Free Life Insurance Basics Practice Questions
Colorado Life exam — 140 practice questions.
Subtopics: Insurable interest, Premium components, Law of large numbers, STOLI, Underwriting purpose, Insurable interest in self, Adverse selection, Producer responsibility, Foreign travel, Medical aid in dying, Insurable interest timing, Insurable interest - family, Key person insurance, Creditor insurable interest, Consent of insured, Charitable ownership, Viatical settlements, Viatical rescission, Viatical timing, Insurable interest parties, Personal uses, Liquidity, Human life value, Needs approach, Buy-sell funding, Key person, Term vs permanent, Participating policies, Separate account, Variable products licensing, Premium factors, Mortality, Interest assumption, Premium mode, Advertising, Field underwriting, Application accuracy, Sources of underwriting, Risk classification, Substandard risk, Effective date, Statement of good health, Backdating, MIB, Unfair discrimination underwriting, Group vs individual, Warranties vs representations, Disclosure statement, Estate conservation, Executive compensation, Expense factor, Declined risk, Surrender comparison index, Net amount at risk, Legal reserve, CSO mortality table, Level premium funding, Cash value accumulation, Endowment maturity, Free look period, Policy replacement rules, Twisting, Churning, Rebating, Defamation, Binding receipt, Insuring clause, Consideration clause, Owner vs insured, Stranger-originated life insurance, Suitability, Sales illustration, Producer appointment, Paramedical exam, Inspection report, Nonmedical limit, Split-dollar plan, Section 162 executive bonus, Dependency period need, Social Security blackout period, Capital retention approach, Final expense need, Insurance age, Flat extra premium, Postponed risk, Agent's report, Policy summary, Material misrepresentation, Estate creation, Cash accumulation, Charitable giving, Buy-sell cross purchase, Buy-sell entity purchase, Cross purchase count, Key person beneficiary, Deferred compensation, Split dollar collateral assignment, Executive bonus taxation, Business overhead uses, Information for needs analysis, Group vs individual class, Nonparticipating policy, Fixed vs variable, Variable minimum death benefit, Gross vs net premium, Modal factors, Mortality table use, Gender and mortality, Producer delivery duties, Constructive delivery, Rated policy delivery, Conditional receipt insurability, No premium with application, Application signatures, Application corrections, Insurable interest third party, Self insurable interest, Attending physician statement, MIB adverse decisions, MIB pre-notice, HIV testing consent, Underwriting prohibited factor, Rated policy, Standard risk, Prescription database, Social Security fully insured, Currently insured, Survivor benefits children, Spouse caring for child, Blackout period end, Lump-sum death benefit, Full retirement age, Social Security disability, Social Security as offset, Producer report purpose
Read the Life Insurance Basics study guide
Sample questions & answers
1. For an individual life insurance policy, insurable interest must exist:
At the time the policy is applied for
C.R.S. 10-7-703 requires a person procuring insurance on another's life to have an insurable interest at the time the policy is issued.
2. The three primary factors used to determine a life insurance premium are:
Mortality, interest, and expense
Life premiums are based on mortality (expected claims), interest (assumed earnings), and expense (operating costs).
3. The principle that lets insurers predict losses more accurately as similar exposures increase is the:
Law of large numbers
The law of large numbers states that as the number of similar exposure units grows, actual results approach predicted results.
4. Stranger-originated life insurance (STOLI) arrangements are problematic because they:
Lack insurable interest at inception
Colorado defines STOLI as initiating a policy for a third-party investor with no insurable interest at origination, and C.R.S. 10-7-708(2) makes it unlawful.
Practice: Life Insurance Basics
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
