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Washington Life Practice Exam

20 exam-style questions drawn from the same bank as our full Washington Life course (Washington 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. An insured carries a $200,000 whole life policy with an ADB rider equal to the face amount. The insured is severely injured in an auto accident, lingers in a coma for 100 days, and then dies from those injuries. How is the claim settled under the typical ADB clause?
$400,000, both base and ADB are paid because death resulted from the accident$600,000, base, ADB, and a triple-indemnity bonus for catastrophic injury$200,000, base only, because the 90-day causation window in most ADB riders has elapsed$200,000, base only, because coma is treated as a sickness, not an accident
2. Distributing a deceased beneficiary's share to that beneficiary's descendants is
Facility of paymentPro rataPer capitaPer stirpes
3. Which payout option pays a fixed dollar amount each period until the principal and interest are exhausted, regardless of how long the annuitant lives?
Joint and survivorFixed-amount installmentLife onlyLife with period certain
4. A 60-year-old widow elects the 'life income only' (straight life) settlement option for a $500,000 death benefit. She dies after receiving 14 months of payments. What does the insurer pay to her estate or any contingent payee?
A lump-sum payment equal to the original face amount minus the total monthly payments already made to the widow.Nothing, straight life income terminates at the annuitant's death with no refund.Five years of guaranteed monthly payments paid to a contingent payee named on the settlement option election form.The remaining unpaid principal balance, prorated against the widow's actual age at the date of death.
5. A carrier is designing a single-premium whole life policy aimed at affluent buyers who want to load as much premium as possible into a permanent contract on day one. Which §7702 qualification approach would the carrier most logically choose, and why?
The CVAT, because it imposes no separate cumulative-premium limit and instead tests only the cash-value-to-NSP ratio.The GPT, because it imposes no cumulative-premium ceiling on the contract's lifetime funding under the guideline-premium and corridor structureNeither, single-premium permanent life contracts are categorically exempt from §7702 qualification testing for life-insurance statusThe §7702A 7-pay test, because single-premium permanent life contracts are categorically exempt from MEC classification under the safe harbor
6. The Insuring Clause of a life insurance policy:
Defines how participating-policy dividends will be paid each year and which of the five standard dividend options is in effect by default upon issueAuthorizes the producer to bind permanent coverage on the spot when an applicant initials the application and remits the first modal premium with the formSets out the insurer's basic promise to pay the face amount upon death of the insured, identifies the parties, and is generally signed by an officer of the companyItemizes the policy's standard and specially endorsed exclusions, including the war, suicide, aviation, and hazardous-occupation provisions required by state code
7. A table showing expected deaths at each age is a
Actuarial chartRate tableMorbidity tableMortality table
8. An indirect rollover from an employer plan has mandatory federal withholding of
25%10%20%15%
9. Replacing policies with the same insurer mainly to earn new commissions is
ChurningTwistingCoercionRebating
10. 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 effectBackdate the policy to the original application date so the contract's effective date matches the medical-exam datePhysically 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 contract
11. Which statement best characterizes industrial (or 'home service') life insurance?
A modern form of universal life insurance featuring index-linked cash-value crediting subject to a participation rate, cap, and 0% floorSmall 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 employeeLarge face amounts of $100,000 or more sold through brokerage general agents under negotiated commission overrides on each premium
12. Transferring all ownership rights in a policy to another party is an
Beneficiary changeReinstatementAbsolute assignmentCollateral assignment
13. The time after a missed premium during which coverage stays in force is the
Free lookReinstatement periodWaiting periodGrace period
14. An applicant materially misrepresents his smoking status on his life application. The policy is issued July 1, 2024. He dies of lung cancer on August 1, 2026, 25 months after issue. The insurer discovers the misrepresentation during routine claim review. What is the most likely outcome?
The insurer denies the claim outright as intentional fraud committed on the original life-insurance application, and treats the entire face amount as forfeited at the date of deathThe insurer pays the full face amount because the contestable period has expired and the cause of death is not specifically excludedThe insurer pays only the prorated face amount the actual smoker-class premium paid would have purchased at the insured's correct underwriting class at issueThe insurer rescinds the policy retroactively, refunds all premiums to the named beneficiary, and pays no death benefit on the basis of the smoker misstatement on the original application
15. Two 35-year-old male nonsmokers apply for $250,000 of 20-year term. Applicant A receives a Preferred Plus rating, while Applicant B is rated Standard with a Table 4 substandard table rating. Which factor most directly explains the difference in their gross premiums?
Different mortality assumptions reflecting risk classificationDifferent assumed interest rates because they live in different ZIP codesDifferent expense loadings because of different sales channelsDifferent commission schedules paid to their agents
16. How does Modified Endowment Contract status affect the income-tax treatment of the death benefit paid to the named beneficiary at the insured's death?
Only the gain over the policy's investment-in-the-contract basis is taxable as ordinary income; the remaining basis portion is excluded under §101(a)MEC status converts the death benefit from §101(a)-excluded proceeds to long-term capital gain at preferential capital-gains rates under §1221The death benefit remains income-tax-free under IRC §101(a), MEC status changes living-benefit taxation, not death-benefit treatment.The death benefit paid to the named beneficiary becomes fully taxable as ordinary income at the marginal federal rate on the receipt year's return
17. A plan promising a set retirement benefit based on salary and service is a
Defined benefit planCash balance accountDefined contribution planProfit-sharing plan
18. Premiums for individual life insurance are generally
Deductible over $5,000Fully deductibleNot tax deductiblePartly deductible
19. An employee leaves her job and wants to keep her group term life coverage. What is her statutory right under typical state group life laws?
She may continue the existing group term policy at the original group rate indefinitely under federal portability rulesShe has no continuation rights once employment ends, and the certificate lapses without a refund of her share of premiums paidShe may convert to an individual permanent policy without evidence of insurability within 31 days of terminationShe may transfer the master-policy certificate directly to her new employer's group plan upon written request to the insurer
20. A non-natural entity such as a corporation owns a deferred annuity. How is the inside buildup taxed during the accumulation phase?
Tax-deferred, the same as a contract owned by an individualTaxed as long-term capital gainsCurrently taxable as ordinary income each yearTax-free until annuitization

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