NM Life Insurance EXAM STUDY GUIDE
2026 COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS ||
100% GUARANTEED PASS
<RECENT VERSION>
1. The role of insurance - ANSWER ✔ To transfer the risk of financial loss
from an individual or business to an insurance company
2. Life insurance guarantees what - ANSWER ✔ A specific sum of money
when someone dies
3. Health insurance provides what - ANSWER ✔ Funds to cover medical bills
and loss of money due to disability
4. Annuities provide what - ANSWER ✔ A stream of income by making a
series of payments over a certain period of time
5. Private insurance - ANSWER ✔ Known as commercial insurance
companies. Funded through premiums and sell insurance for a profit.
6. Government insurance - ANSWER ✔ Funded with taxes and serve national
and state social purposes
,7. Stock Insurance Company - ANSWER ✔ Owned by stockholders, issues
nonparticipating policies.
8. Mutual Insurer - ANSWER ✔ An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
9. Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - ANSWER ✔ B
10.Demutualization - ANSWER ✔ The process of a mutual company being
converted into a stock company.
11.Lloyds of London - ANSWER ✔ This is NOT an insurer but a group of
individuals and companies that underwrite unusual insurance policies.
12.Reinsurers - ANSWER ✔ Specialized branch of the insurance industry that
insures other insurance companies' risk; insurance company sells reinsurer
the risk
13.ceding company - ANSWER ✔ The company transferring the risk
14.Parties to a contract - ANSWER ✔ must be capable of entering into a
contract in the eyes of the law
15. T/F Courts have held that any ambiguity in the contract should be
interpreted in favor of the insurer. - ANSWER ✔ False; the insured.
,16. Utmost Good Faith - ANSWER ✔ A principle that implies that there will be
no fraud, misrepresentation or concealment between the parties
17. Representations - ANSWER ✔ Statements believed to be true but not
guaranteed to be true.
18. Material Misrepresentation - ANSWER ✔ Statement that if discovered
would alter the underwriting decision of the insurance company, if intention
it is fraud
19. Fraud - ANSWER ✔ The intentional misrepresentation or intentional
concealment of a material fact used to induce another party to make or
refrain from making a contract.
20. An insurer wants to obtain information from investigators regarding an
applicant for insurance. What must the insurer do in order to legally acquire
this information? - ANSWER ✔ Present the insured with a Disclosure
Authorization Notice.
21. What is a gross annual premium? - ANSWER ✔ Net premium plus
expenses
22. Purpose of a conditional receipt? - ANSWER ✔ Provide coverage on a date
earlier than the date of the issuance of the policy.
23. Which entity protects policyowners, insureds, and beneficiaries under
insurance contracts when insurers fail to perform contractual obligations due
to financial impairment? - ANSWER ✔ Insurance Guarantee Association
24. A producer is helping a married couple determine financial needs of their
children in the event one or both should die prematurely. This is a personal
use of life insurance known as what? - ANSWER ✔ Survivor Protection
, 25. T/F The agent can be considered the most important source of information
available to the company underwriters. - ANSWER ✔ True
26. T/F The producer's report is one of the main sources of underwriting
information for the company. - ANSWER ✔ True.
27. What Act outlines the rules and regulations for inspection reports? -
ANSWER ✔ Fair Credit Reporting Act
28. Personal Uses of Life Insurance - ANSWER ✔ 1. Survivor Protection
2. Estate Creation
3. Cash Accumulation
4. Liquidity
5. Estate Conservation
Approaches to Determining Amount of Personal Life insurance - ANSWER
✔ Human Life Value Approach
Needs Approach
29. 3 Business Uses of Life Insurance - ANSWER ✔ 1. Key Person
2. Buy-sell Funding
3. Executive Bonus
30. Process of Issuing a Life Insurance Policy - ANSWER ✔ - Solicitation and
Sales Presentations
- Underwriting: Field and Company
- Premium Determination
- Policy Issue and Delivery
31. T/F: The insurer is partially responsible for all of its advertisements. -
ANSWER ✔ False, they are completely responsible.
32. Illustration - ANSWER ✔ Presentation or depiction that includes
nonguaranteed elements of a policy of individual
2026 COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS ||
100% GUARANTEED PASS
<RECENT VERSION>
1. The role of insurance - ANSWER ✔ To transfer the risk of financial loss
from an individual or business to an insurance company
2. Life insurance guarantees what - ANSWER ✔ A specific sum of money
when someone dies
3. Health insurance provides what - ANSWER ✔ Funds to cover medical bills
and loss of money due to disability
4. Annuities provide what - ANSWER ✔ A stream of income by making a
series of payments over a certain period of time
5. Private insurance - ANSWER ✔ Known as commercial insurance
companies. Funded through premiums and sell insurance for a profit.
6. Government insurance - ANSWER ✔ Funded with taxes and serve national
and state social purposes
,7. Stock Insurance Company - ANSWER ✔ Owned by stockholders, issues
nonparticipating policies.
8. Mutual Insurer - ANSWER ✔ An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
9. Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - ANSWER ✔ B
10.Demutualization - ANSWER ✔ The process of a mutual company being
converted into a stock company.
11.Lloyds of London - ANSWER ✔ This is NOT an insurer but a group of
individuals and companies that underwrite unusual insurance policies.
12.Reinsurers - ANSWER ✔ Specialized branch of the insurance industry that
insures other insurance companies' risk; insurance company sells reinsurer
the risk
13.ceding company - ANSWER ✔ The company transferring the risk
14.Parties to a contract - ANSWER ✔ must be capable of entering into a
contract in the eyes of the law
15. T/F Courts have held that any ambiguity in the contract should be
interpreted in favor of the insurer. - ANSWER ✔ False; the insured.
,16. Utmost Good Faith - ANSWER ✔ A principle that implies that there will be
no fraud, misrepresentation or concealment between the parties
17. Representations - ANSWER ✔ Statements believed to be true but not
guaranteed to be true.
18. Material Misrepresentation - ANSWER ✔ Statement that if discovered
would alter the underwriting decision of the insurance company, if intention
it is fraud
19. Fraud - ANSWER ✔ The intentional misrepresentation or intentional
concealment of a material fact used to induce another party to make or
refrain from making a contract.
20. An insurer wants to obtain information from investigators regarding an
applicant for insurance. What must the insurer do in order to legally acquire
this information? - ANSWER ✔ Present the insured with a Disclosure
Authorization Notice.
21. What is a gross annual premium? - ANSWER ✔ Net premium plus
expenses
22. Purpose of a conditional receipt? - ANSWER ✔ Provide coverage on a date
earlier than the date of the issuance of the policy.
23. Which entity protects policyowners, insureds, and beneficiaries under
insurance contracts when insurers fail to perform contractual obligations due
to financial impairment? - ANSWER ✔ Insurance Guarantee Association
24. A producer is helping a married couple determine financial needs of their
children in the event one or both should die prematurely. This is a personal
use of life insurance known as what? - ANSWER ✔ Survivor Protection
, 25. T/F The agent can be considered the most important source of information
available to the company underwriters. - ANSWER ✔ True
26. T/F The producer's report is one of the main sources of underwriting
information for the company. - ANSWER ✔ True.
27. What Act outlines the rules and regulations for inspection reports? -
ANSWER ✔ Fair Credit Reporting Act
28. Personal Uses of Life Insurance - ANSWER ✔ 1. Survivor Protection
2. Estate Creation
3. Cash Accumulation
4. Liquidity
5. Estate Conservation
Approaches to Determining Amount of Personal Life insurance - ANSWER
✔ Human Life Value Approach
Needs Approach
29. 3 Business Uses of Life Insurance - ANSWER ✔ 1. Key Person
2. Buy-sell Funding
3. Executive Bonus
30. Process of Issuing a Life Insurance Policy - ANSWER ✔ - Solicitation and
Sales Presentations
- Underwriting: Field and Company
- Premium Determination
- Policy Issue and Delivery
31. T/F: The insurer is partially responsible for all of its advertisements. -
ANSWER ✔ False, they are completely responsible.
32. Illustration - ANSWER ✔ Presentation or depiction that includes
nonguaranteed elements of a policy of individual
