New Hampshire Life Insurance Practice Exam Free - 2026

• A. In the agency's operating account; remit within 30 days
• B. In any account; remit at the next monthly statement
• C. In the premium trust account; remit within 60 days
• D. In the premium trust account; remit no later than 15 days from the date the carrier determined the return premium

Correct answer: D. In the premium trust account; remit no later than 15 days from the date the carrier determined the return premium

Explanation: Ins 4301.06 requires the producer to hold return premiums as a fiduciary in the trust account until remittance to the client, which must occur no later than 15 days from the date the return premium is determined by the carrier; if it cannot be delivered, the funds go back to the insurer. Ins 4301.05 forbids placing fiduciary funds in a personal or business operating account, so A is wrong, and neither 30 nor 60 days is the remittance period (30 days is the address-change and claim-decision figure elsewhere). See N.H. Code Admin. R. Ins 4301.06.

• A. A referral fee not exceeding the nominal amount of $25 that is not based on whether the customer buys insurance
• B. A referral fee of up to $100 per referral that closes
• C. A share of the first-year commission not exceeding 10 percent
• D. Nothing; any payment to an unlicensed person is prohibited

Correct answer: A. A referral fee not exceeding the nominal amount of $25 that is not based on whether the customer buys insurance

Explanation: RSA 402:16-b permits a person who is not licensed and appointed to refer a party to a licensed producer if the compensation for the referral does not exceed the nominal amount of $25 and is not based on or related to the party's purchase of insurance. A fee paid only for referrals that close, or any percentage of commission, would be tied to the purchase and would also violate RSA 402-J:13, which bars paying commissions to unlicensed persons; but because the statute expressly allows the $25 nominal fee, D overstates the prohibition. See RSA 402:16-b.

• A. When any policy is written on the applicant's own property
• B. When more than 10 percent of total commissions or premiums in a calendar year come from insurance on the applicant's own or related persons' property or interests
• C. When more than 25 percent of premiums come from controlled sources
• D. When more than 50 percent of commissions come from controlled sources

Correct answer: B. When more than 10 percent of total commissions or premiums in a calendar year come from insurance on the applicant's own or related persons' property or interests

Explanation: RSA 402:74 states New Hampshire's policy that an agent should not be licensed primarily to insure his own property or property owned or controlled by his employees or close relatives, and paragraph II deems an applicant so licensed if in any calendar year more than 10 percent of total commissions or premiums come from insurance involving the property or interests of the persons listed in paragraph III; the commissioner then may not issue the license unless the applicant shows otherwise. Twenty-five and 50 percent are thresholds used in other states, and a single policy on one's own property does not trigger the rule. See RSA 402:74.

• A. Notify the existing insurer within 30 days and give a 10-day free look
• B. Nothing regarding the existing insurer; give a 20-day free look
• C. Notify the existing insurer within 5 business days and give the owner the right to return the policy within 30 days of delivery for an unconditional full refund
• D. Notify the existing insurer within 15 days and give a 15-day free look

Correct answer: C. Notify the existing insurer within 5 business days and give the owner the right to return the policy within 30 days of delivery for an unconditional full refund

Explanation: Ins 302.06(a) requires the replacing insurer to notify any existing insurer that may be affected within 5 business days of receipt of a completed application indicating replacement, keep the replacement notices for at least 5 years, and provide the policy or contract owner notice of the right to return the policy within 30 days of delivery and receive an unconditional full refund of all premiums (or the cash surrender value plus fees for a variable or market value adjustment contract). Thirty, 15 and zero days for the existing-insurer notice, and 10, 15 and 20-day free looks, are all figures used elsewhere, not in this rule. See N.H. Code Admin. R. Ins 302.06.

• 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.

• A. The salesperson's personal debts and mortgage balance
• B. The estimated cost of replacing the employee and the profits the business would lose
• C. The company's total annual payroll
• D. A fixed multiple of the business owner's salary

Correct answer: B. The estimated cost of replacing the employee and the profits the business would lose

Explanation: Key person coverage protects the business, so the amount reflects the employee's economic value to the firm: profits that would be lost, the cost of recruiting and training a replacement, and credit or project commitments that depend on that person. The employee's personal finances are irrelevant - those belong to personal, not business, insurance planning.

• A. An entity purchase plan
• B. A cross-purchase plan among partners
• C. A one-way buy-sell agreement
• D. A split-dollar plan

Correct answer: C. A one-way buy-sell agreement

Explanation: With a single owner there are no partners for a cross-purchase and no entity to redeem shares, so the sale runs one way: the designated buyer owns and pays for a policy on the proprietor and uses the death benefit to purchase the business at the agreement's price. This lets the business continue rather than being liquidated with the estate.

• A. An arrangement where the business purchases life insurance on each of its owners
• B. An arrangement where each business owner purchases life insurance on their own life for their heirs
• C. An arrangement where a business purchases life insurance on an employee it cannot easily replace
• D. An arrangement where each business owner purchases life insurance on the other owners

Correct answer: D. An arrangement where each business owner purchases life insurance on the other owners

Explanation: In a cross-purchase plan, each business owner buys life insurance policies on the lives of the other owners. Upon an owner's death, the surviving owners use the death benefits to purchase the deceased's share.

• A. An arrangement where the business itself purchases life insurance on each owner
• B. An arrangement where each owner purchases life insurance on every other owner
• C. An arrangement where the business purchases life insurance on a valuable non-owner employee
• D. An arrangement where the business pays premiums on a policy owned by each individual owner

Correct answer: A. An arrangement where the business itself purchases life insurance on each owner

Explanation: In an entity purchase (or stock redemption) plan, the business purchases life insurance on each owner. Upon an owner's death, the business uses the death benefit to buy the deceased's ownership interest.

• A. The employee owns it and assigns part of the death benefit to the employer
• B. The employer owns it and endorses part of the death benefit to the employee's beneficiary
• C. The employer and employee own equal shares as joint policyowners
• D. An irrevocable trust owns it for the employee's family

Correct answer: B. The employer owns it and endorses part of the death benefit to the employee's beneficiary

Explanation: Split-dollar plans are structured two main ways. Under the endorsement method the employer owns the policy, pays most or all of the premium, and endorses the death benefit above its own interest to the employee's beneficiary. Under the collateral assignment (loan) method ownership is reversed: the employee owns the policy and assigns it to the employer as security for the premiums advanced.

• A. A small amount of life insurance on the employee's spouse and children, payable to the employee
• B. Full income replacement for the family if the employee becomes disabled
• C. An equal death benefit for every family member, payable to the insurer
• D. Health coverage for dependents after the employee retires

Correct answer: A. A small amount of life insurance on the employee's spouse and children, payable to the employee

Explanation: Dependent life coverage adds modest death benefits on an employee's spouse and eligible children to a group life plan, with the employee normally the beneficiary. Benefit amounts are typically small - sized for final expenses - and are often limited relative to the employee's own coverage amount.