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NEW MEXICO LIFE INSURANCE ACTUAL
EXAM PREP 2026 ALL QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY A
GRADED | NEW AND REVISED
When an insurance appointment with an agent is terminated, the party
must notify the agent of the termination is the - ANSWER- Insurer
The policy provision that permits an employee to change from group life
coverage to an individual life policy is called the - ANSWER-
Conversation provision
A qualified profit-sharing plan is designed to - ANSWER- distribute a
portion of company earnings to its employees
What is the maximum number of employees (earning at least 5k) that an
employer can have in order to start SIMPLE retirement plan -
ANSWER- 100
A policy owner with a terminal illness who sells his life insurance policy
to a third party is called a - ANSWER- Viator
The Medical information Bureau consists of members from which group
- ANSWER- insurance companies
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A life insurance policy's waiver of premium rider has the ability to -
ANSWER- Relieve the insured of premium payments following an
initial waiting period after the insured becomes totally disabled
An insurable risk requires - ANSWER- that the chance of loss be
calculable
Under the Fair Credit Reporting Act, which statement is true? -
ANSWER- The consumer who was investigated must be advised that
credit, insurance, or employment was denied because of an unfavorable
report.
A life insurance policyowner would like a dividend option that results in
a limited current outlay of funds. Which dividend option would be
chosen? - ANSWER- Reduction of premium payment
With life insurance, the needs approach is used primarily in determining
- ANSWER- how much life insurance a client should apply for
Which life insurance policy provision prohibits a beneficiary from
"commuting, encumbering, withdrawing,or assigning" any portion of the
proceeds prior to actual receipt from the company? - ANSWER-
Spendthrift clause
Kevin has an existing life insurance policy and assigns it to another
insurer for a new contract. How would this transaction be treated for tax
purposes? - ANSWER- As a Section 1035 exchange
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If a basic illustration is not provided, an insurer MUST provide a policy
summary to a prospective insured at which of the following times? -
ANSWER- When the policy is delivered
Which of the following would most likely purchase an immediate
annuity? - ANSWER- Retiree having a lump sum to invest
A life insurance policy in NM becomes incontestable after it has been
force for - ANSWER- 2 years
A retired couple would like to maximize the income derived from their
combined life savings and have it payable until they both die. Which
annuity would be their best choice? - ANSWER- Joint and survivor
annuity
If an agent misleads or fails to adequately disclose the title and true
nature of a policy offered to a potential insured, it may be considered -
ANSWER- misrepresentation
Which life insurance policy would be eligible to include an automatic
premium loan provision - ANSWER- whole life
Sylvia purchased an annuity for $100,000 from the proceeds of an
inheritance. No further payments are permitted and the income stream
begins in 15 years. This contract is a(n) - ANSWER- Single Premium
Deferred Annuity
NEW MEXICO LIFE INSURANCE ACTUAL
EXAM PREP 2026 ALL QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY A
GRADED | NEW AND REVISED
When an insurance appointment with an agent is terminated, the party
must notify the agent of the termination is the - ANSWER- Insurer
The policy provision that permits an employee to change from group life
coverage to an individual life policy is called the - ANSWER-
Conversation provision
A qualified profit-sharing plan is designed to - ANSWER- distribute a
portion of company earnings to its employees
What is the maximum number of employees (earning at least 5k) that an
employer can have in order to start SIMPLE retirement plan -
ANSWER- 100
A policy owner with a terminal illness who sells his life insurance policy
to a third party is called a - ANSWER- Viator
The Medical information Bureau consists of members from which group
- ANSWER- insurance companies
,2|Page
A life insurance policy's waiver of premium rider has the ability to -
ANSWER- Relieve the insured of premium payments following an
initial waiting period after the insured becomes totally disabled
An insurable risk requires - ANSWER- that the chance of loss be
calculable
Under the Fair Credit Reporting Act, which statement is true? -
ANSWER- The consumer who was investigated must be advised that
credit, insurance, or employment was denied because of an unfavorable
report.
A life insurance policyowner would like a dividend option that results in
a limited current outlay of funds. Which dividend option would be
chosen? - ANSWER- Reduction of premium payment
With life insurance, the needs approach is used primarily in determining
- ANSWER- how much life insurance a client should apply for
Which life insurance policy provision prohibits a beneficiary from
"commuting, encumbering, withdrawing,or assigning" any portion of the
proceeds prior to actual receipt from the company? - ANSWER-
Spendthrift clause
Kevin has an existing life insurance policy and assigns it to another
insurer for a new contract. How would this transaction be treated for tax
purposes? - ANSWER- As a Section 1035 exchange
, 3|Page
If a basic illustration is not provided, an insurer MUST provide a policy
summary to a prospective insured at which of the following times? -
ANSWER- When the policy is delivered
Which of the following would most likely purchase an immediate
annuity? - ANSWER- Retiree having a lump sum to invest
A life insurance policy in NM becomes incontestable after it has been
force for - ANSWER- 2 years
A retired couple would like to maximize the income derived from their
combined life savings and have it payable until they both die. Which
annuity would be their best choice? - ANSWER- Joint and survivor
annuity
If an agent misleads or fails to adequately disclose the title and true
nature of a policy offered to a potential insured, it may be considered -
ANSWER- misrepresentation
Which life insurance policy would be eligible to include an automatic
premium loan provision - ANSWER- whole life
Sylvia purchased an annuity for $100,000 from the proceeds of an
inheritance. No further payments are permitted and the income stream
begins in 15 years. This contract is a(n) - ANSWER- Single Premium
Deferred Annuity
