South Carolina Life Insurance Practice Exam Free - 2026

• A. The applicant is at least eighteen years of age
• B. The applicant is at least twenty-one years of age
• C. The applicant has completed a college degree
• D. The applicant is at least sixteen years of age with parental consent

Correct answer: A. The applicant is at least eighteen years of age

Explanation: Before approving a resident producer application, the Director must find that the applicant is at least eighteen years of age, has good moral character, has paid the fees, and has passed the required examination. Twenty-one (B) and sixteen with consent (D) are not the statutory age, and no degree requirement (C) exists. See S.C. Code Ann. § 38-43-100(F).

• A. Twelve hours every year
• B. Twenty-four hours biennially
• C. Thirty hours every three years
• D. Sixteen hours biennially

Correct answer: B. Twenty-four hours biennially

Explanation: A producer licensed for property and casualty or life, accident and health insurance must complete biennially a minimum of twenty-four hours of continuing insurance education to be eligible for licensure for the following two years. Twelve hours annually (A), thirty every three years (C), and sixteen biennially (D) are not the statutory figures. See S.C. Code Ann. § 38-43-106(A)(1).

• A. December 31 of every year
• B. The anniversary date of her original license
• C. The last day of March in every odd-numbered year
• D. The last day of March in every even-numbered year

Correct answer: C. The last day of March in every odd-numbered year

Explanation: Licensed producers must provide evidence of CE status by the last day of their month of birth; an individual born in an odd-numbered year complies every odd-numbered year and one born in an even-numbered year every even-numbered year. The individual license is renewed biennially by the last day of the licensee's month of birth. December 31 (A) and the license anniversary (B) are not the statutory dates, and (D) applies to even-year births. See S.C. Code Ann. §§ 38-43-106(B)(1) and 38-43-110(A).

• A. Within thirty days of the contract
• B. Within sixty days of the contract
• C. Before the first application may be submitted
• D. Within fifteen days from the date the contract is executed or the first application is submitted

Correct answer: D. Within fifteen days from the date the contract is executed or the first application is submitted

Explanation: To appoint a producer as its agent, the insurer must file a notice of appointment within fifteen days from the date the agency contract is executed or the first insurance application is submitted, whichever applies. Thirty days (A) is the deadline for reporting a termination, not an appointment; sixty days (B) is not statutory; and the appointment need not precede the first application (C). See S.C. Code Ann. § 38-43-50(C).

• A. Increases each year by the amount of interest credited to the cash value
• B. Stays level, with the pure insurance element shrinking as cash value grows
• C. Equals the face amount plus the accumulated cash value at death
• D. Stays level, with the pure insurance element growing as cash value builds

Correct answer: B. Stays level, with the pure insurance element shrinking as cash value grows

Explanation: Option A keeps the total death benefit level, so as the cash value builds the insurer's net amount at risk declines, which helps hold down mortality charges. Adding cash value on top of the face amount describes Option B, the increasing death benefit design. Because the total benefit is fixed, the net amount at risk falls rather than rises as cash value builds, and interest credited increases the cash value rather than the death benefit; the total payable to the beneficiary remains constant subject to corridor requirements.

• A. Both a state life insurance license and a securities registration
• B. A state life insurance license, since the insurer holds the securities registration
• C. A federal securities registration, which preempts the state life license requirement
• D. A state life license and a state investment adviser registration

Correct answer: A. Both a state life insurance license and a securities registration

Explanation: A variable product is simultaneously an insurance contract and a security, so the producer needs the state life license plus FINRA registration through a broker-dealer. Holding only one credential leaves the producer unqualified for half the product; the securities registration belongs to the producer through a broker-dealer, not to the insurer, and federal registration does not preempt the state license. Investment adviser registration is a separate credential that does not authorize the sale of variable products.

• A. A federally insured bank deposit
• B. An escrow account managed by the state
• C. Separate accounts, where the policyowner bears the investment risk
• D. The insurer's general account, with a guaranteed minimum rate

Correct answer: C. Separate accounts, where the policyowner bears the investment risk

Explanation: Variable products place cash value in separate accounts made up of investment subaccounts, and the policyowner accepts the resulting gains and losses. General account placement with guaranteed minimums describes traditional whole life and fixed products. Life insurance values are not bank deposits and are not held by the state.

• A. The policyowner's premiums are invested directly in the shares that make up the chosen stock index
• B. Cash value is held in separate account subaccounts and fluctuates daily with their net asset value
• C. Interest credited is guaranteed to match the full index return each year, including reinvested dividends, with no cap applied
• D. Interest credited is linked to an external index, subject to features such as a floor, cap, or participation rate

Correct answer: D. Interest credited is linked to an external index, subject to features such as a floor, cap, or participation rate

Explanation: Indexed UL credits interest using a formula tied to an index such as a broad stock market benchmark, and the insurer limits both downside and upside through a guaranteed floor and a cap or participation rate. The policyowner never actually buys index shares. Because of caps and participation rates the credited rate rarely matches the raw index return, and daily net asset value pricing is a characteristic of variable products.

• A. Survivorship life, also called second-to-die
• B. Joint life, also called first-to-die
• C. Two separate term policies with a common beneficiary
• D. A family policy with spouse and child riders

Correct answer: A. Survivorship life, also called second-to-die

Explanation: Survivorship life insures two lives and pays a single death benefit at the second death, which is exactly when estate settlement costs typically come due. Joint life pays at the first death, so the timing would be wrong. Separate policies pay at each individual death rather than a single coordinated benefit, and a family policy with riders simply covers each family member individually rather than paying at the second death.

• A. Pays the face amount at death but returns the premiums paid, not the face amount, if the insured outlives the term
• B. Pays the face amount if the insured survives to a stated maturity date, or at earlier death
• C. Builds cash value more slowly than whole life because it is designed to mature at age 100
• D. Pays the face amount at death alone, with the cash value forfeited if the insured survives to maturity

Correct answer: B. Pays the face amount if the insured survives to a stated maturity date, or at earlier death

Explanation: An endowment is designed to build value quickly and pay the face amount either at the insured's death or upon reaching the maturity date, whichever comes first. Rapid cash value accumulation is central to the design, so an endowment builds value faster than ordinary whole life, not more slowly. Returning premiums alone at the end of a term describes return-of-premium term insurance, and the cash value is paid out at maturity rather than forfeited.

• A. The borrower's estate, which then repays the creditor
• B. The borrower's surviving spouse or dependent children
• C. The creditor, up to the amount of the outstanding debt
• D. The creditor, for the full original amount of the loan

Correct answer: C. The creditor, up to the amount of the outstanding debt

Explanation: Credit life is written to retire a debt, so the lending institution is the beneficiary and may collect only up to the remaining balance owed. Paying the estate or the family would defeat the purpose of guaranteeing repayment to the lender. The lender cannot collect the full original loan amount, since insurable interest is limited to the balance still owed.

• A. Higher during the early policy years and lower in later years
• B. Adjustable each year by the policyowner within stated limits
• C. Level for the entire premium-paying period of the contract
• D. Lower during the early policy years and higher in later years

Correct answer: D. Lower during the early policy years and higher in later years

Explanation: Modified premium designs help a buyer with strong future earning potential by charging less in the first few years and then stepping up to a higher level premium thereafter. Level premiums throughout describe ordinary whole life, and charging more in the early years reverses the design. Owner-selected premium amounts within limits describe universal life flexibility instead.