Illinois Life Insurance Practice Exam Free - 2026

• A. This is permitted if the current scale supports it
• B. This is permitted if the word 'vanish' is in quotation marks
• C. The term 'vanish' or 'vanishing premium,' or any similar term implying the policy becomes paid up by means of non-guaranteed elements, may not be used; the illustration may not represent that premiums will not be required for each year, imply that non-guaranteed elements are guaranteed, or be lapse-supported or not self-supporting
• D. The illustration may be used only with term insurance

Correct answer: C. The term 'vanish' or 'vanishing premium,' or any similar term implying the policy becomes paid up by means of non-guaranteed elements, may not be used; the illustration may not represent that premiums will not be required for each year, imply that non-guaranteed elements are guaranteed, or be lapse-supported or not self-supporting

Explanation: Under the Illinois life insurance illustrations regulation, an insurer or producer may not represent the policy as anything other than life insurance; use or describe non-guaranteed elements in a misleading manner; state or imply that non-guaranteed elements are guaranteed; use an illustration that depicts performance more favorable than the insurer's illustrated scale; provide an incomplete illustration; represent that premium payments will not be required for each year unless that is the fact; use the term 'vanish' or 'vanishing premium' or a similar term implying the policy becomes paid up through non-guaranteed elements; use a lapse-supported illustration; or use an illustration that is not self-supporting. See 50 Ill. Adm. Code 1406.70(b).

• A. No new illustration is needed; the original is kept for 1 year
• B. A revised basic illustration labeled 'Revised Illustration' must be sent with the policy and signed and dated by the policyowner and producer no later than delivery; the insurer keeps copies until 3 years after the policy is no longer in force
• C. A verbal explanation at delivery is sufficient; records are kept for 10 years
• D. The Director must approve the revised illustration

Correct answer: B. A revised basic illustration labeled 'Revised Illustration' must be sent with the policy and signed and dated by the policyowner and producer no later than delivery; the insurer keeps copies until 3 years after the policy is no longer in force

Explanation: If a basic illustration is used and the policy is applied for as illustrated, a signed copy goes to the insurer at application and a copy to the applicant. If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued must be sent with the policy, labeled 'Revised Illustration,' and signed and dated by the applicant or policyowner and the producer no later than the time the policy is delivered. Where no illustration is used, the producer's certification and the applicant's acknowledgment are submitted at application, and an illustration used at the point of sale must be signed no later than delivery. Insurers must notify the Director whether each form is marketed with or without an illustration, and copies of illustrations and certifications are retained until 3 years after the policy is no longer in force. See 50 Ill. Adm. Code 1406.40, 1406.80.

• A. Any licensed insurance producer, without further requirements
• B. Only an attorney
• C. The insurer that issued the policy
• D. A producer who has held a resident insurance producer license with a life line of authority in Illinois or his or her home state for at least one year, has notified the Director on the prescribed form and paid the $500 registration fee, and has completed the required training; the broker represents only the viator

Correct answer: D. A producer who has held a resident insurance producer license with a life line of authority in Illinois or his or her home state for at least one year, has notified the Director on the prescribed form and paid the $500 registration fee, and has completed the required training; the broker represents only the viator

Explanation: A viatical settlement contract is a written agreement under which a viatical settlement provider pays the viator (the policy owner or group certificate holder) less than the expected death benefit in return for assignment or transfer of the policy or its death benefit. A viatical settlement broker is a licensed insurance producer who, for compensation, represents only the viator in negotiating with providers; a producer may act as a broker only after being licensed as a resident producer with a life line of authority for at least one year, notifying the Director and paying a $500 registration fee, and completing the required training. Providers must be licensed by the Director (application fee $3,000, annual renewal $1,500). Attorneys, CPAs and accredited financial planners retained by the viator and not paid by a provider are exempt from broker licensing. The Act defines terminally ill as a condition reasonably expected to result in death within 24 months and chronically ill by reference to activities of daily living or severe cognitive impairment. See 215 ILCS 159/5, 159/10.

• A. Both are prohibited: a life company may not refuse to insure, refuse to continue to insure, or limit the amount or terms of coverage solely because of blindness, nor refuse to insure an individual solely because of military status, and may not make any distinction among individuals of the same class and equal expectation of life in premiums, dividends or terms
• B. Both are permitted if actuarially supported
• C. Only the blindness refusal is prohibited
• D. Only the military-status rating is prohibited

Correct answer: A. Both are prohibited: a life company may not refuse to insure, refuse to continue to insure, or limit the amount or terms of coverage solely because of blindness, nor refuse to insure an individual solely because of military status, and may not make any distinction among individuals of the same class and equal expectation of life in premiums, dividends or terms

Explanation: No life company doing business in Illinois may make or permit any distinction or discrimination in favor of individuals of the same class and equal expectation of life in the amount of premiums, dividends or benefits, or in the terms and conditions of a contract. A life company may not make a distinction against individuals with disabilities except where based on sound actuarial principles or actual experience, may not refuse to insure, refuse to continue to insure, or limit the amount, extent or kind of coverage solely because of blindness or partial blindness, may not refuse to insure or continue to insure an individual solely because of status as a member of the military, and an insurer or producer may not discriminate based on past or future lawful travel. See 215 ILCS 5/236.

• A. Cash surrender
• B. Reduced paid-up insurance
• C. Automatic premium loan
• D. Extended term insurance

Correct answer: A. Cash surrender

Explanation: Cash surrender ends the policy and pays the available cash value. Reduced paid-up and extended term continue some form of coverage.

• A. insurers that refuse to renew existing coverage
• B. unsuitable or misleading policy changes
• C. producers selling without a valid license
• D. unpaid claims after a policy lapses

Correct answer: B. unsuitable or misleading policy changes

Explanation: Replacement rules help ensure consumers understand the consequences of replacing existing coverage, including surrender charges, new contestability periods, and loss of benefits.

• A. The exam vendor must approve the sale
• B. The beneficiary becomes the insurer
• C. The recommendation may be misleading or unsuitable
• D. The policy automatically becomes group insurance

Correct answer: C. The recommendation may be misleading or unsuitable

Explanation: A replacement recommendation should fairly explain material disadvantages and advantages. Omitting important consequences can make the recommendation misleading.

• A. offering part of the commission as an inducement to buy
• B. making false statements about an insurer's financial condition
• C. requiring a client to buy insurance as a condition of a loan
• D. using misleading information to induce a policy replacement

Correct answer: D. using misleading information to induce a policy replacement

Explanation: Twisting is commonly used to describe misleading or deceptive conduct that induces a policyowner to replace or change coverage improperly.

• A. offering an unlawful inducement not stated in the policy
• B. misrepresenting policy terms to induce a replacement
• C. charging different rates to insureds of the same class
• D. returning unearned premium after a policy is cancelled

Correct answer: A. offering an unlawful inducement not stated in the policy

Explanation: Rebating generally involves offering something of value not specified in the policy as an inducement to buy insurance, where prohibited by law.

• A. emphasize the benefits and leave exclusions to the policy text
• B. present material information accurately and fairly
• C. recommend the policy that pays the highest commission
• D. rely on the illustration in place of the policy provisions

Correct answer: B. present material information accurately and fairly

Explanation: Producers should present coverage, limitations, costs, and suitability factors honestly so applicants can make informed decisions.

• A. The old policy's contestability period carries over to the replacement policy
• B. The new policy cannot be contested because the insured was already underwritten once
• C. The new policy may start a new period during which misstatements can be contested
• D. The new policy's contestability period is shortened to the time remaining on the old policy

Correct answer: C. The new policy may start a new period during which misstatements can be contested

Explanation: A replacement may create a new contestability period under the new policy. This is an important consumer consideration before replacing coverage.

• A. Advising the client to surrender the old policy before the new one is approved
• B. Recommending the policy with the highest first-year commission to the producer
• C. Presenting the new policy's illustration as a guaranteed projection of values
• D. Comparing old and new coverage honestly before recommending replacement

Correct answer: D. Comparing old and new coverage honestly before recommending replacement

Explanation: A fair replacement discussion compares benefits, costs, limitations, charges, and underwriting consequences before the client makes a decision.