Alabama State Insurance Exam 2026
Questions and Answers
If a producer changes his residential address who must he/she notify? - Correct
answer-This change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing insurance
policies in this state? - Correct answer-Minors at the age of 14 are allowed to buy
their own policies.
What is the penalty for IRA distributions that are below the required minimum for
the year? - Correct answer-50%
All of the following are business uses of life insurance EXCEPT - Correct answer-
Funding against general company financial loss.
Which of the following is called a "second-to-die" policy? - Correct answer-
Survivorship life
The term "fiduciary capacity" deals with a producer's - Correct answer-Position of
financial trust.
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,Which is NOT true about beneficiary designations? - Correct answer-The
beneficiary must have insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a - Correct
answer-
All of the following applicants for an insurance producer license are exempt from
prelicensing education requirements EXCEPT - Correct answer-An applicant for a
dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the insured
that there will not be a problem keeping the policy in force. This is an example of
what type of agent authority? - Correct answer-apparant
Which of the following determines the length of time that benefits will be received
under the Fixed-Amount settlement option? - Correct answer-Size of each
installment
What is a major problem with naming a trust as the beneficiary of a life insurance
policy? - Correct answer-They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party on a take-
it-or-leave-it basis are classified as - Correct answer-Contracts of adhesion.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, All of the following statements concerning the use of life insurance as an
Executive Bonus are correct EXCEPT - Correct answer-The policy is owned by the
company.
Which of the following is considered to be a morale hazard? - Correct answer-
Driving recklessly
When transacting business in this state an insurer formed under the laws of another
country is known as a/an - Correct answer-Alien Insurer
When a reduced-paid up nonforfeiture option is chosen, what happens to the face
amount of the policy? - Correct answer-It is reduced to the amount of what the
cash value would buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy will pay a
portion of the proceeds annually to his spouse, but that the principal will be paid to
their children when they reach a certain age. Which settlement option should the
policyowner choose? - Correct answer-Interest only option
Under which nonforfeiture option does the company pay the surrender value and
have no further obligations to the policyowner? - Correct answer-Cash surrender
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Questions and Answers
If a producer changes his residential address who must he/she notify? - Correct
answer-This change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing insurance
policies in this state? - Correct answer-Minors at the age of 14 are allowed to buy
their own policies.
What is the penalty for IRA distributions that are below the required minimum for
the year? - Correct answer-50%
All of the following are business uses of life insurance EXCEPT - Correct answer-
Funding against general company financial loss.
Which of the following is called a "second-to-die" policy? - Correct answer-
Survivorship life
The term "fiduciary capacity" deals with a producer's - Correct answer-Position of
financial trust.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Which is NOT true about beneficiary designations? - Correct answer-The
beneficiary must have insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a - Correct
answer-
All of the following applicants for an insurance producer license are exempt from
prelicensing education requirements EXCEPT - Correct answer-An applicant for a
dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the insured
that there will not be a problem keeping the policy in force. This is an example of
what type of agent authority? - Correct answer-apparant
Which of the following determines the length of time that benefits will be received
under the Fixed-Amount settlement option? - Correct answer-Size of each
installment
What is a major problem with naming a trust as the beneficiary of a life insurance
policy? - Correct answer-They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party on a take-
it-or-leave-it basis are classified as - Correct answer-Contracts of adhesion.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, All of the following statements concerning the use of life insurance as an
Executive Bonus are correct EXCEPT - Correct answer-The policy is owned by the
company.
Which of the following is considered to be a morale hazard? - Correct answer-
Driving recklessly
When transacting business in this state an insurer formed under the laws of another
country is known as a/an - Correct answer-Alien Insurer
When a reduced-paid up nonforfeiture option is chosen, what happens to the face
amount of the policy? - Correct answer-It is reduced to the amount of what the
cash value would buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy will pay a
portion of the proceeds annually to his spouse, but that the principal will be paid to
their children when they reach a certain age. Which settlement option should the
policyowner choose? - Correct answer-Interest only option
Under which nonforfeiture option does the company pay the surrender value and
have no further obligations to the policyowner? - Correct answer-Cash surrender
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
