Alaska Life Insurance Practice Exam Free - 2026

• A. Two years
• B. Three years
• C. Seven years
• D. Five years (10 years for reinsurance transactions)

Correct answer: D. Five years (10 years for reinsurance transactions)

Explanation: A licensee must retain the records of a particular transaction, open for examination and inspection by the director, during the five years immediately after the date of completion of the transaction, or 10 years for reinsurance transactions, unless the director orders a longer period. A is wrong; two years is the period after which an expired license can no longer be renewed. B and C are retention periods used elsewhere, not in AS 21.27.350. See AS 21.27.350.

• A. Restitution, suspension or revocation of all his licenses, and a civil penalty not to exceed $50,000 for each violation
• B. A civil penalty of not more than $2,500 per violation and a cease-and-desist order only
• C. A penalty equal to three times the compensation received, with no license action
• D. Restitution only, because personal use of fiduciary funds is not a licensing violation

Correct answer: A. Restitution, suspension or revocation of all his licenses, and a civil penalty not to exceed $50,000 for each violation

Explanation: A person the director determines has acted to divert or appropriate money held as a fiduciary for personal use shall be ordered to make restitution and is subject to suspension or revocation of all licenses and a civil penalty not to exceed $50,000 for each violation. B is the unfair trade practice penalty under AS 21.36.910, not the fiduciary penalty. C is the penalty for unlawful compensation sharing under AS 21.27.370. D is wrong because misappropriation of fiduciary funds is expressly a ground for revocation under AS 21.27.410. See AS 21.27.360.

• A. Issue the license, because controlled business is permitted without limit
• B. Refuse the license, because controlled-business compensation would exceed 50 percent of compensation from all other business
• C. Issue the license but bar Ravi from writing any coverage on relatives
• D. Refuse the license only if controlled business would exceed 75 percent of total business

Correct answer: B. Refuse the license, because controlled-business compensation would exceed 50 percent of compensation from all other business

Explanation: The director may not issue a producer license if there is reasonable cause to believe that, during the 12-month period after issuance, the applicant's compensation from controlled business would exceed 50 percent of the compensation from all other insurance business; the same 50 percent test applies to licensees each calendar year. Controlled business includes insurance on the applicant, spouse, relatives to the second degree, and the applicant's employer or firm and its employees. A is wrong because the 50 percent limit applies. C is wrong because coverage on relatives is allowed within the limit. D uses a threshold Alaska does not apply. See AS 21.27.030.

• A. Notify Tundra Mutual within 30 days and give the applicant a 10-day free look
• B. Obtain Tundra Mutual's written consent before issuing the new policy
• C. Notify Tundra Mutual within five working days and include a 30-day right to return the new policy with an unconditional full refund
• D. Send the applicant a comparison prepared by Tundra Mutual before delivery

Correct answer: C. Notify Tundra Mutual within five working days and include a 30-day right to return the new policy with an unconditional full refund

Explanation: A replacing insurer must notify any existing insurer that may be affected within five working days after receiving a completed application indicating an existing policy, and must include in the new policy the right to return it within 30 days after delivery with an unconditional full refund of all premiums (cash surrender value plus charges for variable products). A is wrong on both counts: the notice period is five working days and the replacement free look is 30 days, not the general 10-day period in AS 21.45.020. B and D describe duties the regulation does not impose; the existing insurer's consent is never required. See 3 AAC 26.805.

• A. A term policy that can be renewed for another term without proof of insurability
• B. A term policy that can be converted to permanent insurance without proof of insurability
• C. A permanent policy that can be exchanged for a lower-premium term policy at any time after issue
• D. A term policy whose accumulated cash value can be converted into an immediate annuity

Correct answer: B. A term policy that can be converted to permanent insurance without proof of insurability

Explanation: A convertible term policy allows the policyholder to convert their term coverage to a permanent policy (like whole life) without providing evidence of insurability. This protects the insured if their health declines.

• A. Whole life covers natural death alone; term covers both natural and accidental death
• B. Term life provides lifetime coverage at a lower cost; whole life ends at a stated age
• C. Whole life provides lifetime coverage and cash value; term is temporary with no cash value
• D. Term life builds cash value faster because its premiums are lower than whole life

Correct answer: C. Whole life provides lifetime coverage and cash value; term is temporary with no cash value

Explanation: Whole life insurance provides permanent coverage for the insured's entire life and accumulates cash value. Term life provides temporary coverage for a specific period and has no cash value component.

• A. A term policy that renews only after the insured passes a new medical exam
• B. A permanent policy whose premiums are recalculated each year at attained age
• C. A term policy that can be exchanged for permanent coverage without a new exam
• D. A term policy that can be renewed without proof of insurability

Correct answer: D. A term policy that can be renewed without proof of insurability

Explanation: Renewable term insurance allows the policyholder to renew the policy at the end of the term without providing evidence of insurability. Premiums typically increase with each renewal based on the insured's attained age.

• A. A provision that limits the insurer's ability to void the policy after 2 years
• B. A provision that limits the beneficiary's right to contest a claim denial after 2 years
• C. A provision that bars the insurer from adjusting benefits for a misstated age after 2 years
• D. A provision that prevents the policyowner from changing the beneficiary after 2 years

Correct answer: A. A provision that limits the insurer's ability to void the policy after 2 years

Explanation: Once a life policy has been in force for the contestable period, commonly two years, the insurer can no longer contest the policy or deny a claim because of misstatements in the application. Nonpayment of premium is never barred by the clause. A minority of states preserve a narrow exception for fraudulent misstatements, so the protection is close to but not absolutely universal.

• A. A provision allowing the insurer to contest the policy for material misstatements made on the application during its first two years
• B. A provision limiting the payout to a refund of premiums if the insured dies by suicide within a stated period after the policy is issued
• C. A provision that permanently excludes suicide as a covered cause of death for the entire life of the policy
• D. A provision requiring a two-year waiting period before the full death benefit becomes payable for any cause of death

Correct answer: B. A provision limiting the payout to a refund of premiums if the insured dies by suicide within a stated period after the policy is issued

Explanation: The suicide clause applies only during a stated period after issue - typically the first two years. If the insured dies by suicide within that period, the insurer does not pay the face amount; it refunds the premiums paid (some policies add interest). After the period ends, suicide is a covered cause of death, so option C is wrong. Option A describes the contestability provision, and option D describes a graded-benefit design, not the suicide clause.

• A. A loan from the insurer that is repaid to the beneficiary out of the death benefit
• B. An advance of the death benefit paid to the insured after a terminal diagnosis
• C. A loan from the insurance company using the policy's cash value as collateral
• D. A loan from a lender secured by an assignment of the policy's death benefit

Correct answer: C. A loan from the insurance company using the policy's cash value as collateral

Explanation: A policy loan allows the policyholder to borrow money from the insurance company using the policy's cash value as collateral. Interest is charged on the loan, and unpaid loans reduce the death benefit.

• A. A provision that waives premiums once the insured reaches age 65
• B. A provision that pays a monthly income if the insured becomes disabled
• C. A provision that waives the policy's surrender charges after 10 years
• D. A provision that waives premiums if the insured becomes disabled

Correct answer: D. A provision that waives premiums if the insured becomes disabled

Explanation: The waiver of premium rider allows premium payments to be waived if the insured becomes totally disabled for a specified period. The policy remains in force without premium payments during the disability.

• A. A provision allowing early access to death benefit if terminally ill
• B. A provision allowing the beneficiary to collect proceeds before the insured's death
• C. A provision that pays the death benefit within 30 days of proof of loss
• D. A provision allowing the sale of the policy to a third party for a lump sum

Correct answer: A. A provision allowing early access to death benefit if terminally ill

Explanation: An accelerated death benefit rider allows the insured to receive a portion of the death benefit early if diagnosed with a terminal illness. This provides funds for medical expenses or other needs while still living.