ALABAMA LIFE INSURANCE EXAM

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ALABAMA LIFE INSURANCE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -36 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: How long must an applicant who fails two examinations for the same line of authority wait to take another examination for that line of authority?

Answer:

Three months Question 2: What is it called when an insurance company sells part of their risk to another insurance company?

Answer:

Reinsurance (also, risk-sharing) Question 3: Group Insurance Market: A certificate of insurance is issued to whom?

Answer:

Each individual covered by the group life insurance

Question 4: Describe the term reserve

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

Question 5: A Taft-Hartley trust is established by one or more:

Answer:

Labor unions or associations

Question 6: The policy conditions represent the obligation of whom?

Answer:

Both the insured and the insurer

Question 7: What does a split-dollar plan do?

Answer:

A split-dollar plan divides the cost of additional insurance for an employee between that employee and the company. If death occurs while employed, the death benefit is shared between the employer and the employee's beneficiary Question 8: If an annuitant with drawls funds from their annuity prior to age 59 1/2 what is the tax consequence?

Answer:

Tax and 10% penalty tax on the withdrawal that represents earnings Question 9: The extended term nonforfeiture option provides:

Answer:

Paid-up term coverage equal to that of the original policy Question 10: What qualifying event could initiate the accelerated benefits provision or rider of a life policy?

Answer:

A condition that is terminal (projected to die within one or two years) Question 11: 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?

Answer:

Privilege of change clause

Question 12: What is the minimum requirement for currently insured status under the Social Security system?

Answer:

At least 6 credits earned in the 13 calendar quarters prior to death, disability, or is entitled to retirement benefits

Question 13: At what age does the waiver of premium rider normally expire?

Answer:

60

Question 14: What are the essential elements of a contract?

Answer:

Remember the acronym: CLOC: consideration, offer and acceptance, competent parties, and legal purpose Question 15: In a whole life insurance policy when is the cash value at its greatest?

Answer:

At the end of the policy term.

Question 16: What are non-financial regulatory activities known as

Answer:

Market conduct Question 17: Does social insurance provide equal benefits to all citizens that contribute?

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.Question 18: With a collateral assignment of a life policy to a creditor:

Answer:

You assign a partial amount of the policy values to the creditor Question 19: An insured allows a permanent policy to lapse: Unless otherwise instructed, what will the insurance company do?

Answer:

The insurance company will automatically institute the extended term option

Question 20: Who owns a mutual company?

Answer:

A mutual company is mutually owned by its policy holders, therefore, there are no stockholders.Question 21: What can the cash value of a permanent life insurance policy be used for?

Answer:

Cash values can be used as nonforfeiture option, policy loans, full or partial surrender's, but not for accidental death benefits.

Question 22: What is the primary purpose of a section 303 redemption?

Answer:

To provide liquidity to pay estate taxes and administration and funeral costs

Question 23: In Alabama, who appoints the Commissioner of insurance?

Answer:

The Governor

Question 24: How long is the probationary period for group life insurance?

Answer:

The probationary period is usually 90 days.Question 25: What market is a private source of coverage of last resort for individuals or businesses that have been rejected by voluntary market insurers?

Answer:

The residual marketplace Question 26: When a producer receives an application for life insurance that is completed and signed, but without premium payment, when does coverage start?

Answer:

On the date the policy is delivered and premium collected Question 27: Assets in a separate account are valued at:

Answer:

Their market value on the date of valuation