer
    4. D. A conversion of group insurance to an individual policy

    Answer: B

    Explanation: "A life settlement is the sale of a life insurance policy to another person or company in return for a cash payment of less than the full amount of the death benefit." A life settlement is a sale of an existing policy to another person or company for less than the full death benefit.

    Reference: NAIC Understanding Life Settlements — Page 4, What is a life settlement?

  5. 5Which duty does Hawaii law impose directly on the Insurance Commissioner?

    1. A. Set every insurer's premium rates
    2. B. Enforce the Insurance Code
    3. C. Approve every individual claim payment
    4. D. Appoint each insurer's directors

    Answer: B

    Explanation: HRS §431:2-201 states that the commissioner shall "shall enforce this code"; therefore enforcing the Insurance Code is the directly imposed duty.

    Reference: PART II — HRS §431:2-201(b)

  6. 6A life applicant borrows from an existing policy four months before buying a new policy. Through what later period may that transaction fall within Hawaii's financed-purchase definition?

    1. A. One month after the new policy is issued
    2. B. Thirteen months after the new policy is issued
    3. C. Three years after the new policy is issued
    4. D. Only through the application date

    Answer: B

    Explanation: HRS §431:10D-502 includes specified borrowing during the four months before or thirteen months after the new policy is issued. The controlling text states, "four months before or thirteen months after the".

    Reference: HRS 0431 0010 D (0502) — HRS §431:10D-502, definition of financed purchase

  7. 7A buyer can pay scheduled annual premiums for 20 years, then wants lifetime whole life coverage with no further scheduled premium payments. Which basic payment design matches?

    1. A. Ordinary whole life with premiums scheduled throughout life
    2. B. Annually renewable term with premiums at each yearly renewal
    3. C. Single-premium whole life paid completely at policy issue
    4. D. Limited-payment whole life with a shortened premium period

    Answer: D

    Explanation: "Premiums are paid over a shorter time, but coverage lasts a lifetime." Limited-payment whole life separates the premium-paying period from the lifetime coverage period.

    Reference: NAIC Life Insurance Topics — Whole Life Insurance—Limited payment whole life insurance

  8. 8A healthy applicant wants to preserve the option to increase a life policy's death benefit at specified future dates without another medical exam. Which rider fits?

    1. A. A guaranteed insurability rider
    2. B. An accidental death benefit rider
    3. C. A long-term care benefit rider
    4. D. A waiver of premium rider

    Answer: A

    Explanation: "lets you increase your death benefit at certain times in the future without a medical exam." The rider grants future increases at stated times without a new medical exam.

    Reference: NAIC Life Insurance Consumer Guide — Life insurance riders—Guaranteed insurability rider

  9. 9After a life application is signed, the insurer's home office changes the proposed plan and benefit amount. What is required for that change under the cited application standard?

    1. A. Written consent from the owner alone for the changed terms
    2. B. Written consent from the owner and the proposed insured
    3. C. Written consent from the producer and proposed insured
    4. D. Oral consent from the owner and the proposed insured

    Answer: B

    Explanation: "Any change in plan of insurance, amount, age at issue, gender, class or benefits shall require the written consent of the owner and the proposed insured." A change in plan or benefits requires written consent from both the owner and proposed insured.

    Reference: Insurance Compact Individual Life Application Standards — Section 3, Changes in application

  10. 10An employer wants a common group life benefit for employees rather than a separate individual cash-value policy for each worker. What coverage basis is most typical for employer-paid group life?

    1. A. Variable whole life coverage
    2. B. Universal life coverage
    3. C. Term life coverage
    4. D. Single-premium whole life coverage

    Answer: C

    Explanation: "Most group life insurance coverage paid by employers is sold on a term life basis." Employer-paid group life is most commonly sold on a term life basis.

    Reference: NAIC Small Business Insurance — Group Life Insurance—employer-paid coverage

Topics in this practice bank

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

  • Life—General Knowledge: I. TYPES OF POLICIES (15 scoreable 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
    • D. Annuities > 5. Accumulation and Annuity Periods
    • D. Annuities > 6. Payout options
    • 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)
  • Life—General Knowledge: II. LIFE PROVISIONS, RIDERS, OPTIONS, AND EXCLUSIONS (15 scoreable 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
    • C. Policy exclusions > 1. War
    • C. Policy exclusions > 2. Aviation
    • C. Policy exclusions > 3. Dangerous Occupation
  • Life—General Knowledge: III. COMPLETING THE APPLICATION, UNDERWRITING, AND DELIVERING THE POLICES (12 scoreable 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
  • Life—General Knowledge: IV. RETIREMENT AND OTHER INSURANCE CONCEPTS (8 scoreable questions)
    • A. Third-party ownership
    • B. Life Settlements
    • C. Group life insurance
    • C. Group life insurance > 1. Conversion privilege
    • C. Group life insurance > 2. Contributory vs. noncontributory
    • D. Retirement plans
    • D. Retirement plans > 1. Qualified plans
    • D. Retirement plans > 2. Nonqualified plans
    • E. Life insurance needs analysis/suitability
    • E. Life insurance needs analysis/suitability > 1. Personal insurance needs
    • E. Life insurance needs analysis/suitability > 2. Business insurance needs
    • E. Life insurance needs analysis/suitability > 2. Business insurance needs > a. Key person
    • E. Life insurance needs analysis/suitability > 2. Business insurance needs > b. Buy sell
    • F. Social Security benefits
    • G. Tax treatment of insurance premiums, proceeds, and dividends
    • G. Tax treatment of insurance premiums, proceeds, and dividends > 1. Individual life
    • G. Tax treatment of insurance premiums, proceeds, and dividends > 2. Group life
    • G. Tax treatment of insurance premiums, proceeds, and dividends > 3. Modified Endowment Contracts (MECs)
  • Life—Hawaii Specific: I. HAWAII LAWS AND RULES COMMON TO LIFE, ACCIDENT AND HEALTH, PROPERTY, CASUALTY AND PERSONAL LINES INSURANCE (23 scoreable questions)
    • A. Insurance Commissioner
    • A. Insurance Commissioner > 1. General powers and duties
    • A. Insurance Commissioner > 2. Examination of records
    • A. Insurance Commissioner > 3. Notice of hearings
    • A. Insurance Commissioner > 4. Penalties
    • B. Definitions
    • B. Definitions > 1. Authorized and unauthorized
    • B. Definitions > 2. Domestic, foreign, and alien
    • B. Definitions > 3. Stock, reciprocal and mutual
    • B. Definitions > 4. Certificate of authority
    • B. Definitions > 5. Insurance
    • C. Licensing
    • C. Licensing > 1. General qualifications for licensing
    • C. Licensing > 2. Persons required to be licensed
    • C. Licensing > 2. Persons required to be licensed > a. Producer
    • C. Licensing > 2. Persons required to be licensed > b. Temporary license
    • C. Licensing > 2. Persons required to be licensed > c. Nonresident
    • C. Licensing > 2. Persons required to be licensed > d. Exemptions
    • C. Licensing > 3. Denial, suspension, revocation of licenses
    • C. Licensing > 4. Renewal of license and continuing education
    • D. Marketing practices
    • D. Marketing practices > 1. Unfair and deceptive practices
    • D. Marketing practices > 2. Reporting and accounting for premiums
    • D. Marketing practices > 3. Sharing commissions
    • D. Marketing practices > 4. Required records and record retention
    • D. Marketing practices > 5. Controlled business
    • D. Marketing practices > 6. Premiums
    • E. Guaranty Associations
  • Life—Hawaii Specific: II. HAWAII LAWS AND RULES PERTINENT TO LIFE INSURANCE ONLY (12 scoreable questions)
    • A. Marketing methods and practices
    • A. Marketing methods and practices > 1. Replacement
    • A. Marketing methods and practices > 1. Replacement > a. Definition
    • A. Marketing methods and practices > 1. Replacement > b. Duties of producers
    • A. Marketing methods and practices > 1. Replacement > c. Duties of insurers that use producers
    • A. Marketing methods and practices > 1. Replacement > d. Duties of replacing insurers that use producers
    • A. Marketing methods and practices > 1. Replacement > e. Duties of the existing insurer
    • A. Marketing methods and practices > 2. Annuities
    • A. Marketing methods and practices > 2. Annuities > a. Disclosure
    • A. Marketing methods and practices > 2. Annuities > b. Suitability
    • B. Variable Contracts
    • C. Policy Clauses and Provisions
    • C. Policy Clauses and Provisions > 1. Protection of beneficiaries from creditors
    • C. Policy Clauses and Provisions > 2. Policy loan interest rate
    • C. Policy Clauses and Provisions > 3. Spouse’s rights
    • D. Group Life
    • D. Group Life > 1. Group requirements
    • D. Group Life > 2. Assignment of proceeds
    • D. Group Life > 3. Conversion
    • E. Participation in Surplus
    • F. Credit Life

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