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Free Life Insurance Basics Practice Questions

Maryland Life exam — 79 practice questions.

Subtopics: Insurable interest, Principle of indemnity, Human life value, Needs approach, Risk classification, Insurer types, Underwriting, Adverse selection, Insurable interest parties, Personal uses, Liquidity, 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, 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

Read the Life Insurance Basics study guide

Sample questions & answers

1. When must insurable interest exist for a life insurance policy to be valid?

At the time of application

For life insurance, insurable interest must exist at policy inception (application); it need not exist at the time of death.

2. Life insurance differs from property insurance because it is generally:

A valued contract paying a stated sum

Life insurance is a valued contract paying a stated face amount, not an indemnity contract that measures actual loss.

3. The human life value approach estimates life insurance need based on:

The insured's future earning capacity

The human life value approach calculates the present value of the insured's expected future earnings to determine coverage need.

4. The needs approach to determining coverage focuses on:

The family's financial obligations and goals

The needs approach quantifies the family's obligations (debts, income replacement, education) to set an appropriate amount of coverage.

All Life topics

Practice: Life Insurance Basics

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

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.