Life Insurance Practice Exam Questions and
Answers () (Verified Answers)
The ownership provision entities the policy owner to do all of the following EXCEPT
a) Assign the policy.
b) Designate a beneficiary.
c) Set premium rates.
d) Receive a policy loan.
c) Set premium rates.
The insurer sets premium rates based upon underwriting considerations.
Which of the following protects consumers against the circulation of inaccurate or obsolete personal
or financial information?
a) The Guaranty Association
b) Consumer Privacy Act
c) The Fair Credit Reporting Act
d) Unfair Trade Practices Law
c) The Fair Credit Reporting Act
The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of
inaccurate or obsolete information and to insure that consumer reporting agencies are fair and
equitable in their treatment of consumers.
Why is an equity indexed annuity considered to be fixed annuity?
a) It has modest investment potential.
b) It has a fixed rate of return.
c) It is not tied to an index like the S&P 500.
d) It has a guaranteed minimum interest rate.
d) It has a guaranteed minimum interest rate.
While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities
guarantee a specific minimum interest rate.
An agent who is a resident of another state may obtain an Oklahoma nonresident license without
taking a licensing examination provided
a) The agent is currently licensed in the state of domicile.
b) The agent obtained that license by passing a test suitable to the Oklahoma Department.
c) The state where the agent lives affords the same privilege to residents of Oklahoma.
d) All of these requirements are met.
d) All of these requirements are met.
A nonresident can be licensed as an insurance agent in the Oklahoma licensing requirements are met,
as long as the agents home state gives Oklahoma residents the same privilege (reciprocity). The
applicant must hold a license in good standing in his or her resident state.
Which nonforfeiture option has the highest amount of insurance protection?
a) Decreasing Term
,b) Reduced Paid-up
c) Extended Term
d) Conversion
c) Extended Term
The Extended Term nonforfeiture option has the same face amount as the original policy, but for a
shorter period of time.
What is a material misrepresentation?
a) Any misstatement made by an applicant for insurance
b) Any misstatement by the producer
c) Concealment
d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the
insurance company
d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the
insurance company
A material misrepresentation is a statement that, if discovered, would alter the underwriting decision
of the insurance company.
Which of the following information about the applicant is NOT included in the General Information
section of the application for insurance?
a) Occupation
b) Marital status
c) Medical background
d) Gender
c) Medical background
Part 1 - General Information of the application includes the general questions about the applicant,
including name, age, address, birth date, gender, income, marital status, and occupation. The
applicant's medical background is addressed in Part 2 - Medical Information.
The term "illustration" in a life insurance policy refers to
a) A depiction of policy benefits and guarantees
b) Pictures accompanying a policy
c) Charts and graphs
d) A presentation of non-guaranteed elements of a policy.
d) A presentation of non-guaranteed elements of a policy.
The term "illustration" means a presentation or depiction that includes non-guaranteed elements of a
policy of individual or group life insurance over a period of years.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan
is paid back?
a) The balance of the loan will be taken out of the death benefit.
a) The balance of the loan will be taken out of the death benefit.
, An employee is joining a group insurance plan. In order to avoid having to prove insurability, what
must the employee do?
a) Join during the open enrollment period
b) Provide medical records to the insurer
c) Sign a statement of continued good health
d) Nothing; proof of insurability is never required in group polices
a) Join during the open enrollment period
If one applies for coverage after the open enrollment period, proof of insurability may be required in
order to avoid adverse selection.
All of the following are duties and responsibilities of producers at the time of application EXCEPT
a) Explain the nature and type of any receipt the producer is giving to the applicant
b) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or
concealing information.
c) Check to make sure that there are no unanswered questions on the application
d) Change any incorrect statement on the application by personally initialing next to the corrected
statement
d) Change any incorrect statement on the application by personally initialing next to the corrected
statement
Any changes to information on an application must be initialed by the applicant.
The insured had his wife named the beneficiary of his life insurance policy. To ensure that his wife had
income for life after the insured's death, he chose the life income settlement option. The amount of
payments will be determined by taking into account all of the following EXCEPT
a) Face amount of the policy
b) The insured's age at death
c) The beneficiary's life expectancy
d) Projected interest rates
b) The insured's age at death
The insured's age at death will NOT be considered, but the longer the life expectancy of the recipient,
the lower the payments will be.
Which of the following licenses is NOT compensated directly related to the amount of insurance sold?
a) Insurance producer
b) Insurance broker
c) Insurance consultant
d) Insurance agent
c) Insurance consultant
Insurance consultants advise others about their insurance needs and coverages. Consultants are
compensated by the people they advise, not by agents or insurers. Their compensation is not directly
related to the amount of insurance sold, but based upon their advice and recommendations.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit
only upon the death of the first insured. Which policy is that?
Answers () (Verified Answers)
The ownership provision entities the policy owner to do all of the following EXCEPT
a) Assign the policy.
b) Designate a beneficiary.
c) Set premium rates.
d) Receive a policy loan.
c) Set premium rates.
The insurer sets premium rates based upon underwriting considerations.
Which of the following protects consumers against the circulation of inaccurate or obsolete personal
or financial information?
a) The Guaranty Association
b) Consumer Privacy Act
c) The Fair Credit Reporting Act
d) Unfair Trade Practices Law
c) The Fair Credit Reporting Act
The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of
inaccurate or obsolete information and to insure that consumer reporting agencies are fair and
equitable in their treatment of consumers.
Why is an equity indexed annuity considered to be fixed annuity?
a) It has modest investment potential.
b) It has a fixed rate of return.
c) It is not tied to an index like the S&P 500.
d) It has a guaranteed minimum interest rate.
d) It has a guaranteed minimum interest rate.
While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities
guarantee a specific minimum interest rate.
An agent who is a resident of another state may obtain an Oklahoma nonresident license without
taking a licensing examination provided
a) The agent is currently licensed in the state of domicile.
b) The agent obtained that license by passing a test suitable to the Oklahoma Department.
c) The state where the agent lives affords the same privilege to residents of Oklahoma.
d) All of these requirements are met.
d) All of these requirements are met.
A nonresident can be licensed as an insurance agent in the Oklahoma licensing requirements are met,
as long as the agents home state gives Oklahoma residents the same privilege (reciprocity). The
applicant must hold a license in good standing in his or her resident state.
Which nonforfeiture option has the highest amount of insurance protection?
a) Decreasing Term
,b) Reduced Paid-up
c) Extended Term
d) Conversion
c) Extended Term
The Extended Term nonforfeiture option has the same face amount as the original policy, but for a
shorter period of time.
What is a material misrepresentation?
a) Any misstatement made by an applicant for insurance
b) Any misstatement by the producer
c) Concealment
d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the
insurance company
d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the
insurance company
A material misrepresentation is a statement that, if discovered, would alter the underwriting decision
of the insurance company.
Which of the following information about the applicant is NOT included in the General Information
section of the application for insurance?
a) Occupation
b) Marital status
c) Medical background
d) Gender
c) Medical background
Part 1 - General Information of the application includes the general questions about the applicant,
including name, age, address, birth date, gender, income, marital status, and occupation. The
applicant's medical background is addressed in Part 2 - Medical Information.
The term "illustration" in a life insurance policy refers to
a) A depiction of policy benefits and guarantees
b) Pictures accompanying a policy
c) Charts and graphs
d) A presentation of non-guaranteed elements of a policy.
d) A presentation of non-guaranteed elements of a policy.
The term "illustration" means a presentation or depiction that includes non-guaranteed elements of a
policy of individual or group life insurance over a period of years.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan
is paid back?
a) The balance of the loan will be taken out of the death benefit.
a) The balance of the loan will be taken out of the death benefit.
, An employee is joining a group insurance plan. In order to avoid having to prove insurability, what
must the employee do?
a) Join during the open enrollment period
b) Provide medical records to the insurer
c) Sign a statement of continued good health
d) Nothing; proof of insurability is never required in group polices
a) Join during the open enrollment period
If one applies for coverage after the open enrollment period, proof of insurability may be required in
order to avoid adverse selection.
All of the following are duties and responsibilities of producers at the time of application EXCEPT
a) Explain the nature and type of any receipt the producer is giving to the applicant
b) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or
concealing information.
c) Check to make sure that there are no unanswered questions on the application
d) Change any incorrect statement on the application by personally initialing next to the corrected
statement
d) Change any incorrect statement on the application by personally initialing next to the corrected
statement
Any changes to information on an application must be initialed by the applicant.
The insured had his wife named the beneficiary of his life insurance policy. To ensure that his wife had
income for life after the insured's death, he chose the life income settlement option. The amount of
payments will be determined by taking into account all of the following EXCEPT
a) Face amount of the policy
b) The insured's age at death
c) The beneficiary's life expectancy
d) Projected interest rates
b) The insured's age at death
The insured's age at death will NOT be considered, but the longer the life expectancy of the recipient,
the lower the payments will be.
Which of the following licenses is NOT compensated directly related to the amount of insurance sold?
a) Insurance producer
b) Insurance broker
c) Insurance consultant
d) Insurance agent
c) Insurance consultant
Insurance consultants advise others about their insurance needs and coverages. Consultants are
compensated by the people they advise, not by agents or insurers. Their compensation is not directly
related to the amount of insurance sold, but based upon their advice and recommendations.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit
only upon the death of the first insured. Which policy is that?
