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Free Nebraska Producer's Examination for Life Insurance Series 13-01 Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the Nebraska Producer's Examination for Life Insurance Series 13-01 practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1Which Nebraska resident producer applicant is excused by statute from the usual written-examination requirement?

    1. A. An applicant qualifying for the prior-state examination exemption
    2. B. An applicant who merely reaches the minimum licensing age
    3. C. An applicant who merely obtains insurer sponsorship
    4. D. An applicant who merely pays a late-renewal fee

    Answer: A

    Explanation: Section 44-4052(1) says the applicant must pass a written examination "unless exempt pursuant to section 44-4056."

    Reference: Nebraska Legislature — Neb. Rev. Stat. § 44-4052(1)

  2. 2Faulty wiring increases the chance that an insured building will burn. In risk terminology, what is the faulty wiring?

    1. A. The insured's loss after the fire
    2. B. The peril that directly causes the fire
    3. C. The building's stated coverage limit
    4. D. A hazard increasing the chance of loss

    Answer: D

    Explanation: "Hazard - circumstance which tends to increase the probability or severity of a loss." Faulty wiring raises the probability of loss, making it a hazard. Fire would be the peril, damage the loss, and a limit is a policy amount.

    Reference: NAIC Glossary of Insurance Terms — Hazard

  3. 3A Nebraska business is considering life coverage on an unrelated person. Which relationship would establish an insurable interest for the proposed beneficiary under Nebraska's life-insurance definition?

    1. A. A creditor expects an unpaid debt to be repaid from the person's continued earnings
    2. B. A former creditor had the person's debt fully repaid before the policy was proposed
    3. C. A market competitor expects increased sales if the person dies
    4. D. A prospective investor has no financial or family ties to the person

    Answer: A

    Explanation: Nebraska defines life insurable interest where the beneficiary, because of a pecuniary or family relationship, "has reason to expect some benefit from the continuance of the life of the insured." The unpaid creditor has a current financial stake in the debtor remaining alive to repay; repaid debt, rival gains from death, and a stranger with no such ties do not satisfy that relationship.

    Reference: Nebraska Legislature — Neb. Rev. Stat. § 44-103(13)(b)

  4. 4A client wants temporary life coverage with both a fixed death benefit and a fixed premium throughout the chosen term. Which policy design fits?

    1. A. Decreasing term with a declining benefit and fixed premium
    2. B. Level term with a fixed benefit and fixed premium
    3. C. Renewable term with a new premium at each renewal
    4. D. Universal life with flexible premiums and cash value

    Answer: B

    Explanation: "Provides a fixed death benefit and premium amount throughout the term" Level term keeps the benefit and premium fixed over the term. The alternatives change the benefit or premium, or are permanent cash-value coverage.

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

  5. 5A Nebraska individual life policy is delivered to its purchaser. What minimum statutory examination period must its return notice provide for a premium refund?

    1. A. Five days after the policy is delivered
    2. B. Ten days after the policy is delivered
    3. C. Twenty days after the policy is delivered
    4. D. Thirty days after the policy is delivered

    Answer: B

    Explanation: "return the policy within ten days of its delivery to the purchaser and to have the premium paid refunded" The Nebraska notice must allow return within ten days of delivery for a premium refund. The question asks the statutory minimum period, so a longer voluntary period does not change the answer.

    Reference: Nebraska Legislature — Neb. Rev. Stat. § 44-502.05

  6. 6A retiree pays one lump sum and wants annuity income to begin within a year. Which annuity classification matches the income start?

    1. A. An immediate annuity starting income soon after purchase
    2. B. A deferred annuity starting income on a later chosen date
    3. C. A fixed deferred annuity accumulating before income starts
    4. D. An indexed deferred annuity accumulating before income starts

    Answer: A

    Explanation: "Immediate annuities are purchased with a one-time contribution and provide income payments to the annuitant within one year of purchasing the contract." An immediate annuity uses a one-time contribution and begins income within one year. Deferred classifications postpone income to a later date.

    Reference: NAIC, Annuities — Overview, immediate annuities

  7. 7A beneficiary receives a life policy's death benefit in a lump sum. The policy was not transferred for value or acquired in a reportable policy sale. How is the death benefit generally treated for federal income tax?

    1. A. Included as ordinary income in the beneficiary's return
    2. B. Excluded from the beneficiary's gross income
    3. C. Included as interest income on deposited proceeds
    4. D. Included as capital gain from policy ownership

    Answer: B

    Explanation: "Life insurance proceeds paid to you because of the death of the insured person generally aren’t taxable unless the policy was turned over to you for a price or was acquired in a reportable policy sale." Death proceeds are generally excluded under these facts. Interest earned afterward is a separate taxable item, and the stated transfer exceptions are absent.

    Reference: IRS Publication 525, Taxable and Nontaxable Income — Life Insurance Proceeds, proceeds not received in installments

  8. 8Which subject does Nebraska expressly require its resident producer examination to test?

    1. A. Insurer statutory accounting methods
    2. B. The duties and responsibilities of an insurance producer
    3. C. Securities portfolio allocation methods
    4. D. Property-loss repair estimating methods

    Answer: B

    Explanation: Section 44-4052(1) requires questions on the requested lines, producer duties, and "the insurance laws, rules, and regulations of this state."

    Reference: Nebraska Legislature — Neb. Rev. Stat. § 44-4052(1)

  9. 9A business sets aside its own funds to pay predictable small losses instead of insuring those losses. Which risk-handling method is it using?

    1. A. Risk retention through an internal fund
    2. B. Risk transfer through an insurance policy
    3. C. Risk reduction through loss prevention
    4. D. Risk avoidance by ending the activity

    Answer: A

    Explanation: "Retention - a mechanism of internal fund allocation for loss exposure" Internal funding leaves the exposure with the business, which is retention. The other methods shift, reduce or eliminate the exposure.

    Reference: NAIC Glossary of Insurance Terms — Retention

  10. 10A producer is preparing a family's gross lump-sum life-insurance needs estimate before subtracting existing assets or benefits. Which amount is a financial obligation that the survivors may need coverage to pay?

    1. A. The remaining mortgage principal on the family's home
    2. B. The death benefit of an existing policy on the parent
    3. C. The balance of savings already available to survivors
    4. D. The value of pension income already payable to survivors

    Answer: A

    Explanation: The NAIC lists "paying off a mortgage" among continuing financial needs after death. Mortgage principal is a liability to fund. Existing insurance, savings and survivor income are resources to consider separately when moving from gross needs to a net coverage amount.

    Reference: NAIC Life Insurance Buyer's Guide — How much coverage do I need?, p. 3

Topics in this practice bank

These topics describe the available practice for Nebraska Producer's Examination for Life Insurance Series 13-01. Review the examination outline and its sources for scope and allocation details.

  • 1.0 Insurance Regulation
    • 1.1 General
    • State specific licensing requirements
    • License issuance (44-4052, 44-4053)
    • License issuance (44-4052, 44-4053) > Application
    • License maintenance
    • License maintenance > Change of name/phone number/address/email address (44-4054(8))
    • License maintenance > Assumed business name (44-4057)
    • License maintenance > Reporting of actions (44-4065)
    • License maintenance > Continuing education including exemptions (44-3901 to 44-3908)
    • License maintenance > Penalties
    • License maintenance > Appointment and termination process
    • License duration
    • License duration > Renewal/nonrenewal (44-4054)
    • License duration > Reinstatement
    • License duration > Continuation
    • License duration > Termination (44-4062)
    • License duration > Surrender
    • License duration > Lapse
    • License duration > Inactivity due to military service
    • License duration > Inactivity due to extenuating circumstances
    • Disciplinary actions related to the license
    • Disciplinary actions related to the license > Denial
    • Disciplinary actions related to the license > Suspension (44-2633, 44-4059)
    • Disciplinary actions related to the license > Surrender
    • Disciplinary actions related to the license > Revocation or refusal to issue or renew (44-2633, 44-4059)
    • Penalties
    • Penalties > Civil
    • Penalties > Criminal (28-631)
    • Penalties > Hearings (44-4059(2))
    • Penalties > Fines (44-2634, 44-4059(4))
    • Penalties > Cease and desist order (44-1529, 44-1542)
    • 1.2 Licensing Types, Purposes, and Processes
    • License types (44-4054)
    • License types (44-4054) > Producer (44-4049, 44-4054)
    • License types (44-4054) > Consultant (44-2606 to 44-2635)
    • License types (44-4054) > Agency
    • License types (44-4054) > Resident (44-2625, 44-4055, 44-4063)
    • License types (44-4054) > Nonresident (44-2625, 4055, 44-4063)
    • License types (44-4054) > Temporary (44-4058)
    • Licensing requirements
    • Licensing requirements > Eligibility and qualification
    • Licensing requirements > Licensing exemptions (44-4051)
    • 1.3 State Regulation
    • Acts constituting insurance transaction
    • Acts constituting insurance transaction > Negotiate
    • Acts constituting insurance transaction > Sell
    • Acts constituting insurance transaction > Solicit
    • Director's general duties and powers (44-101.01, 44-2635)
    • Producer regulatory requirements
    • Producer regulatory requirements > Policy signatures
    • Producer regulatory requirements > Application signatures
    • Producer regulatory requirements > Premium payment
    • Producer regulatory requirements > Producer representation
    • Producer regulatory requirements > Commissions/compensation and fees (44-4060)
    • Producer regulatory requirements > Controlled business (44-361.01, 44-361.02)
    • Producer regulatory requirements > Appointment (44-4061)
    • Producer regulatory requirements > Fiduciary responsibility
    • Producer regulatory requirements > Impersonation
    • Producer regulatory requirements > Records maintenance (44-5905)
    • Producer regulatory requirements > Claims reporting
    • Company regulatory requirements
    • Company regulatory requirements > Solvency
    • Company regulatory requirements > Financial requirements
    • Company regulatory requirements > Certificate of authority (44-303)
    • Company regulatory requirements > State of domicile
    • Company regulatory requirements > Records maintenance
    • Company regulatory requirements > Policy forms/rates/exceptions
    • Company regulatory requirements > Appointment/termination
    • Company regulatory requirements > Capital and surplus requirements (44-214, 44-305)
    • Company regulatory requirements > Unfair trade practices complaint register (44-1525(9))
    • Difference between admitted, non-admitted, foreign, and domestic insurers
    • Unfair trade practices
    • Unfair trade practices > Unfair discrimination (44-1525(7))
    • Unfair trade practices > Misrepresentation (44-1525(1))
    • Unfair trade practices > False or deceptive advertising (44-1525(2))
    • Unfair trade practices > Claims settlement
    • Unfair trade practices > Boycott (44-1525(4))
    • Unfair trade practices > Coercion (44-1525(4))
    • Unfair trade practices > Intimidation (44-1525(4))
    • Unfair trade practices > Defamation (44-1525(3))
    • Unfair trade practices > False financial statements
    • Unfair trade practices > Fraud
    • Unfair trade practices > Illegal inducements including rebating and twisting (44-361, 44-1525(8))
    • Unfair trade practices > Misappropriation of funds
    • Unfair trade practices > Testimonials
    • Unfair trade practices > Comparisons
    • Unfair trade practices > Nondisclosure of fees or charges (44-354)
    • Other prohibited practices
    • Other prohibited practices > Commingling of funds
    • Other prohibited practices > Non-transparency
    • Other prohibited practices > STOLI/IOLI
    • Other prohibited practices > Prohibited fees/premiums/extra charges
    • Other prohibited practices > Larceny
    • Other prohibited practices > Acting without a license
    • Unfair claims settlement practices (44-1539, 44-1540)
    • Nonpublic personal information and privacy protection
    • Policy replacement
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33)
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Advertising (210 Nebraska Administrative Code Ch. 50)
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Provisions/rules
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Policy summary
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Buyer's Guide (210 Nebraska Administrative Code Ch. 33, § 005, NAIC Current Model Buyer's Guide)
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Illustrations (210 Nebraska Administrative Code Ch. 72)
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Suitability
    • Solicitation and sales (210 Nebraska Administrative Code Ch. 33) > Backdating
    • Selection criteria and unfair discrimination (44- 1525(7)(a))
    • Insurance Fraud Act (44-6601 to 44-6608)
    • Privacy of Insurance Consumer Information Act (44-901 to 44-925) Neb. Rev. Stat. §44-902(1)(a)
    • 1.4 Federal Regulation
    • Federal Law (18 U.S. Code § 1033)
    • Fair Credit Reporting Act (15 USC 1681–1681d)
    • Fraud and false statements including 1033 and 1034 waiver
    • "Prohibited Persons" Waiver (Consent to Work) (18 U.S. Code § 1033-1034)
    • Other federal regulations
    • Other federal regulations > Do Not Call List (Telephone Consumer Protection Act)
    • Other federal regulations > Can-Spam Act
    • Other federal regulations > Sarbanes-Oxley Act
    • Other federal regulations > Consumer Data Privacy and Security Act
    • Other federal regulations > Gramm-Leach-Bliley Act
  • 2.0 General Insurance
    • 2.1 Risk management key terms
    • Risk
    • Exposure
    • Hazard
    • Peril
    • Loss
    • Insurance
    • 2.2 Methods of handling risk
    • Avoidance
    • Retention
    • Sharing
    • Reduction
    • Transfer
    • 2.3 Other risk concepts
    • Elements of insurable risks
    • Adverse selection
    • Law of large numbers
    • Reinsurance
    • 2.4 Types of insurers
    • Stock
    • Mutual
    • Fraternal benefit society
    • 2.5 Financial rating services
    • A.M. Best
    • Standard and Poor's
    • Moody's
    • 2.6 Distribution systems
    • Independent
    • Direct
    • Exclusive/captive agent
    • Exchanges
    • 2.7 Law of agency
    • Insurer as principal
    • Producer/agent/broker-insurer relationships
    • 2.8 Authority and powers of producers/agents/brokers
    • Express
    • Implied
    • Apparent
    • 2.9 Elements of a legal contract
    • Offer and acceptance
    • Consideration
    • Competent parties
    • Legal purpose
    • 2.10 Legal interpretations affecting contracts
    • Reasonable expectations
    • Indemnity
    • Utmost good faith
    • Concealment
    • Representations
    • Misrepresentations
    • Warranties
    • Fraud
  • 3.0 Life Insurance Basics
    • 3.1 Producer Authority and Powers
    • Insurable interest
    • Personal uses of life insurance
    • Personal uses of life insurance > Survivor protection
    • Personal uses of life insurance > Estate creation/conservation
    • Personal uses of life insurance > Cash accumulation
    • Personal uses of life insurance > Security
    • Personal uses of life insurance > Exemption from creditor claims/probate
    • Needs approach to determining amount of personal life insurance
    • Needs approach to determining amount of personal life insurance > Types of information gathered
    • Needs approach to determining amount of personal life insurance > Determining lump-sum needs
    • Needs approach to determining amount of personal life insurance > Planning for income needs
    • Business uses of life insurance
    • Business uses of life insurance > Key person
    • Business uses of life insurance > Buy-sell
    • Factors in premium determination
    • Factors in premium determination > Mortality
    • Factors in premium determination > Interest
    • Factors in premium determination > Expense
    • Field underwriting
    • Field underwriting > Application procedures
    • Field underwriting > Required signatures
    • Field underwriting > Notice of information practices and premium collection
    • Field underwriting > Conditional receipt
    • Policy delivery
    • Policy delivery > Policy review
    • Policy delivery > Effective date of coverage
    • Policy delivery > Premium collection
    • Policy delivery > Statement of Good Health
    • Policy delivery > Delivery/electronic delivery requirements
    • Information sources and regulation
    • Information sources and regulation > Application
    • Information sources and regulation > Producer report
    • Information sources and regulation > Attending physician statement
    • Information sources and regulation > Investigative consumer report
    • Information sources and regulation > Medical Information Bureau (MIB)
    • Information sources and regulation > Medical examination and lab tests including HIV (RL 71-531)
    • Information sources and regulation > Financial information
    • Risk classifications
    • Risk classifications > Preferred
    • Risk classifications > Standard
    • Risk classifications > Substandard/rated
    • Risk classifications > Declined
  • 4.0 Life Insurance Policies
    • 4.1 Characteristics of Level Term
    • Renewability
    • Level premium
    • Convertibility
    • Term-to-65
    • 4.2 Decreasing Term
    • Credit/mortgage protection
    • 4.3 Whole Life
    • Ordinary
    • Limited pay
    • Single premium
    • 4.4 Characteristics of Whole Life
    • Cash value
    • Maturity
    • Guarantees
    • 4.5 Universal and Indexed Life
    • 4.6 Variable products
    • Regulation of variable products
    • Qualifications of producers for the sale of variable products
    • General account versus separate account
    • 4.7 Specialized policies
    • Joint life/first-to-die
    • Survivorship life/second-to-die
    • 4.8 Characteristics of Group Life
    • Individual certificates
    • Eligibility
    • Plan sponsors
    • Underwriting requirements
    • Required provisions (44-1607)
    • Assignability (44-1619)
    • Conversion (44-1607(8– 10), 44-1613, 44-1614)
    • Standard provisions
  • 5.0 Life Insurance Policy Provisions, Options and Riders
    • 5.1 Required Provisions (44-502)
    • Ownership
    • Assignment
    • Entire contract (44-502(3))
    • Right to examine (free look) (44-502.05)
    • Payment of premiums (44-502(1))
    • Grace period (44-502(2))
    • Reinstatement (44-502(11))
    • Incontestability (44-502(5))
    • Misstatement of age or sex (44-502(6))
    • Exclusions (44-502(5))
    • Statements of the insured (44- 502(4))
    • Payment of claims (44- 502(12))
    • Interest on proceeds (44-3, 44-143)
    • Prohibited provisions including backdating (44-503)
    • Suicide
    • Consideration
    • Insuring clause
    • 5.2 Beneficiaries
    • Designation options
    • Designation options > Individuals
    • Designation options > Classes
    • Designation options > Estates
    • Designation options > Minors
    • Designation options > Trusts
    • Succession
    • Succession > Primary
    • Succession > Contingent
    • Revocable versus irrevocable
    • Common Disaster Clause
    • 5.3 Settlement Options
    • Types of settlement options
    • Types of settlement options > Cash payment
    • Types of settlement options > Interest only
    • Types of settlement options > Fixed-period installments
    • Types of settlement options > Fixed-amount installments
    • Types of settlement options > Life income
    • Types of settlement options > Single life
    • Types of settlement options > Joint and survivor
    • Retained asset account
    • Spendthrift clause
    • 5.4 Nonforfeiture Options
    • Types of nonforfeiture options
    • Types of nonforfeiture options > Cash surrender value
    • Types of nonforfeiture options > Extended term
    • Types of nonforfeiture options > Reduced paid-up insurance
    • 5.5 Policy Loan and Withdrawal Options
    • Types of loans and withdrawals
    • Types of loans and withdrawals > Policy loans
    • Types of loans and withdrawals > Automatic premium loans
    • Types of loans and withdrawals > Withdrawals or partial surrenders
    • 5.6 Dividend Options
    • Dividend options
    • Dividend options > Cash
    • Dividend options > Reduction of premium/loan
    • Dividend options > Accumulation at interest
    • Dividend options > One-year term
    • Dividend options > Paid-up additions
    • Dividend options > Paid-up insurance
    • 5.7 Policy Riders
    • Disability riders
    • Disability riders > Waiver of premium
    • Disability riders > Waiver of cost of insurance (Universal Life)
    • Disability riders > Disability income benefit
    • Disability riders > Guaranteed insurability
    • Accelerated (living) and long-term care benefits/riders
    • Accelerated (living) and long-term care benefits/riders > Conditions for payment
    • Accelerated (living) and long-term care benefits/riders > Effect on death benefit
    • Accelerated (living) and long-term care benefits/riders > Qualifying events
    • Accelerated (living) and long-term care benefits/riders > Disclosure
    • Accelerated (living) and long-term care benefits/riders > Exclusions and restrictions
    • Additional insureds
    • Additional insureds > Spouse/other-insured term
    • Additional insureds > Children's term
    • Additional insureds > Family term
    • Riders affecting death benefit
    • Riders affecting death benefit > Accidental death and dismemberment
    • Riders affecting death benefit > Cost of living
    • Riders affecting death benefit > Return of premium
  • 6.0 Annuities
    • 6.1 Annuity Basics
    • Annuity concepts and uses
    • Annuity concepts and uses > Accumulation/annuity periods
    • Annuity concepts and uses > Owner
    • Annuity concepts and uses > Annuitant
    • Annuity concepts and uses > Beneficiary
    • Annuity concepts and uses > Death of owner
    • Annuity concepts and uses > Nebraska Protection in Annuity Transactions Act (44-8101 to 44-8109)
    • Types of annuities
    • Types of annuities > Single premium
    • Types of annuities > Fixed premium
    • Types of annuities > Flexible premium
    • Types of annuities > Immediate
    • Types of annuities > Deferred
    • Features/aspects of annuities
    • Features/aspects of annuities > Nonforfeiture
    • Features/aspects of annuities > Surrender charges
    • Fixed versus variable annuities (44-2212, 44-216; 210 Administrative Code Ch. 15, § 006, § 011)
    • Fixed versus variable annuities (44-2212, 44-216; 210 Administrative Code Ch. 15, § 006, § 011) > Interest rate guarantees
    • Fixed versus variable annuities (44-2212, 44-216; 210 Administrative Code Ch. 15, § 006, § 011) > Separate account
    • Fixed versus variable annuities (44-2212, 44-216; 210 Administrative Code Ch. 15, § 006, § 011) > General account
    • 6.2 Payout Options
    • Life contingency benefit options
    • Life contingency benefit options > Pure life
    • Life contingency benefit options > Life with guaranteed minimum
    • Life contingency benefit options > Single life
    • Life contingency benefit options > Multiple life
    • Annuity certain payment options
    • Annuity certain payment options > Installments for a fixed period/amount
  • 7.0 Federal Taxation of Life Insurance and Annuities
    • 7.1 General
    • Taxation of amounts available to policyowner
    • Taxation of amounts available to policyowner > Cash value increases
    • Taxation of amounts available to policyowner > Dividends
    • Taxation of amounts available to policyowner > Loans
    • Taxation of amounts available to policyowner > Surrenders
    • Taxation of amounts available to policyowner > Accelerated benefits
    • Taxation of amounts available to policyowner > Death benefit
    • Taxation of amounts received by the beneficiary
    • Taxation of amounts received by the beneficiary > General rules and exceptions
    • Taxation of amounts received by the beneficiary > Settlement options
    • Taxation of amounts received by the beneficiary > Tax implications of estate as beneficiary
    • Section 1035 exchanges
    • Qualified versus nonqualified annuities
    • Qualified versus nonqualified annuities > General requirements
    • Qualified versus nonqualified annuities > Taxation of distributions/withdrawals/contributions
    • Qualified versus nonqualified annuities > Premature distributions
    • Qualified versus nonqualified annuities > During accumulation phase
    • Qualified versus nonqualified annuities > Annuity phase, exclusion ratio
    • Modified endowment contracts (MECs)
    • Modified endowment contracts (MECs) > Modified endowment versus life insurance
    • Modified endowment contracts (MECs) > Seven-pay test
    • Modified endowment contracts (MECs) > Distributions

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These are independent study questions, not actual examination items. For examination requirements and official information, view Nebraska Producer's Examination for Life Insurance Series 13-01 details.