ARIZONA LIFE INSURANCE EXAM 2 FINAL
STUDY PAPER 2026 COMPLETE QUESTIONS
AND ANSWERS
◉ How are monthly life annuity benefit payments treated under a
tax sheltered annuity (TSA)? Answer: Taxed as ordinary income in
the year received
◉ How does a continuous premium whole life policy differ from a
limited payment whole life policy? Answer: The time period in
which premiums will be paid
◉ Which of these is an accurate statement regarding the fixed period
settlement option on a life insurance policy? Answer: A portion of
the payments paid to the beneficiary comes from interest calculated
on the proceeds of the policy
◉ Under what circumstance does an accident and health insurer
have the right to request an autopsy? Answer: When not prohibited
by state law
◉ A material change in a modified endowment contract (MEC)
results in Answer: the seven pay test, adjusted for cash value, being
applied again
,◉ Under an adjustable life insurance policy, which of the following
may NOT be changed without further underwriting? Answer: The
person insured
◉ Linda is covered with long-term care insurance and has early-
stage Alzheimer's. She is still able to reside in her home while
receiving primary care, as opposed to moving into a nursing home.
All of the following long-term benefits encourage this EXCEPT for
Answer: custodial care
◉ Employer-paid qualified long-term care insurance premiums are
typically Answer: Excluded from the employee's gross income.
◉ Which statement regarding the certificate of insurance is
accurate? Answer: Indicates evidence of an employee's insurance
coverage
◉ Purchasing insurance is an example of risk Answer: transference
◉ When an applicant applies for a large amount of life insurance
coverage, which of the following would likely NOT be an
underwriting requirement? Answer: eye examination
,◉ A comprehensive major medical health insurance policy contains
an eligible expenses provision which identifies the type of health
care services that are covered. All of the following health care
services are typical covered EXCEPT for Answer: Experimental and
investigative services
◉ All of these statements concerning group credit life insurance are
false EXCEPT Answer: The face amount is determined by the
outstanding loan balance
◉ Who may terminate coverage under and cancelable health
insurance policy? Answer: insurer or insured
◉ The interest credited to the cash values of personally-owned non-
qualified annuities is considered Answer: tax deferred
◉ An insurer that confines or largely limits the exposures it writes
to those of its owners is called Answer: captive
◉ Dividends from a mutual insurance company are paid to whom?
Answer: Policyholders
◉ A business may purchase an annuity for all of the following
reasons EXCEPT Answer: Informally finding a non-qualified deferred
compensation plan
, ◉ An organization that requires healthcare services to be provided
by a network of physicians and hospitals is known as an Answer:
HMO
◉ In Arizona, and insurer providing small employer group medical
plans may discontinue an employers coverage if Answer: The
insurer no longer offers the plan to any employer
◉ Which of the following statements is NOT true concerning the
relationship between group health insurance plans and Medicare?
(Assuming the business has more than 20 employees) Answer:
Group health coverage is NOT available for workers over the age of
65
◉ hold harmless clause is an example of risk Answer: to transfer.
Shifts liability for loss from one party to another
◉ What is a "functional assessment" for long-term care benefits?
Answer: A review of the insured ability to perform the activities of
daily living
◉ Which is an accurate description of the premium in a graded
premium life insurance policy? Answer: Annual increases in
STUDY PAPER 2026 COMPLETE QUESTIONS
AND ANSWERS
◉ How are monthly life annuity benefit payments treated under a
tax sheltered annuity (TSA)? Answer: Taxed as ordinary income in
the year received
◉ How does a continuous premium whole life policy differ from a
limited payment whole life policy? Answer: The time period in
which premiums will be paid
◉ Which of these is an accurate statement regarding the fixed period
settlement option on a life insurance policy? Answer: A portion of
the payments paid to the beneficiary comes from interest calculated
on the proceeds of the policy
◉ Under what circumstance does an accident and health insurer
have the right to request an autopsy? Answer: When not prohibited
by state law
◉ A material change in a modified endowment contract (MEC)
results in Answer: the seven pay test, adjusted for cash value, being
applied again
,◉ Under an adjustable life insurance policy, which of the following
may NOT be changed without further underwriting? Answer: The
person insured
◉ Linda is covered with long-term care insurance and has early-
stage Alzheimer's. She is still able to reside in her home while
receiving primary care, as opposed to moving into a nursing home.
All of the following long-term benefits encourage this EXCEPT for
Answer: custodial care
◉ Employer-paid qualified long-term care insurance premiums are
typically Answer: Excluded from the employee's gross income.
◉ Which statement regarding the certificate of insurance is
accurate? Answer: Indicates evidence of an employee's insurance
coverage
◉ Purchasing insurance is an example of risk Answer: transference
◉ When an applicant applies for a large amount of life insurance
coverage, which of the following would likely NOT be an
underwriting requirement? Answer: eye examination
,◉ A comprehensive major medical health insurance policy contains
an eligible expenses provision which identifies the type of health
care services that are covered. All of the following health care
services are typical covered EXCEPT for Answer: Experimental and
investigative services
◉ All of these statements concerning group credit life insurance are
false EXCEPT Answer: The face amount is determined by the
outstanding loan balance
◉ Who may terminate coverage under and cancelable health
insurance policy? Answer: insurer or insured
◉ The interest credited to the cash values of personally-owned non-
qualified annuities is considered Answer: tax deferred
◉ An insurer that confines or largely limits the exposures it writes
to those of its owners is called Answer: captive
◉ Dividends from a mutual insurance company are paid to whom?
Answer: Policyholders
◉ A business may purchase an annuity for all of the following
reasons EXCEPT Answer: Informally finding a non-qualified deferred
compensation plan
, ◉ An organization that requires healthcare services to be provided
by a network of physicians and hospitals is known as an Answer:
HMO
◉ In Arizona, and insurer providing small employer group medical
plans may discontinue an employers coverage if Answer: The
insurer no longer offers the plan to any employer
◉ Which of the following statements is NOT true concerning the
relationship between group health insurance plans and Medicare?
(Assuming the business has more than 20 employees) Answer:
Group health coverage is NOT available for workers over the age of
65
◉ hold harmless clause is an example of risk Answer: to transfer.
Shifts liability for loss from one party to another
◉ What is a "functional assessment" for long-term care benefits?
Answer: A review of the insured ability to perform the activities of
daily living
◉ Which is an accurate description of the premium in a graded
premium life insurance policy? Answer: Annual increases in
