1
Alabama Life Insurance Exam| Latest
Exam 2026/2027 Latest Exam.
1. Which clause allows the insured to change an existing policy to any other policy
of any type as long as the new policy has a higher premium, without any proof of
insurability? - Correct answer Privilege of change clause
2. The extended term nonforfeiture option provides: - Correct answer Paid-up term
coverage equal to that of the original policy
3. With a collateral assignment of a life policy to a creditor: - Correct answer You
assign a partial amount of the policy values to the creditor
4. An accounting measure used to determine a contract owner's interest in the
separate account of a variable annuity before payments begin is called: - Correct
answer An accumulation unit
5. Group Insurance Market: A certificate of insurance is issued to whom? - Correct
answer Each individual covered by the group life insurance
6. The principal difference between an entity purchase and a cross purchase buy-
sell agreement is: - Correct answer The identity of the policy owner (the main
difference is who owns the policy)
7. How long is the probationary period for group life insurance? - Correct answer
The probationary period is usually 90 days.
8. What is the primary purpose of a section 303 redemption? - Correct answer To
provide liquidity to pay estate taxes and administration and funeral costs
[Date] 1
, 2
9. What is it called when an insurance company sells part of their risk to another
insurance company? - Correct answer Reinsurance (also, risk-sharing)
10. The policy conditions represent the obligation of whom? - Correct answer Both
the insured and the insurer
11. Does social insurance provide equal benefits to all citizens that contribute? -
Correct answer No. As income is re-distributed through the governmental
system, insureds who put less into the system such as the poor, elderly, and
those with dependents get proportionately greater benefits.
12. In determining whether disability is permanent, most companies call for a waiting
period of how long? - Correct answer 3 to 6 months
13. What can the cash value of a permanent life insurance policy be used for? -
Correct answer Cash values can be used as nonforfeiture option, policy loans,
full or partial surrender's, but not for accidental death benefits.
14. What are the essential elements of a contract? - Correct answer Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties, and
legal purpose
15. What market is a private source of coverage of last resort for individuals or
businesses that have been rejected by voluntary market insurers? - Correct
answer The residual marketplace
16. Describe the term reserve - Correct answer That amount that, when increased by
future premiums on outstanding policies, and interest on this premiums will
enable the company to meet future death claims
[Date] 2
Alabama Life Insurance Exam| Latest
Exam 2026/2027 Latest Exam.
1. Which clause allows the insured to change an existing policy to any other policy
of any type as long as the new policy has a higher premium, without any proof of
insurability? - Correct answer Privilege of change clause
2. The extended term nonforfeiture option provides: - Correct answer Paid-up term
coverage equal to that of the original policy
3. With a collateral assignment of a life policy to a creditor: - Correct answer You
assign a partial amount of the policy values to the creditor
4. An accounting measure used to determine a contract owner's interest in the
separate account of a variable annuity before payments begin is called: - Correct
answer An accumulation unit
5. Group Insurance Market: A certificate of insurance is issued to whom? - Correct
answer Each individual covered by the group life insurance
6. The principal difference between an entity purchase and a cross purchase buy-
sell agreement is: - Correct answer The identity of the policy owner (the main
difference is who owns the policy)
7. How long is the probationary period for group life insurance? - Correct answer
The probationary period is usually 90 days.
8. What is the primary purpose of a section 303 redemption? - Correct answer To
provide liquidity to pay estate taxes and administration and funeral costs
[Date] 1
, 2
9. What is it called when an insurance company sells part of their risk to another
insurance company? - Correct answer Reinsurance (also, risk-sharing)
10. The policy conditions represent the obligation of whom? - Correct answer Both
the insured and the insurer
11. Does social insurance provide equal benefits to all citizens that contribute? -
Correct answer No. As income is re-distributed through the governmental
system, insureds who put less into the system such as the poor, elderly, and
those with dependents get proportionately greater benefits.
12. In determining whether disability is permanent, most companies call for a waiting
period of how long? - Correct answer 3 to 6 months
13. What can the cash value of a permanent life insurance policy be used for? -
Correct answer Cash values can be used as nonforfeiture option, policy loans,
full or partial surrender's, but not for accidental death benefits.
14. What are the essential elements of a contract? - Correct answer Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties, and
legal purpose
15. What market is a private source of coverage of last resort for individuals or
businesses that have been rejected by voluntary market insurers? - Correct
answer The residual marketplace
16. Describe the term reserve - Correct answer That amount that, when increased by
future premiums on outstanding policies, and interest on this premiums will
enable the company to meet future death claims
[Date] 2
