Wyoming Life Insurance Practice Exam Free - 2026

• A. At least 30 days (or one month of not less than 30 days), with interest of no more than 6% per year
• B. At least 31 days, with no interest permitted
• C. At least 60 days, with interest of no more than 8% per year
• D. At least 10 days, with a late fee equal to one month's premium

Correct answer: A. At least 30 days (or one month of not less than 30 days), with interest of no more than 6% per year

Explanation: Wyo. Stat. § 26-16-103 requires a grace period of thirty days, or at the insurer's option one month of not less than thirty days (four weeks for industrial policies paid more often than monthly), during which the policy stays in force; the insurer may charge interest not exceeding six percent per annum for the days of grace elapsed. B uses the 31-day health policy grace figure and wrongly bars interest. C's 60 days is the nonforfeiture election window, not the grace period. D's 10 days is the health monthly-premium grace figure and no such late fee is authorized. See Wyo. Stat. § 26-16-103.

• A. Yes, because misstatements on the application can be raised at any time while the insured lives
• B. No, because the policy became incontestable after it was in force during the insured's lifetime for two years from its date of issue
• C. No, because Wyoming policies become incontestable one year after issue
• D. Yes, but only if the insurer refunds all premiums paid

Correct answer: B. No, because the policy became incontestable after it was in force during the insured's lifetime for two years from its date of issue

Explanation: Under Wyo. Stat. § 26-16-104 a life policy (excluding disability and accidental death benefit provisions) is incontestable, except for nonpayment of premium, after it has been in force during the insured's lifetime for two years from its date of issue. A is wrong because the two-year limit cuts off application-based contests. C states the wrong period; Wyoming uses two years, not one. D describes no Wyoming rule; a contest is barred regardless of any refund offer. See Wyo. Stat. § 26-16-104.

• A. Refuse, because reinstatement must be requested within one year of default
• B. Refuse, because the policy can only be reinstated within two years of default
• C. Reinstate, because the statutory reinstatement right runs three years from the date of premium default
• D. Reinstate only if Marcus also pays interest of at least 8% on the arrears

Correct answer: C. Reinstate, because the statutory reinstatement right runs three years from the date of premium default

Explanation: Wyo. Stat. § 26-16-110 requires that an unsurrendered policy be reinstated at any time within three years from the date of premium default (two years for industrial policies) upon written application, satisfactory evidence of insurability, payment of premiums in arrears and any indebtedness, and interest not exceeding six percent per annum. A's one-year period appears nowhere in the statute. B's two years applies only to industrial life policies. D is wrong because six percent is the maximum, not a required minimum. See Wyo. Stat. § 26-16-110.

• A. Within 30 days, with no interest owed
• B. Within 60 days, with interest only if the claim was disputed
• C. Within 90 days, with interest from the date proof was received
• D. Within 45 days after receipt of the proofs of loss, with interest accrued from the date of death until payment

Correct answer: D. Within 45 days after receipt of the proofs of loss, with interest accrued from the date of death until payment

Explanation: Wyo. Stat. § 26-15-124(a) requires life claims to be rejected or accepted and paid within forty-five days after receipt of proofs of loss and supporting evidence, and § 26-16-112(b) requires benefits paid on death to include interest accrued from the date of death until the date of payment, at not less than the rate paid on death proceeds left on deposit. A's 30 days is the guaranty-association claim window and denies interest. B and C state periods that do not appear in the statute and misstate when interest begins. See Wyo. Stat. § 26-16-112.

• A. Only if the benefit exceeds $100,000
• B. Only for term life policies
• C. No, death benefits are generally received income tax-free
• D. Yes, they are fully taxable

Correct answer: C. No, death benefits are generally received income tax-free

Explanation: Life insurance death benefits paid to beneficiaries are generally received income tax-free. This is one of the key tax advantages of life insurance.

• A. Taxed as capital gains on the amount above premiums paid
• B. Tax-free as long as the policy remains in force
• C. Taxed as ordinary income on the full amount withdrawn
• D. Tax-free up to basis (premiums paid), taxable above that

Correct answer: D. Tax-free up to basis (premiums paid), taxable above that

Explanation: Cash value withdrawals are taxed on a FIFO (First-In, First-Out) basis. Withdrawals up to the total premiums paid (basis) are tax-free. Amounts exceeding basis are taxed as ordinary income.

• A. A life policy that fails the 7-pay test and loses certain tax advantages
• B. A life policy that has been reinstated after lapse under modified terms
• C. A life policy whose death benefit is reduced for a misstatement of age
• D. A life policy that passes the 7-pay test and keeps its tax advantages

Correct answer: A. A life policy that fails the 7-pay test and loses certain tax advantages

Explanation: A MEC is a life insurance policy that has been funded too quickly (fails the 7-pay test) and loses some tax advantages. Withdrawals and loans from MECs may be subject to ordinary income tax and a 10% penalty if taken before age 59½.

• A. Yes, they are a deductible medical expense if the taxpayer itemizes
• B. No, personal life insurance premiums are generally not tax-deductible
• C. Yes, but only the portion of the premium that goes toward cash value
• D. No, unless the policy is a term policy with no cash value component

Correct answer: B. No, personal life insurance premiums are generally not tax-deductible

Explanation: Premiums on personal life insurance are not deductible, because the death benefit is received income-tax free. Employer-paid group term life premiums are fully deductible to the employer as a business expense. Separately, only the cost of the first $50,000 of that group coverage is excluded from the employee's income; the cost of coverage above $50,000 is imputed to the employee as taxable wages.

• A. A contract that pays a lump-sum death benefit to a named beneficiary
• B. A bank deposit account that earns a guaranteed interest rate for a set term
• C. A contract that provides periodic income payments, often for retirement
• D. A short-term loan secured by the cash value of a permanent life policy

Correct answer: C. A contract that provides periodic income payments, often for retirement

Explanation: An annuity is a contract between an individual and an insurance company where the individual pays premiums and the insurer provides periodic income payments, typically for retirement.

• A. An annuity whose payments rise and fall with the performance of sub-accounts
• B. An annuity that must be held for a fixed period before it can be annuitized
• C. An annuity that pays a fixed amount only for a fixed number of years
• D. An annuity with guaranteed minimum interest rates and fixed payments

Correct answer: D. An annuity with guaranteed minimum interest rates and fixed payments

Explanation: A fixed annuity provides a guaranteed minimum interest rate during the accumulation phase and fixed periodic payments during the payout phase. The insurance company bears the investment risk.

• A. An annuity where payments vary based on investment performance
• B. An annuity where payments vary based on the insurer's declared interest rate
• C. An annuity where the owner may vary the timing and amount of premium payments
• D. An annuity where the insurer guarantees a minimum return and bears the risk

Correct answer: A. An annuity where payments vary based on investment performance

Explanation: A variable annuity allows the owner to invest in sub-accounts (similar to mutual funds). The accumulation value and income payments vary based on investment performance. The owner bears the investment risk.

• A. When the insurer recalculates payments each year based on returns
• B. When premiums are paid and the value grows before payout begins
• C. When the annuitant receives periodic income payments from the contract
• D. When the contract's value is paid to the beneficiary at the annuitant's death

Correct answer: B. When premiums are paid and the value grows before payout begins

Explanation: The accumulation period (also called pay-in period) is when the annuity owner pays premiums and the account value grows through interest or investment returns before income payments begin.