MONTANA LIFE INSURANCE EXAM 2026 FINAL
ASSESSMENT PAPER INSURANCE PRINCIPLES
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ An insured has a policy with a Waiver of Premium rider. The
insured has suffered an illness that will prevent them for working
for two years. When will their premiums be waived?
A: Immediately
B: After the first nine months of disability
C: After the first six months of disability
D: Never, premiums cannot be waived because illness is not a
disability. Answer: C: After the first six months of disability
◉ The clause that defines and describes the scope of coverage and
the limits of indemnification is known as the:
A: Insuring Agreement
B: Incontestable Clause
C: Payor Clause
D: Entire Contract Clause Answer: A: Insuring Agreement
,◉ D has just paid off his mortgage and has decided that he no longer
needs his life insurance policy which he originally purchased to
cover the house payments should he die. If D explores the possibly of
selling his policy while he is still alive, it is known as:
A: a life settlement
B: an annuity
C: a Viatical settlement
D: STOLI Answer: A: a life settlement
◉ Combination/Variation Plans insure:
A: Groups
B: Two or More lives under one contract
C: Two or more people under separate contracts
D: are a form of variable life insurance Answer: B: Two or More lives
under one contract
◉ What is the tax consideration for taking a cash dividend option?
A: The dividend is fully taxable as income
B: The dividend is paid tax free
C: Depending on income bracket of the insured, the dividend may be
taxable
D: If the company gets to keep half of the dividend it is take free
Answer: B: The dividend is paid tax free
,◉ Which of the following is not true regarding a renewable option
on a term policy?
A: The policy must be renewed regardless of insurability.
B: The rates cannot be more than standard rates at renewal.
C: Premiums are based off of attained age rates.
D: A policy can be renewed, however, the insured must convert to a
different policy. Answer: D: A policy can be renewed, however, the
insured must convert to a different policy.
◉ Which of the following is considered to be part of the Entire
Contract?
A: Declarations Page
B: Buyers Guide
C: Copy of the Application
D: All of the Above Answer: C: Copy of the Application
◉ Company A has a partnership with Company Z. There is an
agreement in place that if the CEO of either company were to die, the
other company would receive money to buy out the partnership.
This is an example of:
A: Buy/Sell Agreement
B: Crosse Purchase plan
C: Business Entity Plan
, D: Key Person Answer: C: Business Entity Plan
◉ All of the following are true regarding the Guaranty Association
EXCEPT:
A: A claimant may receive less benefits than what they had from a
policy.
B: The Association is comprised of All member insurers
C: The Association is comprised of All member insurers and have a
right to end membership while still transacting business in IL
D: There is a $250,000 limit on the present value of annuity benefits.
Answer: C: The Association is comprised of All member insurers and
have a right to end membership while still transacting business in IL
◉ G has a credit life policy and is replacing that with a whole life
policy. The agent must:
A: formally replace coverage and include all forms to the insured
B: notify the existing insurer with a notice regarding replacement
form
C: sign the application and forward all signed documents to the
replacing insurer to send to the existing insurer
D: None of the Above Answer: D: None of the Above
◉ Each of the following is an unfair claims practice by an insurance
company, EXCEPT:
ASSESSMENT PAPER INSURANCE PRINCIPLES
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ An insured has a policy with a Waiver of Premium rider. The
insured has suffered an illness that will prevent them for working
for two years. When will their premiums be waived?
A: Immediately
B: After the first nine months of disability
C: After the first six months of disability
D: Never, premiums cannot be waived because illness is not a
disability. Answer: C: After the first six months of disability
◉ The clause that defines and describes the scope of coverage and
the limits of indemnification is known as the:
A: Insuring Agreement
B: Incontestable Clause
C: Payor Clause
D: Entire Contract Clause Answer: A: Insuring Agreement
,◉ D has just paid off his mortgage and has decided that he no longer
needs his life insurance policy which he originally purchased to
cover the house payments should he die. If D explores the possibly of
selling his policy while he is still alive, it is known as:
A: a life settlement
B: an annuity
C: a Viatical settlement
D: STOLI Answer: A: a life settlement
◉ Combination/Variation Plans insure:
A: Groups
B: Two or More lives under one contract
C: Two or more people under separate contracts
D: are a form of variable life insurance Answer: B: Two or More lives
under one contract
◉ What is the tax consideration for taking a cash dividend option?
A: The dividend is fully taxable as income
B: The dividend is paid tax free
C: Depending on income bracket of the insured, the dividend may be
taxable
D: If the company gets to keep half of the dividend it is take free
Answer: B: The dividend is paid tax free
,◉ Which of the following is not true regarding a renewable option
on a term policy?
A: The policy must be renewed regardless of insurability.
B: The rates cannot be more than standard rates at renewal.
C: Premiums are based off of attained age rates.
D: A policy can be renewed, however, the insured must convert to a
different policy. Answer: D: A policy can be renewed, however, the
insured must convert to a different policy.
◉ Which of the following is considered to be part of the Entire
Contract?
A: Declarations Page
B: Buyers Guide
C: Copy of the Application
D: All of the Above Answer: C: Copy of the Application
◉ Company A has a partnership with Company Z. There is an
agreement in place that if the CEO of either company were to die, the
other company would receive money to buy out the partnership.
This is an example of:
A: Buy/Sell Agreement
B: Crosse Purchase plan
C: Business Entity Plan
, D: Key Person Answer: C: Business Entity Plan
◉ All of the following are true regarding the Guaranty Association
EXCEPT:
A: A claimant may receive less benefits than what they had from a
policy.
B: The Association is comprised of All member insurers
C: The Association is comprised of All member insurers and have a
right to end membership while still transacting business in IL
D: There is a $250,000 limit on the present value of annuity benefits.
Answer: C: The Association is comprised of All member insurers and
have a right to end membership while still transacting business in IL
◉ G has a credit life policy and is replacing that with a whole life
policy. The agent must:
A: formally replace coverage and include all forms to the insured
B: notify the existing insurer with a notice regarding replacement
form
C: sign the application and forward all signed documents to the
replacing insurer to send to the existing insurer
D: None of the Above Answer: D: None of the Above
◉ Each of the following is an unfair claims practice by an insurance
company, EXCEPT:
