Free Life Insurance License practice test

A. ✓ Correct: Values used from one policy may not support the new policy in future years, leading to more premium payments.

B. × Incorrect: Using cash value to start or fund a policy does not mean the new policy will remain fully paid up forever.

C. × Incorrect: The warning is about keeping the new policy in force, not guaranteeing the old death benefit continues.

D. × Incorrect: The insurer is not required to waive all future premiums simply because old cash value was used.

A. × Incorrect: Riders typically do not decrease premiums; they often increase them due to additional benefits provided.

B. ✓ Correct: Riders provide extra features that go beyond standard coverage terms.

C. × Incorrect: A rider does not extend the policy term; it adds specific protections or benefits.

D. × Incorrect: It is some riders, but it can offer comprehensive protection, they do not entirely replace the need for separate insurance plans.

A. ✓ Correct: Failing to pay premiums results in the policy's termination with no accumulation of cash value, distinguishing it from permanent policies which retain a cash value even if payments are missed temporarily.

B. × Incorrect: Renewing without a physical examination applies to certain term insurance conversions to permanent life insurance and not simply lapses due to non-payment.

C. × Incorrect: Reducing the death benefit for missed premiums does not apply; instead, the policy would lapse entirely if no premium payments are made.

D. × Incorrect: Extending coverage automatically without payment is not a standard feature of term life insurance policies.

A. ✓ Correct: Annual reviews help maintain accuracy in beneficiary listings and contacts.

B. × Incorrect: As increasing premiums without a need may be unnecessary or costly.

C. × Incorrect: Reducing coverage might leave policyholders underinsured.

D. × Incorrect: Switching providers annually can disrupt continuity and familiarity.

A. ✓ Correct: Reasonable diligence, care, and skill are the conduct terms named in the revised model.

B. × Incorrect: Speed and sparse documentation do not show careful recommendation conduct.

C. × Incorrect: Product complexity can make understanding harder and is not the best-interest conduct standard.

D. × Incorrect: Commission ranking places seller compensation ahead of consumer objectives.

A. × Incorrect: Cancellation without refund is not necessarily automatic; it depends on the nature of the mistake.

B. ✓ Correct: As it describes the primary purpose of a contestable period: reviewing applications for misstatements or omissions.

C. × Incorrect: Insurers cannot increase premiums retroactively during this period.

D. × Incorrect: There is no requirement to refund all paid premiums.

A. × Incorrect: The investor should not consider this option because it does not provide immediate income upon retirement.

B. × Incorrect: This is incorrect as the payments would start at a future date, which contradicts the investor's requirement for immediate income upon retirement.

C. ✓ Correct: This because an immediate annuity provides income payments to the annuitant within one year of purchasing the contract, aligning with the investor's needs.

D. × Incorrect: While this option allows for investment flexibility, it does not guarantee immediate income at the time of retirement.

A. × Incorrect: Level premiums are a whole-life feature in the guide, not the universal-life flexibility tested here.

B. × Incorrect: Conversion without a medical exam is a separate policy option and not the core universal-life distinction.

C. ✓ Correct: Premium flexibility and easier death-benefit changes are the universal-life features the source highlights.

D. × Incorrect: Lifetime coverage with level premiums describes whole life more closely than universal life.

A. ✓ Correct: Percentages allocate the death benefit among the named beneficiaries.

B. × Incorrect: Beneficiary percentages divide the benefit; they do not set the policy's premium.

C. × Incorrect: Percentages do not identify who receives the benefit; the beneficiaries still need to be named.

D. × Incorrect: Term versus cash value describes the type of life insurance policy, not the beneficiary allocation.

A. ✓ Correct: The regulation targets recommendations that do not fit the consumer's needs and objectives.

B. × Incorrect: Consumer understanding is part of a healthier sales process, not the problem suitability standards are meant to create.

C. × Incorrect: Supervision assists compliance; it is not the harmful recommendation pattern being reduced.

D. × Incorrect: Asking about needs is part of suitability, not a problem to avoid.