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Free Life Insurance Basics Practice Questions

South Carolina Life exam — 79 practice questions.

Subtopics: Insurable interest timing, Insurable interest relationship, Pure risk, Adverse selection, Law of large numbers, Underwriting, Agency representation, Premium factors, Insurable interest, 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, 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

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Sample questions & answers

1. For a life insurance policy, insurable interest must exist:

At the time the policy is applied for

In life insurance, insurable interest must exist at the inception of the policy, not necessarily at the time of loss.

2. Insurable interest in another person's life generally exists when there is:

A close family or financial relationship

Insurable interest is presumed where a close family bond or financial dependency exists, such that loss of the insured's life would cause harm.

3. Pure risk, which is the type of risk that is insurable, involves:

Only the chance of loss or no loss

Pure risk involves only the possibility of loss or no loss, with no chance of gain, which makes it insurable.

4. Adverse selection refers to the tendency of:

Higher-risk individuals to seek insurance more than average

Adverse selection is the tendency of those with greater-than-average likelihood of loss to seek or keep insurance, which underwriting controls.

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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.