ALABAMA LIFE INSURANCE
PRACTICE SET 2026 TESTED
QUESTIONS AND CORRECT
SOLUTIONS
◉ The extended term nonforfeiture option provides: Answer: Paid-up
term coverage equal to that of the original policy
◉ With a collateral assignment of a life policy to a creditor: Answer:
You assign a partial amount of the policy values to the creditor
◉ An accounting measure used to determine a contract owner's interest
in the separate account of a variable annuity before payments begin is
called: Answer: An accumulation unit
◉ Group Insurance Market: A certificate of insurance is issued to
whom? Answer: Each individual covered by the group life insurance
◉ The principal difference between an entity purchase and a cross
purchase buy-sell agreement is: Answer: The identity of the policy
owner (the main difference is who owns the policy)
◉ How long is the probationary period for group life insurance?
Answer: The probationary period is usually 90 days.
, ◉ What is the primary purpose of a section 303 redemption? Answer:
To provide liquidity to pay estate taxes and administration and funeral
costs
◉ What is it called when an insurance company sells part of their risk to
another insurance company? Answer: Reinsurance (also, risk-sharing)
◉ The policy conditions represent the obligation of whom? Answer:
Both the insured and the insurer
◉ Does social insurance provide equal benefits to all citizens that
contribute? Answer: No. As income is re-distributed through the
governmental system, insureds who put less into the system such as the
poor, elderly, and those with dependents get proportionately greater
benefits.
◉ In determining whether disability is permanent, most companies call
for a waiting period of how long? Answer: 3 to 6 months
◉ What can the cash value of a permanent life insurance policy be used
for? Answer: Cash values can be used as nonforfeiture option, policy
loans, full or partial surrender's, but not for accidental death benefits.
◉ What are the essential elements of a contract? Answer: Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties,
and legal purpose
PRACTICE SET 2026 TESTED
QUESTIONS AND CORRECT
SOLUTIONS
◉ The extended term nonforfeiture option provides: Answer: Paid-up
term coverage equal to that of the original policy
◉ With a collateral assignment of a life policy to a creditor: Answer:
You assign a partial amount of the policy values to the creditor
◉ An accounting measure used to determine a contract owner's interest
in the separate account of a variable annuity before payments begin is
called: Answer: An accumulation unit
◉ Group Insurance Market: A certificate of insurance is issued to
whom? Answer: Each individual covered by the group life insurance
◉ The principal difference between an entity purchase and a cross
purchase buy-sell agreement is: Answer: The identity of the policy
owner (the main difference is who owns the policy)
◉ How long is the probationary period for group life insurance?
Answer: The probationary period is usually 90 days.
, ◉ What is the primary purpose of a section 303 redemption? Answer:
To provide liquidity to pay estate taxes and administration and funeral
costs
◉ What is it called when an insurance company sells part of their risk to
another insurance company? Answer: Reinsurance (also, risk-sharing)
◉ The policy conditions represent the obligation of whom? Answer:
Both the insured and the insurer
◉ Does social insurance provide equal benefits to all citizens that
contribute? Answer: No. As income is re-distributed through the
governmental system, insureds who put less into the system such as the
poor, elderly, and those with dependents get proportionately greater
benefits.
◉ In determining whether disability is permanent, most companies call
for a waiting period of how long? Answer: 3 to 6 months
◉ What can the cash value of a permanent life insurance policy be used
for? Answer: Cash values can be used as nonforfeiture option, policy
loans, full or partial surrender's, but not for accidental death benefits.
◉ What are the essential elements of a contract? Answer: Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties,
and legal purpose
