WISCONSIN LIFE EXAM FX CERTIFICATION
EVALUATION 2026 QUESTIONS WITH
PRACTICE SOLUTION GRADED A+
◉ Credit Life insurance policy provisions. Answer: - Term Insurance
- Nonrenewable/nonconvertible
◉ Policy Illustrations characteristics. Answer: - Presentation of non-
guaranteed elements
- General rule: include information about the insurer, insured,
underwriting classifications, & policy benefits
- Must be clearly labeled "Life Insurance Illustration"
◉ Suitability of Annuity sales. Answer: - Standards for senior
consumers
- Record keeping for 6 years
◉ Policy replacement characteristics. Answer: A new policy replaces
an exisitng policy that is:
- Lapsed, forfeited, surrendered, or terminated
- Reissued with a reduction in cash value
- Converted to reduced paid-up insurance
,Notice regarding replacement must be provided by agent
◉ Interstate Insurance Product Regulation Compact (IIPRC).
Answer: Contract between member states: promote and protect
consumers' interest, and establish uniform standards for insurance
forms
◉ State Life Insurance Fund. Answer: - Low-cost life insurance for
state residents
- Evidence of insurability is required
- Policies purchased through the Office of the Commissioner of
Insurance
◉ Taxation of Life Insurance (Premiums, Cash Value, Policy Loans,
and Dividends). Answer: Premiums: not tax deductible
Cash Value: taxable only if the amount exceeds premiums (taxed on
gain)
Policy Loans: Not taxable, interest not tax deductible
Dividends: Not taxable as return of premium; any interest is taxable
◉ Taxation of Life Insurance (Accelerated benefits, death benefit,
and surrenders). Answer: Accelerated Benefits: tax free
,Death benefit: not taxable if lump sum; any interest on payments is
taxable
Surrenders: Taxable if the cash surrender value exceeds the amount
of premium paid
◉ Taxation of Annuities (Accumulation, Withdrawal of
principal/interest, lump-sum cash surrenders, premature
distribution, and distributions at death). Answer: Accumulation: tax
deferred in individual annuities, not tax deferred in corporate
owned
Withdrawal of principal and interest: Last In, First Out basis
Lump-sum cash surrenders: taxable
Premature distribution: tax and 10% penalty
Distributions at death: interest taxable
◉ Taxation of Traditional IRAs (Contributions, earnings, and
distributions). Answer: Contributions: pretax, tax deductible
Earnings: Tax deferred
Distributions: taxable; 10% penalty for early withdrawals
◉ Taxation of Roth IRAs (contributions/distributions). Answer:
Contributions: after-tax; not tax deductible
Distributions: not taxable
, ◉ Taxation/Characteristics of Rollovers and Transfers. Answer: -
Tax-free transactions/distributions of money from one qualified
retirement plan to another
- Must be completed within 60 days
- If from plan to the participant, 20% of distribution is withheld
- If from plan to trustee, no withholdings (direct rollover)
◉ 1035 Exchange. Answer: Nontaxable if on the same life and one of
the following exchanges:
- Cash value policy to another cash value policy, endowment, or
annuity
- Endowment to another endowment or annuity
- Annuity to another annuity
◉ Modified Endowment Contract (MEC). Answer: - Overfunded life
insurance policy (7-pay test)
- Accumulation: tax deferred
- Distributions: Taxable Last In, First Out
- Distributions before age 59 1/2 = 10% penalty
◉ What are the general requirements of qualified retirement plans?.
Answer: - Approved by the IRS
- Tax benefits for employers and employees
EVALUATION 2026 QUESTIONS WITH
PRACTICE SOLUTION GRADED A+
◉ Credit Life insurance policy provisions. Answer: - Term Insurance
- Nonrenewable/nonconvertible
◉ Policy Illustrations characteristics. Answer: - Presentation of non-
guaranteed elements
- General rule: include information about the insurer, insured,
underwriting classifications, & policy benefits
- Must be clearly labeled "Life Insurance Illustration"
◉ Suitability of Annuity sales. Answer: - Standards for senior
consumers
- Record keeping for 6 years
◉ Policy replacement characteristics. Answer: A new policy replaces
an exisitng policy that is:
- Lapsed, forfeited, surrendered, or terminated
- Reissued with a reduction in cash value
- Converted to reduced paid-up insurance
,Notice regarding replacement must be provided by agent
◉ Interstate Insurance Product Regulation Compact (IIPRC).
Answer: Contract between member states: promote and protect
consumers' interest, and establish uniform standards for insurance
forms
◉ State Life Insurance Fund. Answer: - Low-cost life insurance for
state residents
- Evidence of insurability is required
- Policies purchased through the Office of the Commissioner of
Insurance
◉ Taxation of Life Insurance (Premiums, Cash Value, Policy Loans,
and Dividends). Answer: Premiums: not tax deductible
Cash Value: taxable only if the amount exceeds premiums (taxed on
gain)
Policy Loans: Not taxable, interest not tax deductible
Dividends: Not taxable as return of premium; any interest is taxable
◉ Taxation of Life Insurance (Accelerated benefits, death benefit,
and surrenders). Answer: Accelerated Benefits: tax free
,Death benefit: not taxable if lump sum; any interest on payments is
taxable
Surrenders: Taxable if the cash surrender value exceeds the amount
of premium paid
◉ Taxation of Annuities (Accumulation, Withdrawal of
principal/interest, lump-sum cash surrenders, premature
distribution, and distributions at death). Answer: Accumulation: tax
deferred in individual annuities, not tax deferred in corporate
owned
Withdrawal of principal and interest: Last In, First Out basis
Lump-sum cash surrenders: taxable
Premature distribution: tax and 10% penalty
Distributions at death: interest taxable
◉ Taxation of Traditional IRAs (Contributions, earnings, and
distributions). Answer: Contributions: pretax, tax deductible
Earnings: Tax deferred
Distributions: taxable; 10% penalty for early withdrawals
◉ Taxation of Roth IRAs (contributions/distributions). Answer:
Contributions: after-tax; not tax deductible
Distributions: not taxable
, ◉ Taxation/Characteristics of Rollovers and Transfers. Answer: -
Tax-free transactions/distributions of money from one qualified
retirement plan to another
- Must be completed within 60 days
- If from plan to the participant, 20% of distribution is withheld
- If from plan to trustee, no withholdings (direct rollover)
◉ 1035 Exchange. Answer: Nontaxable if on the same life and one of
the following exchanges:
- Cash value policy to another cash value policy, endowment, or
annuity
- Endowment to another endowment or annuity
- Annuity to another annuity
◉ Modified Endowment Contract (MEC). Answer: - Overfunded life
insurance policy (7-pay test)
- Accumulation: tax deferred
- Distributions: Taxable Last In, First Out
- Distributions before age 59 1/2 = 10% penalty
◉ What are the general requirements of qualified retirement plans?.
Answer: - Approved by the IRS
- Tax benefits for employers and employees
