ALABAMA LIFE AND HEALTH INSURANCE EXAM
QUESTIONS AND VERIFIED SOLUTIONS
a policy owner can collect the face amount on what type of policy? - ANSWER-endowment
policy
the option to convert term life insurance to a permanent form of coverage can normally be
executed - ANSWER-without proof of insurability
with term life insurance, which of the following types of premium remains the same for the
entire policy period? - ANSWER-level premium
mortgage protection is typically covered with: - ANSWER-decreasing term
with renewable term insurance - ANSWER-the premium increases at renewal
paula has an insurance policy that has a guaranteed minimum cash value, a guaranteed death
benefit, fixed premiums, and grows at a rate reflected by a selected fund index. which type of
life policy fits this description? - ANSWER-equity indexed life
what does renewable term guarantee - ANSWER-The insured's insurability
an insurance producer must have which of the following in order to sell variable life insurance
policies - ANSWER-registered with the FINRA, license for variable life and annuities contracts,
and a valid insurance license.
which of the following life insurance policies will build up cash value the fastest - ANSWER-
single premium
at what age is an insured for life insurance considered statistically "dead" - ANSWER-100
michael has a universal life policy with an increasing death benefit option. with the initial face
amount of $50,000 and a value of $5,000, what would the actual death benefit be? - ANSWER-
$55,000
which type of life insurance policy combines insurance protection with an accumulation of cash
value - ANSWER-permanent insurance
tim has a universal life policy. the cash value growth in his policy is: - ANSWER-interest sensitive
in which of the following ways does term life insurance and whole life insurance differ? -
ANSWER-term life insurance does not build cash value
,which type of policy allows the policyowner to switch to permanent insurance - ANSWER-
convertible term
which of these statements accurately portray a whole life policy - ANSWER-endows at age 100
and paid up a stated time
at what point does a whole life policy pay the face amount - ANSWER-upon the insureds death
or reaching age 100
which describes a level term policy? - ANSWER-the premium and protection remain constant for
the term of the policy
albert surrenders his whole life policy ten years after it was purchased. what can he expect? -
ANSWER-to pay taxes on the cash value in excess of the premium paid
a husband and wife purchases a life insurance policy that covers both of them. the policy paid
nothing when the husband died. two years later, the wife dies and a death benefit is paid to the
beneficiary. which type of policy is this? - ANSWER-survivorship life policy
which of the following provisions may not be adjusted in an adjustable life policy? - ANSWER-
the insured
which of the following dividend options allows the continuation of cash value accumulation -
ANSWER-reduced paid-up insurance
ron turned over all rights in his policy to an assignee. this is called - ANSWER-an absolute
assignment
an aviation exclusion: - ANSWER-excludes coverage when the insured is riding in certain kids of
air travel
which type of assignment transfers a portion of the policy owners right to another party in
order to secure a debt to that party? - ANSWER-collateral assignment
A policyowner with a $100,000 whole life policy has a cash value of $10,000. There is an
outstanding loan of $5,000 and a past-due premium of $250. If the policyowner chooses the
reduced paid-up option and then later dies, what will the beneficiary receive? - ANSWER-the
reduced paid-up coverage amount minus $5,250
which type of life insurance Rider allows a policy owner to increase the level of coverage to keep
up with inflation - ANSWER-cost of living rider
policy dividends for life insurance are - ANSWER-not guaranteed
, Rick owns $100,000 life insurance policy with a cash value of 10,000. how much can he borrow
up to - ANSWER-the accumulated cash value ($10,000 less interest)
the automatic premium loan provision is not used in which of the following policies - ANSWER-
increasing term policy
when can a lapse life insurance policy usually be reinstated - ANSWER-within 3-5 years of the
policy lapsing
which of the following permanent life insurance policy writers add more coverage for a limited
amount of time - ANSWER-term rider
which of the following events would allow a policy owner with a guaranteed insurability rider
purchase additional life insurance - ANSWER-having a child, getting married, and reaching a
specific age stated in the policy
John has recently died and it was discovered that he was actually ten years older than was listed
on his life insurance policy. What will the insurer pay his beneficiary? - ANSWER-The amount of
insurance that his premiums would have purchased at his correct age
Which dividend option allows a policy owner to use his/her dividends to buy life insurance on a
single premium basis? - ANSWER-paid-up additions option
Which of the following is NOT guaranteed by a whole life policy? - ANSWER-policy dividends
Susan owns a life insurance policy that has accumulated $10,000 in cash value in which she can
no longer pay its premiums. If she elects to take the extended term option, which of these
actions would she take? - ANSWER-Uses the $10,000 to buy term insurance of the same face
amount as her original policy
Which of the following is considered the "automatic" Nonforfeiture Option that most insurers
will use? - ANSWER-extended term
An accidental death rider claim is usually paid if the insured - ANSWER-dies within 90 days of
the accident
Shawn has a waiver of premium ride on his life insurance policy. He becomes disabled for 3
years, during which the insurance company waives $3,000 in premiums. When Shawn recovers,
he must - ANSWER-resume paying premiums again
An insurance company may cancel a life insurance policy under which of the following
conditions? - ANSWER-the outstanding policy loan exceeds the cash value of the policy
Jan is named irrevocable beneficiary of Jim's life insurance policy. Which of the following
statements is correct? - ANSWER-Jim needs Jan's permission to borrow the policy's loan value
QUESTIONS AND VERIFIED SOLUTIONS
a policy owner can collect the face amount on what type of policy? - ANSWER-endowment
policy
the option to convert term life insurance to a permanent form of coverage can normally be
executed - ANSWER-without proof of insurability
with term life insurance, which of the following types of premium remains the same for the
entire policy period? - ANSWER-level premium
mortgage protection is typically covered with: - ANSWER-decreasing term
with renewable term insurance - ANSWER-the premium increases at renewal
paula has an insurance policy that has a guaranteed minimum cash value, a guaranteed death
benefit, fixed premiums, and grows at a rate reflected by a selected fund index. which type of
life policy fits this description? - ANSWER-equity indexed life
what does renewable term guarantee - ANSWER-The insured's insurability
an insurance producer must have which of the following in order to sell variable life insurance
policies - ANSWER-registered with the FINRA, license for variable life and annuities contracts,
and a valid insurance license.
which of the following life insurance policies will build up cash value the fastest - ANSWER-
single premium
at what age is an insured for life insurance considered statistically "dead" - ANSWER-100
michael has a universal life policy with an increasing death benefit option. with the initial face
amount of $50,000 and a value of $5,000, what would the actual death benefit be? - ANSWER-
$55,000
which type of life insurance policy combines insurance protection with an accumulation of cash
value - ANSWER-permanent insurance
tim has a universal life policy. the cash value growth in his policy is: - ANSWER-interest sensitive
in which of the following ways does term life insurance and whole life insurance differ? -
ANSWER-term life insurance does not build cash value
,which type of policy allows the policyowner to switch to permanent insurance - ANSWER-
convertible term
which of these statements accurately portray a whole life policy - ANSWER-endows at age 100
and paid up a stated time
at what point does a whole life policy pay the face amount - ANSWER-upon the insureds death
or reaching age 100
which describes a level term policy? - ANSWER-the premium and protection remain constant for
the term of the policy
albert surrenders his whole life policy ten years after it was purchased. what can he expect? -
ANSWER-to pay taxes on the cash value in excess of the premium paid
a husband and wife purchases a life insurance policy that covers both of them. the policy paid
nothing when the husband died. two years later, the wife dies and a death benefit is paid to the
beneficiary. which type of policy is this? - ANSWER-survivorship life policy
which of the following provisions may not be adjusted in an adjustable life policy? - ANSWER-
the insured
which of the following dividend options allows the continuation of cash value accumulation -
ANSWER-reduced paid-up insurance
ron turned over all rights in his policy to an assignee. this is called - ANSWER-an absolute
assignment
an aviation exclusion: - ANSWER-excludes coverage when the insured is riding in certain kids of
air travel
which type of assignment transfers a portion of the policy owners right to another party in
order to secure a debt to that party? - ANSWER-collateral assignment
A policyowner with a $100,000 whole life policy has a cash value of $10,000. There is an
outstanding loan of $5,000 and a past-due premium of $250. If the policyowner chooses the
reduced paid-up option and then later dies, what will the beneficiary receive? - ANSWER-the
reduced paid-up coverage amount minus $5,250
which type of life insurance Rider allows a policy owner to increase the level of coverage to keep
up with inflation - ANSWER-cost of living rider
policy dividends for life insurance are - ANSWER-not guaranteed
, Rick owns $100,000 life insurance policy with a cash value of 10,000. how much can he borrow
up to - ANSWER-the accumulated cash value ($10,000 less interest)
the automatic premium loan provision is not used in which of the following policies - ANSWER-
increasing term policy
when can a lapse life insurance policy usually be reinstated - ANSWER-within 3-5 years of the
policy lapsing
which of the following permanent life insurance policy writers add more coverage for a limited
amount of time - ANSWER-term rider
which of the following events would allow a policy owner with a guaranteed insurability rider
purchase additional life insurance - ANSWER-having a child, getting married, and reaching a
specific age stated in the policy
John has recently died and it was discovered that he was actually ten years older than was listed
on his life insurance policy. What will the insurer pay his beneficiary? - ANSWER-The amount of
insurance that his premiums would have purchased at his correct age
Which dividend option allows a policy owner to use his/her dividends to buy life insurance on a
single premium basis? - ANSWER-paid-up additions option
Which of the following is NOT guaranteed by a whole life policy? - ANSWER-policy dividends
Susan owns a life insurance policy that has accumulated $10,000 in cash value in which she can
no longer pay its premiums. If she elects to take the extended term option, which of these
actions would she take? - ANSWER-Uses the $10,000 to buy term insurance of the same face
amount as her original policy
Which of the following is considered the "automatic" Nonforfeiture Option that most insurers
will use? - ANSWER-extended term
An accidental death rider claim is usually paid if the insured - ANSWER-dies within 90 days of
the accident
Shawn has a waiver of premium ride on his life insurance policy. He becomes disabled for 3
years, during which the insurance company waives $3,000 in premiums. When Shawn recovers,
he must - ANSWER-resume paying premiums again
An insurance company may cancel a life insurance policy under which of the following
conditions? - ANSWER-the outstanding policy loan exceeds the cash value of the policy
Jan is named irrevocable beneficiary of Jim's life insurance policy. Which of the following
statements is correct? - ANSWER-Jim needs Jan's permission to borrow the policy's loan value
