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Alabama Life & Health Insurance State Exam
Practice Questions 2023 – 2024 (Verified Answers)
1.if lousie allows her whole life policy to lapse which nonforfeiture option
shoild she elect to obtain the most life insurance protection? ANS
Extended term option
2.If administrative action is taken against you, or you are criminallyprosecut- ed in another jurisdiction, you have how long to submit a notice tothe Alabama commissioner? ANS 30 days
3.How can ‘key employee’ disability income insurance purchased by
business be used by the business ANS Both ANS temporary replace the
key employee and as a salary continuation for the disabled key
employee
4.In health maintenance organizations (HMO’s) the use of a primary
care physician is common as part of ANS An out of network provider
5.Under the typical coordination of benefits clause in group healthinsurance how is the primary coverage determined ANS The employee plan
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is primary and the other may be excess
6.The entire contract provision stipulates ANS The entire contract
includes the ap- plication
7.A man applied for long term care policy. Three months earlier he was
diagnosed with diabetes, can the LTC policy exclude future health
problems linked with diabetes? ANS Yes, for 6 months
8.The ‘elimination period’ refers to ANS The time period after a disability
starts and before the insured may begin receiving disability income
benefits
9.The basic purpose for the coinsurance provision in a major medicalpolicy is to ANS Limit over utilization of the policy benefits
10.Which rider can decrease the amount of the policy death benefit utilized-
ANS Automatic premium loan rider
11.The settlement option under which the principal never decreases
unless the beneficiary makes withdrawals is the ANS The interest only
option
12.If you surrender your policy early or simply stop paying premiums you
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Alabama Life & Health Insurance State Exam
2023 – 2024 (Verified Answers)
1.Which of the following statements about key employee life insurance is
true? ANS The business is always the owner and beneficiary of key
employee insurance.
2.COBRA and HIPPA both address portability. What is the difference
between them? ANS COBRA provides a coverage bridge, HIPPA
addresses coverages under plans for new entrants.
3.The settlement option under which the principal never decreases unless
the beneficiary makes withdrawals is the ANS interest only options, fixed
period, life income option
4.Mr. and Mrs. Carter receive annuity payments. Mr. Carter dies, but MrsCarter continues to receive payments for the rest of her life. The Cartershave a ANS joint and survivor life annuity
5.The primary components in premium calculations include each of the
fol- lowing EXCEPT ANS profit margins
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6.Which of the following characteristics apply to Medicare Supplements
Poli- cies (MSPs)? ANS All of the above
7.What is the definition of Risk? ANS uncertainty or chance of loss
8.The Suicide Clause has what effect? ANS It excludes suicide during
the first two years
9.For weekly premium disability policies in Alabama, there must be a
grace period of ANS 7 days
10.An individual insurance producer who allows his or her license to lapse
may, within a period of months from the due date of the renewal fee,
reinstate the same license without having to complete the prelicensing
course of pass a written exam. ANS 12
11.To sell a variable life insurance policy, an insurance producer must ANS
all of the above
12.Each of the following statements is true about disclosures EXCEPT ANS
The company must keep a copy of the Buyer’s Guide and Policy
Summary for at least 5 years
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13.Which policy will have immediate cash? ANS Single premium
14.Renewable Term guarantees ANS the insured’s insurability
15.For life insurance purposes, all persons are considered to bestatistically “dead” at age ANS 100
16.Which policy accumulates cash value at the fastest rate? ANS 10-pay lifepolicy
17.A beneficiary is always which of the following ANS The person named
to receive the sum specified in a life insurance contract when the
insured dies
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Alabama Life & Health Insurance State Exam
2023 – 2024 (Verified Answers)
1.Which policy accumulates cash value at the fastest rate? ANS A. 10-pay
life policy
2.The legal doctrine that prevents one from exercising a right of privilege
is called ANS Estoppel
3.If the consideration clause states that the premium payment keeps
the policy in force until the next premium is due plus 30 days thereafter,
the policy ANS contains a grace period.
4.If an insurance carrier decides to cancel a producer’s appointment, each
of the following is true EXCEPT ANS The Commissioner can immediately
cancel the producer’s license based upon the Company’s allegation of
wrong doing by the producer.
5.Under the waiver of premium provision of a life insurance policy, if a disability proves total and permanent, what happens to any premiums paid by
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the policyowner during the waiting period ANS All premiums paid by the
policyholder during the waiting period are typically refunded.
6.A company chartered in Alabama would be considered what type of
insur- ance company in Ohio? ANS Foreign
7.The Entire Contract Provision stipulates each of the following EXCEPT
ANS Any verbal changes made by the agent are permissible if in writing.8.If the insurance company accepts a special class risk ANS the premium
will be higher than for a normal risk.
9.The Optional Provisions of a standard Health policy address the issue of
claims arising from “illegal occupations,” “commission of felonies,” and
“use of narcotics.” According to these provisions ANS the insurer is not
liable for claims arising under the conditions described in these
provisions.
10.The application has two parts. Part 1 is? ANS General information
about the applicant.
11.All Health Insurers must pay claims as prescribed by Alabama law. Whichof these statements is FALSE? ANS . Insurers may decide which claimforms they will accept
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12.Darlene dies without having paid the $500 premium on her $50,000
policy that was due a week before her death. With no outstanding policy
loans, Darlene’s beneficiary can expect to receive ANS $49,500, which is
the face amount less the premium owed.
13.Legally, who does an insurance agent (producer) represent? ANS only
the com- pany
- Benefits paid under an employer-paid Group Health Insurance policy
are?-
ANS The benefits are non-taxable to the employee, but the premiums
are taxable as remuneration to the employee.
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9
Alabama Life & Health Insurance State Exam
Practice Questions 2023 – 2024 (Verified Answers)
1.if lousie allows her whole life policy to lapse which nonforfeiture option
shoild she elect to obtain the most life insurance protection? ANS
Extended term option
2.If administrative action is taken against you, or you are criminallyprosecut- ed in another jurisdiction, you have how long to submit a notice tothe Alabama commissioner? ANS 30 days
3.How can ‘key employee’ disability income insurance purchased by
business be used by the business ANS Both ANS temporary replace the
key employee and as a salary continuation for the disabled key
employee
4.In health maintenance organizations (HMO’s) the use of a primary
care physician is common as part of ANS An out of network provider
5.Under the typical coordination of benefits clause in group healthinsurance how is the primary coverage determined ANS The employee plan
2 /
9
is primary and the other may be excess
6.The entire contract provision stipulates ANS The entire contract
includes the ap- plication
7.A man applied for long term care policy. Three months earlier he was
diagnosed with diabetes, can the LTC policy exclude future health
problems linked with diabetes? ANS Yes, for 6 months
8.The ‘elimination period’ refers to ANS The time period after a disability
starts and before the insured may begin receiving disability income
benefits
9.The basic purpose for the coinsurance provision in a major medicalpolicy is to ANS Limit over utilization of the policy benefits
10.Which rider can decrease the amount of the policy death benefit utilized-
ANS Automatic premium loan rider
11.The settlement option under which the principal never decreases
unless the beneficiary makes withdrawals is the ANS The interest only
option
12.If you surrender your policy early or simply stop paying premiums you
1 / 8
Alabama Life & Health Insurance State Exam
2023 – 2024 (Verified Answers)
1.Which of the following statements about key employee life insurance is
true? ANS The business is always the owner and beneficiary of key
employee insurance.
2.COBRA and HIPPA both address portability. What is the difference
between them? ANS COBRA provides a coverage bridge, HIPPA
addresses coverages under plans for new entrants.
3.The settlement option under which the principal never decreases unless
the beneficiary makes withdrawals is the ANS interest only options, fixed
period, life income option
4.Mr. and Mrs. Carter receive annuity payments. Mr. Carter dies, but MrsCarter continues to receive payments for the rest of her life. The Cartershave a ANS joint and survivor life annuity
5.The primary components in premium calculations include each of the
fol- lowing EXCEPT ANS profit margins
2 / 8
6.Which of the following characteristics apply to Medicare Supplements
Poli- cies (MSPs)? ANS All of the above
7.What is the definition of Risk? ANS uncertainty or chance of loss
8.The Suicide Clause has what effect? ANS It excludes suicide during
the first two years
9.For weekly premium disability policies in Alabama, there must be a
grace period of ANS 7 days
10.An individual insurance producer who allows his or her license to lapse
may, within a period of months from the due date of the renewal fee,
reinstate the same license without having to complete the prelicensing
course of pass a written exam. ANS 12
11.To sell a variable life insurance policy, an insurance producer must ANS
all of the above
12.Each of the following statements is true about disclosures EXCEPT ANS
The company must keep a copy of the Buyer’s Guide and Policy
Summary for at least 5 years
3 / 8
13.Which policy will have immediate cash? ANS Single premium
14.Renewable Term guarantees ANS the insured’s insurability
15.For life insurance purposes, all persons are considered to bestatistically “dead” at age ANS 100
16.Which policy accumulates cash value at the fastest rate? ANS 10-pay lifepolicy
17.A beneficiary is always which of the following ANS The person named
to receive the sum specified in a life insurance contract when the
insured dies
1 / 11
Alabama Life & Health Insurance State Exam
2023 – 2024 (Verified Answers)
1.Which policy accumulates cash value at the fastest rate? ANS A. 10-pay
life policy
2.The legal doctrine that prevents one from exercising a right of privilege
is called ANS Estoppel
3.If the consideration clause states that the premium payment keeps
the policy in force until the next premium is due plus 30 days thereafter,
the policy ANS contains a grace period.
4.If an insurance carrier decides to cancel a producer’s appointment, each
of the following is true EXCEPT ANS The Commissioner can immediately
cancel the producer’s license based upon the Company’s allegation of
wrong doing by the producer.
5.Under the waiver of premium provision of a life insurance policy, if a disability proves total and permanent, what happens to any premiums paid by
2 / 11
the policyowner during the waiting period ANS All premiums paid by the
policyholder during the waiting period are typically refunded.
6.A company chartered in Alabama would be considered what type of
insur- ance company in Ohio? ANS Foreign
7.The Entire Contract Provision stipulates each of the following EXCEPT
ANS Any verbal changes made by the agent are permissible if in writing.8.If the insurance company accepts a special class risk ANS the premium
will be higher than for a normal risk.
9.The Optional Provisions of a standard Health policy address the issue of
claims arising from “illegal occupations,” “commission of felonies,” and
“use of narcotics.” According to these provisions ANS the insurer is not
liable for claims arising under the conditions described in these
provisions.
10.The application has two parts. Part 1 is? ANS General information
about the applicant.
11.All Health Insurers must pay claims as prescribed by Alabama law. Whichof these statements is FALSE? ANS . Insurers may decide which claimforms they will accept
3 / 11
12.Darlene dies without having paid the $500 premium on her $50,000
policy that was due a week before her death. With no outstanding policy
loans, Darlene’s beneficiary can expect to receive ANS $49,500, which is
the face amount less the premium owed.
13.Legally, who does an insurance agent (producer) represent? ANS only
the com- pany
- Benefits paid under an employer-paid Group Health Insurance policy
are?-
ANS The benefits are non-taxable to the employee, but the premiums
are taxable as remuneration to the employee.