20 original questions on the general knowledge topics every life exam tests, each with an explanation and the law, regulation or lesson it comes from. Free, no signup.
These cover the general knowledge part of the exam, which is the same in every state. Your state's law sections are taught in that state's modules. Annuity questions are not included, because Life School does not teach annuities. We wrote these ourselves; nothing is copied from any exam or study guide.
1. A policy that insures two people and pays when the first of them dies is:
b) Joint life. Joint life pays at the first death and ends. Survivorship, or second-to-die, pays at the second death. Source: Life School L3.13.1
2. Which of these does level term life insurance usually have?
c) A level premium for a stated period. Term is pure protection: no cash value, so nothing to borrow against, and generally no dividends. Source: Life School L3.1.1
3. Inside a universal life policy, the monthly cost of insurance charge generally:
b) Rises as the insured gets older. The mortality charge is based on the insured's attained age, so it generally rises over time. That is the lapse risk in an underfunded policy. Source: Life School L3.3.2
4. In an indexed universal life policy, a 0 percent floor protects:
b) The interest credited from going below zero. The floor applies to the credited interest. Policy charges still come out, so the account value can still fall in a zero-credit year. Source: Life School L3.4.1
5. To sell variable life insurance, an agent needs:
b) A life license plus securities registration. Variable life is a security. Selling it takes securities registration with a member firm in addition to the insurance license. Source: Life School L3.5.2; FINRA
6. An insured receives part of the death benefit early under an accelerated death benefit rider. What happens to the death benefit?
b) It is reduced by what was paid. It is an advance, not an extra benefit. The death benefit is reduced by what was paid. Source: Life School L3.8.4
7. Statements an applicant makes in a life insurance application are generally treated as:
b) Representations. They are representations. A misstatement generally voids coverage only if it was material or fraudulent. Source: Life School L3.14.2
8. A waiver of premium rider:
b) Pays the premiums while the insured is totally disabled, after an elimination period. It keeps the policy in force by paying the premiums during a covered disability. It pays nothing to the insured directly. Source: Life School L3.8.1
9. Which of these is NOT a standard nonforfeiture option?
d) Accelerated death benefit. The three nonforfeiture options are cash surrender, reduced paid-up and extended term. An accelerated death benefit is a rider. Source: Life School L3.2.5
10. A beneficiary wants payments guaranteed for the rest of their life. Which settlement option fits?
c) Life income. A life income option pays for the beneficiary's lifetime. Fixed period and fixed amount options run out. Source: Life School L3.7.5
11. An insurer must file a Suspicious Activity Report for a suspicious transaction involving at least:
c) $5,000. Five thousand dollars, within 30 calendar days of detection. Agents do not file; the insurer does. Source: 31 CFR 1025.320
12. An insurer orders an investigative consumer report on an applicant. It must notify the applicant no later than:
a) 3 days after requesting it. Within 3 days of the request, including the right to ask about the report's nature and scope. Source: 15 U.S.C. 1681d
13. An applicant pays the first premium and receives a conditional receipt, then dies before the policy is issued. The insurer pays if:
b) The applicant would have qualified as applied for. Coverage under a conditional receipt depends on the applicant having been insurable as applied for. Source: Life School L3.14.3
14. Before a doctor releases an applicant's medical records to a life insurer, who needs the applicant's signed HIPAA authorization?
b) The doctor or hospital. The provider is the HIPAA covered entity. Life insurers are not, which is why the authorization form warns that records may be redisclosed. Source: 45 CFR 164.508; HHS
15. The usual 7-year limit on reporting negative information does not apply when a report is used to underwrite life insurance of at least:
c) $150,000. For life insurance with a face amount of $150,000 or more, the time limits do not apply. Source: 15 U.S.C. 1681c(b)
16. How many Social Security credits make a worker fully insured regardless of age?
c) 40. No one needs more than 40 credits to be fully insured. Source: SSA Handbook s. 203
17. A life policy funded faster than the seven-pay test allows becomes a modified endowment contract. What does it lose?
b) Favorable tax treatment of loans and withdrawals. The death benefit stays income-tax-free. Loans and withdrawals are taxed income first and may carry a 10 percent additional tax. Source: IRC 7702A, 72(e), 72(v)
18. Which account has no required minimum distributions while the owner is alive?
c) Roth IRA. Roth IRAs have no required distributions for the original owner. Source: IRS
19. A life insurance death benefit paid to a beneficiary because of the insured's death is generally:
b) Excluded from the beneficiary's gross income. Death benefits are generally excluded from income. Interest earned on proceeds held by the insurer is taxable. Source: IRC 101(a)
20. Employer-provided group term life coverage is excluded from the employee's income up to:
c) $50,000. The cost of coverage above $50,000 is taxable income to the employee. Source: IRC 79
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