Indiana Life Insurance Practice Exam Free - 2026

• A. Deny the license until he reaches 18 years of age
• B. Issue the license because he passed the examination
• C. Issue a temporary license until he turns 21
• D. Issue the license only if a licensed producer sponsors him

Correct answer: A. Deny the license until he reaches 18 years of age

Explanation: Before approving a resident producer application the commissioner must find the individual is at least eighteen (18) years of age (IC 27-1-15.6-6(b)(1)). Passing the exam does not override the age requirement (B). Temporary licenses under IC 27-1-15.6-11 exist for servicing a deceased or disabled producer's business, not for underage applicants (C). Sponsorship is a condition the commissioner may impose on temporary licensees, not a substitute for the age rule (D). See Ind. Code § 27-1-15.6-6.

• A. Within 90 days after completing the course, by April 10
• B. Within one year, by January 10 of the following year
• C. Within six months, by July 10
• D. Within two years, matching the CE renewal cycle

Correct answer: C. Within six months, by July 10

Explanation: A resident applicant must file a certification showing the certified prelicensing course was completed not more than six (6) months before the application is received by the commissioner (IC 27-1-15.6-6(c)). Ninety days is the window for a formerly licensed nonresident to apply after a license cancellation (A). One year and two years are not the statutory validity period for the prelicensing certificate; two years is the renewal cycle under IC 27-1-15.6-32 (B, D). See Ind. Code § 27-1-15.6-6.

• A. 10 hours
• B. 24 hours
• C. 40 hours
• D. 20 hours

Correct answer: D. 20 hours

Explanation: IC 27-1-15.7-5(a)(2)(A) requires not less than twenty (20) hours of instruction for life insurance producers, covering ethics, Indiana insurance law and principles of life insurance. Ten hours is the title insurance course minimum (A). Forty hours applies to the combined life and health course and to property and casualty (C). Twenty-four hours is the continuing education requirement per renewal period under IC 27-1-15.7-2, not prelicensing (B). See Ind. Code § 27-1-15.7-5.

• A. 90 days
• B. 120 days
• C. 180 days
• D. One year

Correct answer: C. 180 days

Explanation: IC 27-1-15.6-11(a) allows the commissioner, without examination, to issue a temporary insurance producer license for a period of not more than one hundred eighty (180) days to the surviving spouse or personal representative of a deceased or disabled producer. Ninety days is the period a producer moving to Indiana has to apply for a resident license under IC 27-1-15.6-9 (A). One hundred twenty days and one year are not Indiana temporary-license periods (B, D). See Ind. Code § 27-1-15.6-11.

• A. The Roth owner is not required to take minimum distributions during his or her lifetime
• B. The Roth owner may deduct contributions in the year they are made, while the traditional owner may not
• C. Earnings in a Roth accumulate tax-deferred, while earnings in a traditional IRA are taxed each year
• D. The Roth owner must begin distributions at an earlier age than the traditional IRA owner

Correct answer: A. The Roth owner is not required to take minimum distributions during his or her lifetime

Explanation: A signature feature of the Roth IRA is that the original owner never has to begin lifetime required minimum distributions, so the account can keep compounding untouched. Deductibility runs the other way: traditional IRA contributions may be deductible while Roth contributions never are. Both IRA types let earnings accumulate without current taxation, so that does not separate them, and there is no rule forcing a Roth owner to start distributions at an earlier age.

• A. Publicly traded for-profit corporations and their subsidiaries
• B. Public school systems and qualifying 501(c)(3) nonprofit organizations
• C. Federal government agencies and members of the uniformed services
• D. Self-employed persons and partnerships with no common-law employees

Correct answer: B. Public school systems and qualifying 501(c)(3) nonprofit organizations

Explanation: Section 403(b) arrangements are limited by statute to public education employers and tax-exempt charitable organizations described in 501(c)(3), such as hospitals and religious institutions. Ordinary for-profit employers use 401(k) plans instead, and federal civilian workers and uniformed service members use the Thrift Savings Plan. Self-employed individuals and partnerships would look to a SEP, SIMPLE, or Keogh (HR-10) arrangement.

• A. Employees fund the plan by pre-tax salary reduction, and the employer must match
• B. The employer funds a single pooled trust and allocates benefits by final salary
• C. The employer makes contributions into an IRA established for each eligible employee
• D. Employees make after-tax contributions that are later withdrawn income-tax free

Correct answer: C. The employer makes contributions into an IRA established for each eligible employee

Explanation: A SEP is an employer-funded arrangement in which the employer deposits contributions directly into a separate IRA owned by each eligible worker, which is what makes it simple to administer. Salary reduction by employees is the hallmark of 401(k) and SIMPLE plans, not a standard SEP. The employer never owns the assets, and contributions are pre-tax rather than after-tax.

• A. At least 500 employees
• B. Exactly 50 employees
• C. Any number, with no size limit
• D. 100 or fewer eligible employees

Correct answer: D. 100 or fewer eligible employees

Explanation: Congress designed the SIMPLE plan for smaller businesses, and eligibility is capped at employers with roughly 100 or fewer eligible employees. There is no rule requiring exactly 50 workers, and large employers with hundreds of workers must use a conventional 401(k) or pension arrangement. The absence of any size limit would defeat the purpose of a plan built specifically for small firms.

• A. The plan must withhold 20 percent of the eligible rollover distribution for federal income tax
• B. No withholding applies because the funds are being rolled over within the 60-day window
• C. The entire distribution becomes taxable immediately and permanently loses its eligibility for rollover
• D. The plan must withhold a 10 percent early-distribution penalty regardless of her age

Correct answer: A. The plan must withhold 20 percent of the eligible rollover distribution for federal income tax

Explanation: When an eligible rollover distribution is paid to the participant rather than transferred trustee to trustee, the plan is required to withhold 20 percent for federal income tax, and the participant must replace that amount out of pocket to roll over the full balance. A direct rollover avoids this withholding entirely, so the option claiming no withholding describes the wrong method. The money remains rollover-eligible, and the 10 percent early-distribution penalty, when it applies at all, is assessed on the tax return rather than withheld by the plan.

• A. Nonqualified plans must satisfy stricter coverage and nondiscrimination rules than qualified plans in order to earn a deduction
• B. Employer contributions to a qualified plan are currently deductible, while nonqualified plan deductions are generally postponed
• C. Earnings in a qualified plan are taxed to the employee each year, while nonqualified plan earnings grow tax deferred
• D. Benefits from a qualified plan are received income tax free, while nonqualified plan benefits are taxed as ordinary income

Correct answer: B. Employer contributions to a qualified plan are currently deductible, while nonqualified plan deductions are generally postponed

Explanation: A qualified plan earns the employer an immediate deduction because the arrangement satisfies IRS participation and nondiscrimination standards, whereas a nonqualified plan usually delays the employer's deduction until the benefit is actually included in the employee's income. Nonqualified plans are attractive precisely because they may discriminate in favor of selected executives, so the option about stricter rules is reversed. Earnings in both plan types grow tax deferred, and qualified plan distributions are taxed as ordinary income rather than received tax free.

• A. Included in the employee's current taxable income and received tax free when distributed
• B. Deductible by the employee as an itemized deduction on Schedule A in the year deferred
• C. Excluded from the employee's current taxable income and taxed when distributed
• D. Excluded from current income, with the earnings portion alone taxed at distribution

Correct answer: C. Excluded from the employee's current taxable income and taxed when distributed

Explanation: Pre-tax 401(k) deferrals reduce the employee's reportable wages now, and the money plus its earnings is taxed as ordinary income when withdrawn in retirement. The option describing income now and tax-free distributions later describes a designated Roth account instead. Deferrals are handled through payroll, not itemized deductions, and because the deferrals were never taxed going in, the entire distribution, not just the earnings, is taxable coming out.

• A. They must begin by April 1 of the year after the owner reaches age 59 1/2
• B. They may be postponed indefinitely as long as the owner names a spouse as sole beneficiary
• C. They may be delayed past the required beginning date while the owner is still working
• D. Failing to withdraw the required amount triggers an additional tax on the shortfall

Correct answer: D. Failing to withdraw the required amount triggers an additional tax on the shortfall

Explanation: Once required minimum distributions begin, any amount the owner fails to withdraw is subject to an additional excise tax on the shortfall, which is why the schedule must be tracked carefully. Naming a spouse as beneficiary does not eliminate the owner's own lifetime distribution requirement. The required beginning date is tied to the statutory starting age in the owner's early seventies, not to age 59 1/2, and the still-working exception applies to certain employer plans, never to a traditional IRA.