Free practice exam · no signup needed

Arizona Life Practice Exam

20 exam-style questions drawn from the same bank as our full Arizona Life course (Arizona Insurance Producer — Life — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. A policy is issued other than as applied for (e.g., rated up). At delivery, the producer should:
Return the issued policy to the insurer's home office for full cancellation and refund any premium paid to the applicantExplain the changes to the applicant and obtain a new acceptance signature, since the modified policy is a counter-offerRefuse to deliver the issued policy contract until the applicant first pays an additional rated premium installment without any explanationQuietly hand over the issued policy to the applicant at delivery without any further explanation or new signature collected
2. If a life insured dies during the grace period with the renewal premium unpaid, the insurer will typically:
Deny the claim because the premium was unpaidPay the death benefit minus the unpaid premiumPay the full face amount with no adjustmentPay only the policy's cash value
3. Under the NAIC Producer Licensing Model Act (Model #218), adopted in materially identical form by every state, an individual seeking a resident producer license generally must:
Be a citizen of the United States under the NAIC Model #218 citizenship-required prerequisite provision for resident producer licensure in every state's insurance code provisionsHave at least three years of insurance industry experience working in a state-licensed insurance agency before being permitted to apply for resident producer licensure under NAIC Model #218Be at least 18 years old, complete any required pre-licensing education, pass the state examination, and submit to a background checkAlready hold an active securities license at the time of insurance-license application under the NAIC Model #218 securities-coordination prerequisite provision for life-license applicants
4. Under the Paid-Up Additions (PUA) dividend option, each dividend is used to:
Reduce the next contract-year premium on the base whole life policy dollar-for-dollar by applying the declared dividend amount as a direct premium creditRefund the declared dividend in cash to the policyowner each contract year, with no impact on the underlying policy's face amount, cash value, or premium scheduleBuy a one-year term rider equal to the policy's then-current accumulated cash value, increasing the death benefit only for the next contract year before resettingPurchase a small amount of single-premium paid-up whole life insurance, increasing both face amount and cash value with no further premium owed on the addition
5. A producer offers a $50 gift card to anyone who purchases a life insurance policy. Under the NAIC Unfair Trade Practices Act (Model #880) adopted by every state, this offer is best characterized as:
Permitted if disclosed on the applicationA normal and permitted marketing expensePermitted only for term insurance and never for permanent cash-value life policiesA prohibited rebate or inducement not specified in the policy
6. A non-MEC universal-life policy has $60,000 of cash value and a $40,000 cost basis. The owner takes a $30,000 partial withdrawal. How is it taxed under IRC §72(e)?
Withdrawals from any individual life-insurance contract are categorically tax-free regardless of cumulative amount or basis history$30,000 is fully tax-free recovery of basis (FIFO), because the withdrawal does not exceed the $40,000 basis.Half of the $30,000 withdrawal is treated as cost-recovery basis and half is treated as ordinary-income gain under §72(b)$30,000 is fully taxable to the policyowner as ordinary income under the LIFO/gain-first treatment of §72(e)(10) for life insurance
7. Which licensing requirement applies to an agent who recommends only traditional fixed annuities?
A FINRA Series 7 registration is requiredA state life insurance license is sufficientA FINRA Series 6 registration is requiredA state securities (Series 63) license is required
8. Under the NAIC guaranty association model, the standard coverage limit for a life insurance death benefit per insured life is generally:
$300,000 per insured life$100,000 per insured life$200,000 per insured life$500,000 per insured life
9. A cost-of-living (COL) rider on a permanent life policy is designed primarily to protect the policyowner against:
Market losses in the policy's underlying cash value accountLoss of purchasing power due to inflationPremature death of a childLapse caused by nonpayment
10. Under universally adopted insurable interest doctrine, an individual generally has insurable interest in his or her own life:
Only with the spouse's written consentUp to the amount of annual incomeWithout statutory limitUp to ten times annual earnings
11. If a primary beneficiary predeceases the insured, the death proceeds are typically paid to:
The insured's employer, when the underlying policy was sold through a workplace voluntary planThe insurer, which retains the proceeds as surplus under the contract's lapsed-beneficiary clauseThe contingent (secondary) beneficiary, if one is named and survivingThe state as escheated abandoned-property funds after the standard dormancy period expires
12. How many quarters of coverage are generally required for a worker to be FULLY INSURED for Social Security retirement benefits?
20 quarters6 quarters40 quarters60 quarters
13. A spouse term (or 'other-insured') rider differs from a separate spouse-owned life policy primarily in that the rider:
Provides level term coverage on the spouse that is administratively bundled into the primary insured's policy and usually expires at a stated age (often 65)Cannot be removed from the underlying primary insured's contract once it has been added at policy issue, even on a written request from the policyownerDoes not require any additional premium because the spouse-rider mortality charge is absorbed by the primary insured's base whole life premium under standard pricingPays the spouse-rider death benefit only after both the primary insured and the covered spouse die, similar in mechanics to a survivorship second-to-die life policy
14. Under the NAIC Suitability in Annuity Transactions Model Regulation (Model #275), a producer recommending an annuity must:
Only obtain the consumer's name, residence address, and contact telephone number for the carrier's underwriting records, with no further documentation of needs or financial positionAvoid disclosing the new annuity contract's surrender charges or surrender period to the consumer to prevent the consumer from being confused by the technical product detailGuarantee a minimum rate of return that is higher than the rate actually stated in the new annuity contract being recommended to the consumer at the point of saleMake reasonable efforts to obtain the consumer's suitability information (financial situation, objectives, needs) and have a reasonable basis for the recommendation
15. An irrevocable beneficiary designation generally requires which of the following to make changes to the policy?
The written consent of the irrevocable beneficiaryA court order from a court of competent jurisdiction permitting the changeOnly the existing policyowner's signature on the standard change-of-beneficiaryOnly the issuing insurer's approval under the contract's standard ownership rules
16. Mara, age 62, opened her first Roth IRA three years ago and has contributed $5,000 each year. She now wants to withdraw $20,000 (her $15,000 in contributions plus $5,000 of earnings). How is the distribution taxed?
The entire $20,000 is tax-free because Mara is over age 59½.The $15,000 of contributions is tax-free; the $5,000 of earnings is taxable but not subject to the 10% penalty.The entire $20,000 is taxable as ordinary income because the account is less than 5 years old.The $15,000 of contributions is tax-free; the $5,000 of earnings is taxable and subject to a 10% penalty.
17. Under IRC §101(g), accelerated death benefits paid because the insured is terminally ill are generally treated for federal income tax purposes as:
Tax-free, like death proceeds under §101(a)Taxable to the extent the benefit exceeds basis in the contractFully taxable as ordinary incomeTax-free only if the insured is age 59½ or older
18. A Suicide Exclusion in a typical life policy generally provides that:
Suicide is never covered as a cause of death under any life policy, but the named beneficiary receives the policy's then-current accumulated cash surrender value as the carrier's exclusive obligationSuicide is covered immediately on the date the policy is delivered, with no contestable waiting period or suicide-clause carve-out applied to the face amount at the date of issue or thereafterSuicide is excluded for the entire life of the policy, with the beneficiary entitled only to a refund of all premiums paid (without interest) regardless of how many years have elapsed since policy issueIf the insured dies by suicide within the suicide period (commonly 2 years from issue), the insurer's liability is limited to a refund of premiums paid; after the period, suicide is treated as any other death
19. A client purchases an annuity today and is scheduled to receive monthly income beginning 18 months from now. This contract is properly classified as a:
Immediate annuityDeferred annuityHybrid annuityTerm-certain annuity
20. A retiree pays $250,000 in a lump sum and begins receiving monthly income one month later. This contract is best described as a:
Flexible Premium Deferred Annuity (FPDA)Flexible Premium Immediate Annuity (FPIA)Single Premium Deferred Annuity (SPDA)Single Premium Immediate Annuity (SPIA)

Want a different set? Refresh the page for 20 new questions — the full course has 500+, each with a complete explanation, plus full-length timed exam simulations and an AI tutor.