Free practice exam · no signup needed

Oklahoma Life Practice Exam

20 exam-style questions drawn from the same bank as our full Oklahoma Life course (Oklahoma 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 universal life policy with Death Benefit Option B (Increasing) pays which amount at the insured's death?
The greater of the face amount or the cash valueThe face amount onlyThe cash value plus accrued interestThe face amount plus the accumulated cash value
2. Dividends paid on a participating life insurance policy are, for federal income tax purposes, generally treated as:
Tax-free indefinitely, regardless of the cumulative amount the owner receives over the policy lifetimeLong-term capital gains taxable at preferential federal capital-gains rates when distributed in cashA nontaxable return of premium until cumulative dividends exceed the owner's cost basis in the contractFully taxable to the owner as ordinary income at the marginal rate when paid each policy year
3. An insured with a $500,000 policy and a chronic illness ADB rider elects to accelerate $200,000 over two years for chronic-care needs. The policy's cash value at the time of acceleration is $40,000, and total premiums paid are $35,000. How are the accelerated payments most likely treated for federal income tax?
Tax-free only up to $40,000, the policy's cash-value amount at the time of acceleration, and ordinary income thereafterFully taxable as ordinary income because the accelerated amounts received by the insured exceed cumulative premiums paidFully tax-free as a §101(g) chronic-illness acceleration, subject to per-diem limits set annually by the IRSTaxable as a partial surrender to the extent the accelerated payments exceed the policy's investment-in-the-contract basis
4. A fixed annuity's assets are held in the insurer's
Escrow accountSeparate accountTrust accountGeneral account
5. A table showing expected deaths at each age is a
Actuarial chartRate tableMorbidity tableMortality table
6. Statements made by an applicant on a life insurance application are, under typical state insurance law, treated as which of the following?
Implied conditions of the contract, enforceable as conditions precedent to coverage at issueWarranties that must be literally and absolutely true, regardless of the applicant's knowledgeConcealments that are presumed fraudulent under the NAIC Unfair Trade Practices Act provisionsRepresentations that must be true to the best of the applicant's knowledge and belief
7. In which type of qualified plan does the EMPLOYER bear the investment risk of the plan's assets?
Roth IRA.Defined benefit (DB) pension plan.Defined contribution (DC) plan, such as a 401(k).SEP IRA.
8. 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)
9. The earliest age to start reduced Social Security retirement benefits is
6259 1/26065
10. Under IRC §79, the cost of how much employer-paid group term life is excluded from the employee's taxable income?
$250,000$50,000$25,000$100,000
11. An institutional life-settlement investor purchases a $1,000,000 policy from an insured for $200,000, pays $50,000 of subsequent premiums, and ultimately collects the $1,000,000 death benefit. The investor is a stranger to the insured. How much of the death benefit is taxable to the investor under §101(a)(2) and Rev. Rul. 2009-13?
$200,000, only the institutional buyer's original purchase price paid to the insured is recoverable as tax-free return of basis; the remaining $800,000 is taxable$750,000, death benefit ($1,000,000) minus the buyer's basis (consideration $200,000 plus subsequent premiums $50,000).$1,000,000, the entire death benefit is fully taxable as ordinary income to the institutional buyer because the buyer has no investment-in-the-contract basisNothing, the §101(a) income-tax exclusion still applies to the entire death benefit because the proceeds are paid by the carrier 'by reason of death of the insured'
12. An insurer's expense assumption is built into the gross premium primarily to recover which categories of cost?
Only the soliciting producer's first-year commission and contract issue feeFederal income taxes paid by policyowners on annual dividends and inside buildupThe cost of yearly renewable term reinsurance ceded to a reinsurer onlyAcquisition costs, ongoing administration, and premium taxes
13. An owner exchanges Policy A (basis $30,000, cash value $50,000) for Policy B plus a $10,000 cash distribution paid directly to the owner from the surrendering carrier. Which statement correctly describes the federal-tax result?
The $10,000 cash distribution received outside of the exchange is taxed as long-term capital gain at preferential federal capital-gains rates because the original surrendered life-insurance policy was held by the policyowner for substantially longer than one full calendar year before the §1035 exchange to the new policyThe entire transaction is fully tax-free under §1035 because the receiving contract is qualifying property and the policyowner's stated intent was to complete a tax-free exchange of his original whole life policy on his own measuring life under §1035 nonrecognition treatment for new life contractsThe $10,000 cash is 'boot,' and gain is recognized to the lesser of the boot received ($10,000) or the gain realized ($20,000), so $10,000 of ordinary income; the remainder of the gain stays deferred in Policy B.The entire $20,000 of gain is recognized as ordinary income on the policyowner's return for the year of the exchange; partial-§1035 treatment is categorically unavailable to the policyowner whenever any amount of boot is received outside of the exchange, even if the boot is far smaller than the gain realized
14. Group life where the employer pays the entire premium is
VoluntaryContributorySupplementalNoncontributory
15. On a credit life policy, the beneficiary is the
Borrower's estateBorrower's spouseInsurerCreditor
16. A document summarizing a policy's key features and costs is the
IllustrationPolicy summaryBuyer's guideProspectus
17. The Medical Information Bureau (MIB) primarily exists to:
Set standard, preferred, and substandard premium rate tables for individual life and annuity contractsProvide direct primary medical care to life-insurance applicants during the underwriting paramedical exam phaseLicense individual producers to sell life insurance and annuities under each state insurance department's authorityDetect fraud and material omissions by sharing coded medical and non-medical information among member insurers
18. A policy combining whole life on one parent with term on the spouse and children is a
Group policyFamily policyJoint life policySurvivorship policy
19. Three shareholders of a closely held C-corporation own life-insurance policies on each other to fund a cross-purchase buy-sell agreement. When one shareholder retires, the remaining shareholders agree to buy his policies on each other for fair value. Why is this transaction a classic transfer-for-value trap?
Because policies used in a closely held C-corporation cross-purchase buy-sell arrangement are categorically always classified as MECs from issue under §7702A regardless of the contract's actual premium-funding patternBecause cross-purchase buy-sell life-insurance arrangements among shareholders of a closely held C-corporation are categorically forbidden by §101(a)(2), regardless of how the cross-purchase is structured between the participating shareholdersBecause the transfer between co-shareholders is for valuable consideration and shareholder-to-shareholder is NOT one of the five safe-harbor categories, so the death proceeds become taxable above basis.Because corporate-owned life insurance is uniformly disallowed by IRC §264 and all the related employer-owned-life-insurance rules applicable to closely held shareholder-funded buy-sell arrangements among co-shareholders
20. A 60-year-old policyowner takes a $25,000 loan against her non-MEC whole-life policy that has $40,000 of gain. How is the loan taxed?
Subject to the 10% additional federal tax on early distributions because she is under age 65 and no §72(t) exception applies to her policy loanHalf taxable as ordinary income and the other half treated as return of basis under the IRC §72(b) blended FIFO-LIFO pro-rata recovery ruleFully taxable to the policyowner as ordinary income at the marginal federal rate because the contract has gain inside it under the §72(e) LIFO ordering ruleNot currently taxable, a loan against a non-MEC life-insurance contract is treated as debt, not a distribution, while the policy remains in force.

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.