Colorado Life Insurance Practice Exam Free - 2026

• A. $450,000 in death benefit and $130,000 in cash value
• B. $100,000 in death benefit and $100,000 in cash value
• C. $250,000 in death benefit and $250,000 in cash value
• D. $300,000 in net death benefit or $100,000 in net cash surrender value, per life

Correct answer: D. $300,000 in net death benefit or $100,000 in net cash surrender value, per life

Explanation: C.R.S. § 10-20-104 limits the association's obligation to $300,000 in net life insurance death benefits, but no more than $100,000 in net cash surrender and withdrawal values, with respect to any one life. A ignores the caps; B understates the death-benefit cap; C uses the annuity limit ($250,000 present value of annuity benefits), not the life limits. See C.R.S. § 10-20-104.

• A. Return within 30 days of delivery for an unconditional full refund
• B. Return within 10 days of delivery for a refund less costs
• C. Return within 20 days of application
• D. No return right; the replacement notice substitutes for it

Correct answer: A. Return within 30 days of delivery for an unconditional full refund

Explanation: Regulation 4-1-4 requires the replacing insurer to provide the policy owner the right to return the new policy or contract within thirty days of delivery and receive an unconditional full refund. B and C use periods and refund terms not found in the Colorado regulation; D is wrong because the notice regarding replacement is an additional producer duty, not a substitute for the free look. See 3 CCR 702-4, Reg. 4-1-4 § 7.

• A. Mail the applicant a replacement summary within 10 days after issue
• B. Present and read a notice regarding replacements to the applicant, signed by both the applicant and the producer
• C. Obtain the existing insurer's written consent to the replacement
• D. File a copy of the application with the Division of Insurance

Correct answer: B. Present and read a notice regarding replacements to the applicant, signed by both the applicant and the producer

Explanation: Regulation 4-1-4 requires the producer, not later than at the time of taking the application, to present and read to the applicant a notice regarding replacements, signed by both the applicant and the producer, listing every policy or contract to be replaced by insurer, insured, and policy number, and to leave copies of all sales material. A is too late and not the required form; C is wrong because the existing insurer is notified, not asked for consent; D is wrong because the filing goes to the replacing insurer, not the Division. See 3 CCR 702-4, Reg. 4-1-4 § 5.

• A. Within 30 calendar days
• B. Within 15 calendar days
• C. Within 5 business days of receipt of the completed application
• D. Only if the existing insurer requests it

Correct answer: C. Within 5 business days of receipt of the completed application

Explanation: Regulation 4-1-4 § 7 requires the replacing insurer to notify any existing insurer that may be affected within five business days after receiving a completed application indicating replacement, and to send a copy of the available illustration within five business days of the existing insurer's request. A and B are not the regulation's periods; D is wrong because notice is mandatory, not on request. See 3 CCR 702-4, Reg. 4-1-4 § 7.

• A. As though the primary beneficiary died first, so proceeds go to the contingent beneficiary or the insured's estate
• B. As though the insured died first, so proceeds pass through the beneficiary's estate
• C. Split equally between the two estates
• D. Held by the insurer until a court appoints a receiver

Correct answer: A. As though the primary beneficiary died first, so proceeds go to the contingent beneficiary or the insured's estate

Explanation: When the insured and primary beneficiary die together with no proof of survivorship, the Uniform Simultaneous Death Act directs proceeds to be paid as if the beneficiary died first - so they go to any contingent beneficiary, or to the insured's estate if none is named. Many policies add a common disaster (survivorship) clause requiring the beneficiary to outlive the insured by a stated period, such as 30 days, to the same effect.

• A. The claim is denied because the premium was unpaid at death
• B. The full death benefit is paid and the overdue premium is forgiven
• C. The death benefit is paid minus the overdue premium
• D. Only the cash surrender value is paid to the beneficiary

Correct answer: C. The death benefit is paid minus the overdue premium

Explanation: Coverage stays in force throughout the grace period, so a death during that time is covered. The insurer deducts the unpaid premium (and under some policies, interest on it) from the death benefit before paying the beneficiary. The claim is not denied, and the premium is not simply forgiven.

• A. A payor benefit rider
• B. A return of premium rider
• C. A family income rider
• D. An other-insured (spouse) term rider

Correct answer: D. An other-insured (spouse) term rider

Explanation: An other-insured rider - often called a spouse or family rider - attaches term coverage for someone besides the base insured, most commonly a spouse, to an existing policy. It is usually cheaper and simpler than a separate policy, though the added coverage is term insurance that ends when the rider period expires or the base policy terminates.

• A. Monthly income to the family for the remaining 10 years of the rider period
• B. Monthly income to the family for a full 20 years from the date of death
• C. A second lump sum equal to the face amount
• D. Nothing, because the rider expired when the insured survived 10 years

Correct answer: A. Monthly income to the family for the remaining 10 years of the rider period

Explanation: A family income rider is decreasing term insurance that pays monthly income from the insured's death until the END of the period selected, measured from the rider's start date - here, the remaining 10 of 20 years. A family maintenance rider, by contrast, pays income for a full period measured from the date of death. If the insured outlives the rider period, no income benefit remains.

• A. The interest credited to cash value at the insurer's current declared rate
• B. The mortality charge deducted from cash value to pay for death benefit protection
• C. The surrender charge deducted from cash value when the policy is cancelled early
• D. The target premium needed to keep the policy in force to the maturity age

Correct answer: B. The mortality charge deducted from cash value to pay for death benefit protection

Explanation: The cost of insurance (COI) is the mortality charge deducted monthly from the policy's cash value to pay for the death benefit protection. It increases as the insured ages.

• A. An IRS test limiting the premiums paid in the first seven years to avoid MEC status
• B. A state solvency test verifying the insurer's reserves are sufficient to cover its policy obligations
• C. An IRS test ensuring minimum death benefit relative to cash value to qualify as life insurance
• D. An insurer test requiring the minimum premium be paid to keep the death benefit guaranteed

Correct answer: C. An IRS test ensuring minimum death benefit relative to cash value to qualify as life insurance

Explanation: The corridor test is an IRS requirement that the death benefit must exceed cash value by a minimum percentage that varies by age. This ensures the policy qualifies as life insurance for tax purposes.

• A. A system of rating preferred risks with discounted premiums
• B. A flat dollar amount added to the premium for a temporary hazard
• C. A system of classifying insurers by their financial strength
• D. A system of rating substandard risks with higher premiums

Correct answer: D. A system of rating substandard risks with higher premiums

Explanation: Table rating is a method of classifying substandard risks where each 'table' or 'letter' represents a percentage increase in mortality risk and premium. Higher tables mean greater risk and higher premiums.

• A. An additional fixed premium for temporary or specific extra risks
• B. A percentage surcharge based on the substandard mortality table assigned
• C. A one-time policy fee charged to cover the cost of issuing the policy
• D. An additional premium charged for a rider such as waiver of premium

Correct answer: A. An additional fixed premium for temporary or specific extra risks

Explanation: A flat extra premium is an additional fixed dollar amount added to the standard premium to cover specific hazards, often for a limited period. It's commonly used for occupational or avocational risks.