Massachusetts Life Insurance Practice Exam Free - 2026

• A. 10 days
• B. 20 days
• C. 30 days
• D. There is no statutory free look for individual life policies in Massachusetts

Correct answer: A. 10 days

Explanation: M.G.L. c. 175, § 187H provides that no individual life policy with a face amount of less than $25,000 may be delivered in Massachusetts unless it carries a notice that the owner may cancel within ten days of delivery for any reason and receive a refund of any premium paid, the policy being void from the beginning. 20 days is the unconditional refund period that applies specifically to replacement transactions under 211 CMR 34.06, and 30 days is the Medicare supplement right-to-return period; D is wrong because § 187H creates a statutory free look for these smaller policies. See M.G.L. c. 175, § 187H.

• A. 10 days
• B. 15 days
• C. 20 days
• D. 30 days

Correct answer: C. 20 days

Explanation: 211 CMR 34.06(1)(d) requires the replacing insurer to provide, in the policy or in a separate written notice delivered with the policy, that the applicant has a right to an unconditional refund of all premiums paid, exercisable within 20 days commencing from the date of delivery of the policy. 10 days is the general § 187H free look for policies under $25,000, 15 days is the rescission window for a life settlement contract under c. 175, § 220, and 30 days is the Medicare supplement right to return. See 211 CMR 34.06(1)(d).

• A. Present the 'Important Notice Required by the Commissioner of Insurance' no later than the time of taking the application, have it signed by both the applicant and the producer, leave it with the applicant, and submit a copy to the replacing insurer with the application
• B. Send the replacement notice to the applicant within 30 days after the new contract is issued
• C. Obtain written permission from the existing insurer before submitting the application
• D. Only note the replacement verbally, since Massachusetts imposes documentation duties on insurers, not producers

Correct answer: A. Present the 'Important Notice Required by the Commissioner of Insurance' no later than the time of taking the application, have it signed by both the applicant and the producer, leave it with the applicant, and submit a copy to the replacing insurer with the application

Explanation: 211 CMR 34.04 imposes duties directly on agents and brokers: obtain a statement signed by the applicant as to whether replacement is involved, present the required 'Important Notice' not later than the time of taking the application, have it signed by both the applicant and the agent or broker and left with the applicant, obtain a list of all existing life insurance and annuities to be replaced (insurer, insured, contract number), and submit a copy of the notice to the replacing insurer with the application. Option B is too late, C is not required (the existing insurer receives notice through the replacing insurer under 34.06, not permission), and D is wrong because the regulation places explicit duties on the producer. See 211 CMR 34.04.

• A. $100,000 death benefit, $100,000 cash value, $100,000 annuity
• B. Full face amount of the policy and full annuity value, with no dollar caps
• C. $500,000 death benefit, $300,000 cash value, $500,000 annuity
• D. $300,000 death benefit, but not more than $100,000 in net cash surrender value, and $250,000 in present value of annuity benefits

Correct answer: D. $300,000 death benefit, but not more than $100,000 in net cash surrender value, and $250,000 in present value of annuity benefits

Explanation: M.G.L. c. 175, § 146B(4)(B)(3) limits the Association's obligation, per life, to $300,000 in life insurance death benefits (but not more than $100,000 in net cash surrender and net cash withdrawal values) and $250,000 in the present value of annuity benefits, with an aggregate of $300,000 per life (except a $500,000 aggregate for basic hospital, medical-surgical or major medical coverage). Options A and C use the wrong figures and B ignores the statutory caps. See M.G.L. c. 175, § 146B.

• A. A 20-year-old attending college full time
• B. An 18-year-old attending high school full time
• C. A 19-year-old who works full time
• D. A healthy 25-year-old who lived in the worker's home

Correct answer: B. An 18-year-old attending high school full time

Explanation: A child qualifies while under age 18, or under age 19 if a full-time elementary or secondary school student; a full-time high-school student who is 18 therefore still qualifies. College attendance does not extend benefits, and adult children qualify only if disabled before age 22. See 42 U.S.C. 402(d).

• A. Social Security benefits are assignable to the insurer
• B. Federal law requires the deduction before life insurance may be sold
• C. Survivor benefits replace part of the lost income, so less life insurance is needed to fill the remaining gap
• D. The deduction increases the death benefit the family will receive

Correct answer: C. Survivor benefits replace part of the lost income, so less life insurance is needed to fill the remaining gap

Explanation: A needs analysis totals the survivors' income needs and then subtracts other post-death income sources; Social Security survivors' benefits are the most common such source, so the life insurance recommendation covers only the remaining shortfall. No law compels the deduction, and it has no effect on the policy's death benefit. See iii.org.

• A. She may qualify now, because a disabled widow can be eligible as early as age 50
• B. She must wait until age 60 regardless of her disability
• C. She must wait until her own full retirement age
• D. Widows qualify at any age even without a disability

Correct answer: A. She may qualify now, because a disabled widow can be eligible as early as age 50

Explanation: A widow or widower generally qualifies for survivor benefits at age 60, but one who is disabled may qualify after attaining age 50 and before 60. Without a disability or an entitled child in care, benefits are not payable at 52. See 42 U.S.C. 402(e).

• A. Life only
• B. Life with 10-year period certain
• C. Cash refund
• D. Joint and 100 percent survivor covering the annuitant and a same-age spouse

Correct answer: D. Joint and 100 percent survivor covering the annuitant and a same-age spouse

Explanation: Every guarantee added to a life-only payout is paid for with a smaller periodic payment. A joint and 100 percent survivor option must continue the full payment as long as either of two people is alive, the most expensive guarantee listed, so it pays the least; life only, with no guarantee to anyone after death, pays the most.

• A. Annuitizing under a life-only option
• B. Annuitizing under a joint and survivor option
• C. Taking systematic withdrawals from the contract
• D. Exchanging the annuity for an immediate annuity

Correct answer: C. Taking systematic withdrawals from the contract

Explanation: Systematic withdrawals leave the owner in control of the remaining value, though nothing guarantees the money will last for life. Annuitization works the other way: the owner gives up control of the investment to the insurer in exchange for a guaranteed income stream, and the decision is generally irrevocable. See finra.org.

• A. $1,000
• B. $400
• C. $600
• D. $0

Correct answer: B. $400

Explanation: The exclusion ratio is investment in the contract divided by expected return: $60,000 / $150,000 = 40 percent. So $400 of each $1,000 payment returns basis tax-free and $600 is taxable earnings, until the investment is fully recovered. See 26 U.S.C. 72(b).

• A. The exchange does not qualify under Section 1035, so the gain is taxable
• B. The exchange is tax-free because both are insurance products
• C. The exchange is tax-free if both contracts are with the same insurer
• D. The exchange is tax-free if completed within 60 days

Correct answer: A. The exchange does not qualify under Section 1035, so the gain is taxable

Explanation: Section 1035 permits tax-free exchanges of life insurance for life insurance, an endowment, an annuity, or qualified long-term care coverage, and an annuity for another annuity or long-term care contract - but not an annuity for life insurance. The rule runs one way only, and neither the insurer's identity nor a 60-day window changes that. See 26 U.S.C. 1035.

• A. Both payments are entirely tax-free
• B. Both payments are entirely taxable
• C. The IRA-funded payments are fully taxable, while the nonqualified payments are taxable only to the extent they represent earnings
• D. The nonqualified payments are fully taxable, while the IRA-funded payments are tax-free

Correct answer: C. The IRA-funded payments are fully taxable, while the nonqualified payments are taxable only to the extent they represent earnings

Explanation: A qualified annuity funded entirely with pre-tax dollars has no cost basis, so every dollar distributed is ordinary income. A nonqualified annuity is bought with after-tax dollars, so each annuitized payment splits between a tax-free return of premium and taxable earnings under the exclusion ratio. See 26 U.S.C. 72 and finra.org.