ALABAMA INSURANCE EXAM TEST 2024/2025 ACTUAL
QUESTIONS & ANSWERS (100% CORRECT) GRADED A+
A disability policy that must be renewed, cannot be cancelled until age 65, and
may not have an increase in premium for any reason is called a(n): - ASNWER-
noncancellable policy
A written agreement that involves two or more parties and consideration is: -
ASNWER-a contract
According to Alabama law, a minor: - ASNWER-age 18 can begin receiving life
insurance death benefits of up to $3,000 per year
A husband and wife are receiving annuity payments. When the husband dies, the
wife still receives annuity payments for life. What kind of annuity is this? -
ASNWER-Joint and survivor life annuity
,A husband and wife purchases a life insurance policy that covers both of them.
The policy paid nothing when the husband died. Two years later, the wife dies and
a death benefit is paid to the beneficiary. Which type of policy is this? - ASNWER-
Survivorship life policy
A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding
partners. What would this agreement require if the agreement is funded with
individual life insurance? - ASNWER-Each partner must own a policy on the other
partners
A disability policy in Alabama that is paid on a monthly basis is required to have a
grace period of: - ASNWER-10
A licensed Alabama insurance producer would NOT be disciplined by the
Commissioner of Insurance for: - ASNWER-being convicted of a misdemeanor
A life insurance beneficiary has chosen a settlement option in which the principal
never decreases unless the beneficiary makes a withdrawal. This settlement
option is called the: - ASNWER-interest only option
A life insurance policy owned by a third party: - ASNWER-is used largely in estate-
planning as well as business situations
A Long Term Care (LTC) policy has a minimum renewability level of: - ASNWER-
guaranteed renewable
A Long Term Care insured must be unable to perform a minimum of __ Activities
of Daily Living (ADLs) to receive benefits. - ASNWER-2
, A policy owner with an automatic premium loan provision must: - ASNWER-pay
back the loan amount to keep the policy's cash value at its maximum
A policyowner can collect the face amount on what type of policy? - ASNWER-
endowment policy
A Preferred Provider Organization (PPO) contract typically uses which payment
arrangement? - ASNWER-Negotiated fee-for-service
A retirement plan intended for a sole proprietor and his/her employees would be
a(n): - ASNWER-Keogh Plan
A retirement plan that can be started by an employee, even if another plan is in
existence, is called a(n): - ASNWER-Individual Retirement Account (IRA)
A substandard or special class risk typically results in: - ASNWER-a premium that is
higher than for a normal risk
A waiver of premium: - ASNWER-waives the premiums when the policyowner
becomes totally disabled
According to Alabama law, agents of a Health Maintenance Organization (HMO): -
ASNWER-must be licensed as insurance producers
According to Required Provision 4, when an insured applies for reinstatement of a
health policy and receives a conditional receipt, how long does the insurer have to
approve or deny? - ASNWER-within 45 days of the date of application
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