ALABAMA LIFE AND HEALTH INSURANCE EXAM QUESTIONS
AND ANSWERS (VERIFIED BY EXPERT 2025)
Which of the following is NOT a characteristic of life insurance as property? - CORRECT
ANSWERS-It requires a fund portfolio manager
Characteristics:
It creates an immediate estate
It requires no physical maintenance
It may be paid for in installments
The most effective way to ensure that the applicant will accept the policy when it is issued is: -
CORRECT ANSWERS-To have the applicant pay the initial premium at the time of application
Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that
when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following
statements is NOT correct? - CORRECT ANSWERS-Donald must change the beneficiaries
immediately
CORRECT:
The premium will continue to be based on his original age of 5
Donald has enjoyed protection against the problems of premature death
The face value of Donald's policy has increased by 5 times
,Term insurance differs from permanent insurance in that term: - CORRECT ANSWERS-Builds
no cash value, pays a death benefit only
An indeterminate premium policy offers: - CORRECT ANSWERS-A low initial premium with
succeeding premiums based on the company's investment return, mortality and expenses
With regard to the waiver of premium rider, after the disability a policyowner normally: - CORRECT
ANSWERS-Need not repay the premiums paid by the company during disability
In many jurisdictions, permanent policies are required to have some cash value by the end of: -
CORRECT ANSWERS-The Third Year
Loan values and retirement income are: - CORRECT ANSWERS-Called the living benefits of life
insurance
With a modified premium whole life contract, premium payments: - CORRECT ANSWERS-Are
lower in the early years of the contract
A variable life policy: - CORRECT ANSWERS-Death benefit varies to reflect the investment
results of the underlying separate account, but never falls below a guaranteed minimum
The type of policy that can be changed from one that does not accumulate cash values to one that does
is a: - CORRECT ANSWERS-Convertible term policy
A limited pay life policy: - CORRECT ANSWERS-Requires premium payments for a specified
number of years or until a specified age is reached
Should an insured become totally and permanently disabled two months before the cut-off date for the
waiver of premium rider: - CORRECT ANSWERS-The insured remains eligible for all provisions
Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies
and the policy death benefit is paid to the beneficiary. This is called a: - CORRECT ANSWERS-
Survivorship or second-to-die policy
, A whole life policy: - CORRECT ANSWERS-Requires the insured to pay premiums for life and
endows at age 100
If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more
insurance: - CORRECT ANSWERS-On his own life at certain specified ages without proof of
insurability
Any extra premium charged for the waiver of premium rider: - CORRECT ANSWERS-Does not
apply to the policy's cash value
If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can
borrow up to: - CORRECT ANSWERS-The entire accumulated cash value of $6,000, less
interest for 1 year
An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: -
CORRECT ANSWERS-Will automatically institute the extended term option
Each of the following statements about policy loans is correct, except: - CORRECT ANSWERS-
Policy loans may be made on any type of policy
What is a postmortem dividend? - CORRECT ANSWERS-A dividend earned, but not yet paid,
in the year of the insured's death and paid with the death claim
The factors that determine the amount of each payment under the fixed period settlement option are: -
CORRECT ANSWERS-Length of the fixed period, face amount of the policy and interest
Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child,
Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but before receiving
all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of
withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991.
When Fred dies, his insurance company will make settlement by paying: - CORRECT
ANSWERS-Interest in periodic payments to Wilma
AND ANSWERS (VERIFIED BY EXPERT 2025)
Which of the following is NOT a characteristic of life insurance as property? - CORRECT
ANSWERS-It requires a fund portfolio manager
Characteristics:
It creates an immediate estate
It requires no physical maintenance
It may be paid for in installments
The most effective way to ensure that the applicant will accept the policy when it is issued is: -
CORRECT ANSWERS-To have the applicant pay the initial premium at the time of application
Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son, Donald. Suppose that
when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following
statements is NOT correct? - CORRECT ANSWERS-Donald must change the beneficiaries
immediately
CORRECT:
The premium will continue to be based on his original age of 5
Donald has enjoyed protection against the problems of premature death
The face value of Donald's policy has increased by 5 times
,Term insurance differs from permanent insurance in that term: - CORRECT ANSWERS-Builds
no cash value, pays a death benefit only
An indeterminate premium policy offers: - CORRECT ANSWERS-A low initial premium with
succeeding premiums based on the company's investment return, mortality and expenses
With regard to the waiver of premium rider, after the disability a policyowner normally: - CORRECT
ANSWERS-Need not repay the premiums paid by the company during disability
In many jurisdictions, permanent policies are required to have some cash value by the end of: -
CORRECT ANSWERS-The Third Year
Loan values and retirement income are: - CORRECT ANSWERS-Called the living benefits of life
insurance
With a modified premium whole life contract, premium payments: - CORRECT ANSWERS-Are
lower in the early years of the contract
A variable life policy: - CORRECT ANSWERS-Death benefit varies to reflect the investment
results of the underlying separate account, but never falls below a guaranteed minimum
The type of policy that can be changed from one that does not accumulate cash values to one that does
is a: - CORRECT ANSWERS-Convertible term policy
A limited pay life policy: - CORRECT ANSWERS-Requires premium payments for a specified
number of years or until a specified age is reached
Should an insured become totally and permanently disabled two months before the cut-off date for the
waiver of premium rider: - CORRECT ANSWERS-The insured remains eligible for all provisions
Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies
and the policy death benefit is paid to the beneficiary. This is called a: - CORRECT ANSWERS-
Survivorship or second-to-die policy
, A whole life policy: - CORRECT ANSWERS-Requires the insured to pay premiums for life and
endows at age 100
If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more
insurance: - CORRECT ANSWERS-On his own life at certain specified ages without proof of
insurability
Any extra premium charged for the waiver of premium rider: - CORRECT ANSWERS-Does not
apply to the policy's cash value
If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can
borrow up to: - CORRECT ANSWERS-The entire accumulated cash value of $6,000, less
interest for 1 year
An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company: -
CORRECT ANSWERS-Will automatically institute the extended term option
Each of the following statements about policy loans is correct, except: - CORRECT ANSWERS-
Policy loans may be made on any type of policy
What is a postmortem dividend? - CORRECT ANSWERS-A dividend earned, but not yet paid,
in the year of the insured's death and paid with the death claim
The factors that determine the amount of each payment under the fixed period settlement option are: -
CORRECT ANSWERS-Length of the fixed period, face amount of the policy and interest
Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child,
Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but before receiving
all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of
withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991.
When Fred dies, his insurance company will make settlement by paying: - CORRECT
ANSWERS-Interest in periodic payments to Wilma
