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Louisiana Life Practice Exam

20 exam-style questions drawn from the same bank as our full Louisiana Life course (Louisiana 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. Under the NAIC Life Insurance and Annuities Replacement Model Regulation (#582), at the time of application the producer and applicant must:
Submit copies of all the applicant's prior federal income tax returns for the past three filing yearsNotify the state insurance commissioner directly in writing of the proposed replacement of existing coverageSign a statement indicating whether replacement of an existing policy is involvedObtain a court order from a court of competent jurisdiction if any existing life coverage is being replaced
2. Most state insurance codes require individual life policies to contain a 'free-look' provision allowing the policyowner to return the policy for a full refund within at least:
20 days of delivery30 days of delivery5 days of delivery10 days of delivery
3. An underwriter requests an Attending Physician's Statement (APS). The APS is:
A narrative report prepared by the applicant's treating physician describing diagnoses, treatments, and prognosisA paramedical exam done in the applicant's home or office by a contracted paramedical examiner field representativeA health-history and lifestyle questionnaire completed by the applicant at the producer's office or by phoneA coded medical and non-medical summary purchased by the underwriter from the Medical Information Bureau
4. A children's term rider added to a parent's permanent life policy typically:
Terminates immediately when the first eligible child reaches age 18, regardless of remaining covered dependentsCharges a separate per-child premium for each currently named eligible insured juvenile dependentRequires individual paramedical underwriting for each child under the carrier's juvenile-rider rulesProvides a single level amount of term insurance covering all eligible children for one premium
5. If the applicant did not pay the first premium with the application, at policy delivery the producer must:
Collect the first premium AND obtain a signed statement of continued good health (or similar declaration) before coverage takes effectPhysically hand the policy contract to the policyowner and immediately leave the residence to log delivery completionHave the applicant sign a brand-new application with revised health questions before delivering the policy contractBackdate the policy to the original application date so the contract's effective date matches the medical-exam date
6. An IUL policy has a cap of 10%, a participation rate of 90%, and a floor of 0%. The chosen index returns 15% during the crediting period. What rate is credited to the cash value?
0%9%13.5%10%
7. Which of the following is a classic AML 'red flag' a life insurance producer should escalate?
Applicant pays the first annual premium by a personal check drawn from his own routinely used bank account on file with the insurer at issueApplicant names his spouse of more than ten years as the primary beneficiary and his adult children as equal contingent beneficiaries per stirpesApplicant requests carrier illustrations for several different permanent and term life-insurance products before making a final selection on the applicationApplicant insists on overpaying premium with multiple money orders just under the reporting threshold and quickly requests partial surrender
8. Under the federal Gramm-Leach-Bliley Act and its Safeguards Rule, a life insurance producer who collects nonpublic personal financial information from applicants must:
Encrypt all telephone calls with applicants end-to-end under the federal Gramm-Leach-Bliley Act's standard call-confidentiality provision applicable to nonpublic personal financial information collectionRefuse to collect any Social Security numbers from applicants under any circumstances under the federal Gramm-Leach-Bliley Safeguards Rule's strict identifier-collection prohibition for life-insurance applicationsProvide an initial and annual privacy notice and maintain a written information security program with administrative, technical, and physical safeguardsRegister the customer database with the U.S. Department of Commerce under the federal Gramm-Leach-Bliley Act's customer-database-registration provision applicable to all financial institutions handling personal information
9. An applicant pays the initial premium with the application and receives a conditional receipt. Two days later, before any underwriting is completed, the applicant dies. Under the conditional receipt, when does coverage exist?
Coverage exists immediately on the receipt date in all cases, regardless of any later underwriting finding by the carrierCoverage exists only if the applicant survives the carrier's standard underwriting period and any required medical examCoverage never exists until the policy contract is delivered to the applicant and the first premium is paid in fullCoverage exists only if the applicant would have been approved as a standard risk on the receipt date
10. An equity-indexed annuity (also called fixed indexed annuity) credits interest based on:
A fixed contractual rate guaranteed for the entire contract duration and not subject to any later carrier resetThe performance of separate account sub-accounts chosen by the owner under the contract's separate-account allocation rulesThe performance of a specified market index, subject to caps, spreads, and participation ratesThe yield on U.S. Treasury bills only, as published daily by the Federal Reserve Bank for the relevant period
11. A producer's brochure states: "Your policy is fully backed by our state's guaranty association, there is no reason to worry about choosing a financially weaker insurer." Under the NAIC guaranty association model and the NAIC Unfair Trade Practices Act, this advertisement is:
Permitted, because the statement about guaranty association backing is factually accurateProhibited, the guaranty association may not be used as an inducement to purchase insurancePermitted only on materials sent to existing policyholders rather than to new prospectsPermitted only if the brochure cites the guaranty statute and carries the prescribed disclaimer
12. Which statement best characterizes industrial (or 'home service') life insurance?
Large face amounts of $100,000 or more sold through brokerage general agents under negotiated commission overrides on each premiumSmall face amounts (typically a few thousand dollars) with weekly or monthly premiums historically collected at the insured's homeGroup coverage tied to active employment, with a master contract issued to the employer and certificates given to each eligible enrolled employeeA modern form of universal life insurance featuring index-linked cash-value crediting subject to a participation rate, cap, and 0% floor
13. Two years and one day after issue, the insurer discovers the insured materially misstated his health history on the application. Under the standard incontestability provision required in most states, the insurer may:
Rescind the policy retroactively and return all cumulative premiums paid to the insured's estate or named beneficiaryContest the policy only on grounds of nonpayment of premium (and, where applicable, fraud as the policy permits)Reduce the contract's face death benefit by a pro-rata portion equal to the actuarial value of the misstatementCancel coverage prospectively only on a date 30 days after the insurer mails the insured a written notice
14. A life insurer receives a death claim where death occurred 14 months after policy issue. The insurer suspends payment for 75 days while it conducts a documented, prompt contestable-period investigation triggered by genuine application discrepancies. Under the NAIC Unfair Claims Settlement Practices model adopted by every state, this delay is:
Per se an unfair practice, any contestable-period delay past 60 calendar days from claim filing is automatically unreasonable under the NAIC Model #900 strict-deadline contestability-claim provision regardless of investigation effortAn unfair practice, but only the smallest administrative penalty applies under the NAIC Model #900 first-offense reduced-penalty provision applicable to good-faith contestable-period delaysGenerally not an unfair practice, a documented, good-faith contestable investigation is reasonable cause for the delay and is not the kind of pattern the model targetsPer se an unfair practice, a strict 30-day investigation window applies to all life insurance contestable claims under the NAIC Model #900 contestability-period-investigation-deadline provision regardless of underwriting fact pattern
15. For 2024, what is the basic elective deferral limit for a participant under age 50 in a 401(k) plan?
$23,000$7,000$15,500$30,500
16. Which statement best describes a limited-pay whole life policy?
Coverage ends as soon as the policyowner's premium payments stop on the contractBoth premiums and coverage end at a specified age such as 65 or the contract's maturity agePremiums are paid for a limited period, but coverage continues for lifePremiums are paid in a single lump sum at issue under the §7702 single-premium permanent rule
17. The 'net premium' for a life insurance policy is best defined as the amount needed to cover:
Only the agent's commissionAll mortality, interest, and expense loading charges combined into one gross figureMortality and interest assumptions only, before loading for expensesThe cash surrender value at maturity
18. A non-qualified annuity has a cost basis of $60,000 and a current value of $100,000. The owner annuitizes and will receive 240 monthly payments of $500 ($120,000 total expected return). Under the exclusion ratio in IRC Section 72, what portion of each $500 payment is excluded from gross income?
$500$300$250$200
19. Stranger-Originated Life Insurance (STOLI) typically involves:
A standard IRC §1035 tax-free exchange in which the policyowner exchanges one in-force life contract for another life contract on the same insured without recognizing any current gainA bank loan secured by an in-force life policy's accumulated cash value used as collateral under a standard assignment of policy rights and net death benefits to the institutional lenderAn insured who funds his own coverage out of personal earnings and names his immediate family members as the primary and contingent beneficiaries on the new contract at policy issueA third-party investor who induces the insured to purchase a life policy with the intent to transfer it to the investor for profit, when the investor lacks insurable interest at issue
20. Dividends paid on a participating whole life policy are generally treated for income-tax purposes as:
A nontaxable return of premium until basis is recoveredTaxable to the policyowner only if reinvested under a paid-up-additions dividend optionA long-term capital gain at the preferential capital-gains rate under IRC §1221Taxable to the policyowner as ordinary income at the marginal federal rate when received

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