COLORADO LIFE INSURANCE PRACTICE EXAMS QUESTIONS
AND ANSWERS 2025/2026
✔✔Consideration - ✔✔A necessary element of a contract; something of
value exchanged for the transfer of risk.
Insured's consideration is payment of premiums
and truthful statements on the application.
Insurer's consideration is promises contained in
the contract.
✔✔Contingent Beneficiary - ✔✔An alternate beneficiary designated to receive
the policy proceeds in the event that the primary
beneficiary dies before the insured.
✔✔Contributory Plan v. Noncontributory Plan - ✔✔Contributory: Group insurance plan
under which
the employees contribute to the payment of
premiums. Noncontributory: A group insurance
plan in which the employer pays all the
premiums for the policy.
✔✔Convertible Term - ✔✔Term insurance that specifically permits
"conversion" of the policy into permanent
protection without proof of insurability.
✔✔Decreasing Term - ✔✔Term life insurance in which the face amount of
the policy decreases over time in scheduled
steps. Most often used to cover a debt obligation
(mortgage).
✔✔Dividends - ✔✔Distributions paid out by insurance companies.
Stock insurers pay dividends (portion of profit) to
stockholders and they are taxable. Mutual
insurers pay dividends (return of unneeded
premiums) to policyowners and they are not
taxable. Dividends are never guaranteed.
✔✔Equity Indexed Annuity - ✔✔The annuity that has a guaranteed minimum
interest rate and allows the annuitant to invest
money in an index (i.e.: S&P 500). The
investments grow as the index grows
✔✔Estoppel - ✔✔Legally preventing someone from asserting or reasserting a known
right that they have previously
waived.
, ✔✔Extended Term Insurance - ✔✔Nonforfeiture option where cash value is used to
make a single premium payment on a Term
Insurance Policy of the same face amount as the
original policy. Original policy can be reinstated.
Not available on rated policies.
✔✔Face Amount - ✔✔Amount payable in the event of death of the
insured. Also called face value, death benefit,
policy proceeds, coverage, stated amount,
indemnity amount or proceeds to the beneficiary
✔✔Facultative Reinsurance v. Treaty
Reinsurance - ✔✔Facultative: Transferring risk from one insurance
company to another on a policy-by-policy basis.
Treaty: Transferring risk from one insurance
company to another under a blanket agreement.
✔✔Fair Credit Reporting Act - ✔✔A federal law that protects consumers in regard
to their credit history. Establishes guidelines for
how companies can access consumers' credit
reports and what types of disclosures and
notifications are required.
✔✔Financial Needs Approach - ✔✔In determining how much life insurance is
needed the needs of the surviving family are the
focus. Using needs analysis worksheets, an
amount is determined to meet the needs of the
surviving family regardless of the earnings of the
insured.
✔✔Fixed Amount Annuity - ✔✔A Life Annuity that guarantees a fixed dollar
payment at regular intervals during the lifetime of
the annuitant.
✔✔Fixed Amount Settlement Option - ✔✔Upon maturity of an insurance policy the
beneficiary receives periodic payments of a set
dollar amount from the policy proceeds.
✔✔Fixed Period Settlement Option - ✔✔Upon maturity of an insurance policy, the
beneficiary receives income from the policy
proceeds for a stated period of time.
✔✔Free Look Provision - ✔✔A policy provision required by state law that
establishes a set number of days (usually 10) for
AND ANSWERS 2025/2026
✔✔Consideration - ✔✔A necessary element of a contract; something of
value exchanged for the transfer of risk.
Insured's consideration is payment of premiums
and truthful statements on the application.
Insurer's consideration is promises contained in
the contract.
✔✔Contingent Beneficiary - ✔✔An alternate beneficiary designated to receive
the policy proceeds in the event that the primary
beneficiary dies before the insured.
✔✔Contributory Plan v. Noncontributory Plan - ✔✔Contributory: Group insurance plan
under which
the employees contribute to the payment of
premiums. Noncontributory: A group insurance
plan in which the employer pays all the
premiums for the policy.
✔✔Convertible Term - ✔✔Term insurance that specifically permits
"conversion" of the policy into permanent
protection without proof of insurability.
✔✔Decreasing Term - ✔✔Term life insurance in which the face amount of
the policy decreases over time in scheduled
steps. Most often used to cover a debt obligation
(mortgage).
✔✔Dividends - ✔✔Distributions paid out by insurance companies.
Stock insurers pay dividends (portion of profit) to
stockholders and they are taxable. Mutual
insurers pay dividends (return of unneeded
premiums) to policyowners and they are not
taxable. Dividends are never guaranteed.
✔✔Equity Indexed Annuity - ✔✔The annuity that has a guaranteed minimum
interest rate and allows the annuitant to invest
money in an index (i.e.: S&P 500). The
investments grow as the index grows
✔✔Estoppel - ✔✔Legally preventing someone from asserting or reasserting a known
right that they have previously
waived.
, ✔✔Extended Term Insurance - ✔✔Nonforfeiture option where cash value is used to
make a single premium payment on a Term
Insurance Policy of the same face amount as the
original policy. Original policy can be reinstated.
Not available on rated policies.
✔✔Face Amount - ✔✔Amount payable in the event of death of the
insured. Also called face value, death benefit,
policy proceeds, coverage, stated amount,
indemnity amount or proceeds to the beneficiary
✔✔Facultative Reinsurance v. Treaty
Reinsurance - ✔✔Facultative: Transferring risk from one insurance
company to another on a policy-by-policy basis.
Treaty: Transferring risk from one insurance
company to another under a blanket agreement.
✔✔Fair Credit Reporting Act - ✔✔A federal law that protects consumers in regard
to their credit history. Establishes guidelines for
how companies can access consumers' credit
reports and what types of disclosures and
notifications are required.
✔✔Financial Needs Approach - ✔✔In determining how much life insurance is
needed the needs of the surviving family are the
focus. Using needs analysis worksheets, an
amount is determined to meet the needs of the
surviving family regardless of the earnings of the
insured.
✔✔Fixed Amount Annuity - ✔✔A Life Annuity that guarantees a fixed dollar
payment at regular intervals during the lifetime of
the annuitant.
✔✔Fixed Amount Settlement Option - ✔✔Upon maturity of an insurance policy the
beneficiary receives periodic payments of a set
dollar amount from the policy proceeds.
✔✔Fixed Period Settlement Option - ✔✔Upon maturity of an insurance policy, the
beneficiary receives income from the policy
proceeds for a stated period of time.
✔✔Free Look Provision - ✔✔A policy provision required by state law that
establishes a set number of days (usually 10) for
