Hawaii Life Insurance Practice Exam Free - 2026

• A. $450,000 in death benefits and $140,000 in cash value
• B. $250,000 in death benefits and $100,000 in cash value
• C. $300,000 in death benefits and $300,000 in cash value
• D. $300,000 in death benefits, but not more than $100,000 in net cash surrender value

Correct answer: D. $300,000 in death benefits, but not more than $100,000 in net cash surrender value

Explanation: HRS § 431:16-203(c)(2)(A) limits the association's obligation, with respect to any one life, to $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values. Full policy values (A) are not guaranteed; $250,000 (B) is the annuity present-value limit under (c)(2)(C); and cash value is not covered to $300,000 (C). See HRS § 431:16-203.

• A. 30 days
• B. 31 days
• C. 60 days
• D. 10 days

Correct answer: A. 30 days

Explanation: HRS § 431:10D-102(1) requires a grace period of thirty days during which the policy continues in full force, and if a claim arises during the grace period the overdue premium may be deducted from the proceeds. Thirty-one days is the newborn-notification period in § 431:10A-115, sixty days is the nonforfeiture request window in § 431:10D-104, and ten days is not a life-policy grace period. See HRS § 431:10D-102.

• A. A ten-day right to return the policy for a refund of premiums less expenses
• B. A thirty-day right to return the policy for an unconditional full refund of all premiums paid
• C. A twenty-day right to return the policy for a refund of the cash surrender value only
• D. No return right, because the applicant signed the replacement notice

Correct answer: B. A thirty-day right to return the policy for an unconditional full refund of all premiums paid

Explanation: HRS § 431:10D-505 requires a replacing insurer to provide the policy or contract owner notice of the right to return the policy or contract within thirty days of delivery and receive an unconditional full refund of all premiums or considerations paid, including policy fees (for variable or market-value-adjusted contracts, the cash surrender value plus charges). Ten and twenty days are not the Hawaii replacement period, and signing the replacement notice under § 431:10D-503 does not waive the return right. See HRS § 431:10D-505.

• A. 6 per cent per annum
• B. 10 per cent per annum
• C. 8 per cent per annum
• D. 12 per cent per annum

Correct answer: C. 8 per cent per annum

Explanation: HRS § 431:10D-103 requires a life policy either to permit a maximum policy-loan interest rate of not more than eight per cent per annum or to provide an adjustable maximum rate tied to Moody's Corporate Bond Yield Average (or the cash-value interest rate plus one per cent), and an insurer offering the adjustable option must also make the fixed eight per cent option available. Six per cent is below the cap and is not the statutory figure; ten and twelve per cent exceed the fixed maximum. See HRS § 431:10D-103.

• A. the employer pays nothing and no one is insured
• B. only retirees may enroll
• C. covered members pay part or all of the premium
• D. the insurer pays the employee's salary

Correct answer: C. covered members pay part or all of the premium

Explanation: In a contributory plan, employees or members contribute toward the premium. Participation requirements often help prevent adverse selection.

• A. beneficiaries to pay the premium after death
• B. each employee to pass an individual medical exam
• C. coverage to be converted to auto insurance
• D. the employer or sponsor to pay the premium

Correct answer: D. the employer or sponsor to pay the premium

Explanation: In a noncontributory group plan, the employer or sponsor pays the premium. These plans often require all eligible members to be covered.

• A. convert group coverage to an individual policy without proving insurability
• B. convert to an individual term policy after passing a new medical examination
• C. continue the group coverage at the group rate for as long as premiums are paid
• D. transfer the group certificate to a new employer's plan without a waiting period

Correct answer: A. convert group coverage to an individual policy without proving insurability

Explanation: A conversion privilege allows eligible individuals who lose group coverage to convert to an individual policy, often without evidence of insurability, within a limited time.

• A. To allow the insurer to underwrite each employee individually
• B. To define who can participate and help control adverse selection
• C. To require every employee to name the employer as beneficiary
• D. To let the employer select which employees receive the largest benefit

Correct answer: B. To define who can participate and help control adverse selection

Explanation: Eligibility rules help define the covered class and support fair administration. They also reduce the chance that only high-risk individuals join.

• A. the number of claims paid by the auto insurer
• B. the producer's commute distance
• C. salary, job class, or a flat benefit schedule
• D. the employee's favorite beneficiary

Correct answer: C. salary, job class, or a flat benefit schedule

Explanation: Group life benefits often use a schedule such as a flat amount, a multiple of salary, or a class-based amount to avoid unfair discrimination.

• A. property coverage for every employee's home
• B. unlimited investment returns with no risk
• C. automatic licensing as an insurance producer
• D. basic coverage at a lower or employer-supported cost

Correct answer: D. basic coverage at a lower or employer-supported cost

Explanation: Group life coverage can provide convenient basic protection, often with employer support and simplified enrollment compared with individual underwriting.

• A. Adverse selection
• B. Physical hazard
• C. Misrepresentation
• D. Speculative risk

Correct answer: A. Adverse selection

Explanation: Participation and eligibility rules help prevent adverse selection, where people most likely to need coverage are disproportionately the ones who enroll.

• A. replace lost profits while a key employee recovers
• B. help transfer a deceased owner's business interest
• C. fund a deferred compensation promise to an executive
• D. pay off the company's debts to its general creditors

Correct answer: B. help transfer a deceased owner's business interest

Explanation: Life insurance can fund a buy-sell agreement by providing money to purchase a deceased owner's business interest according to the agreement.