Idaho credit insurance, guaranty association and assignment practice questions
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Section II of the Idaho specific outline, Idaho statutes, rules and regulations common to life and health/disability insurance only, has 3 of the 25 Idaho questions on both the Life and the A&H exam. It covers credit life and disability insurance, the Life and Health Insurance Guaranty Association Act, and assignment. [1] This page sets out the Idaho Code and the Department's credit insurance rule behind those topics, with 10 practice questions.
Credit life and credit disability (Idaho Code chapter 23)
- Scope: the chapter covers life and disability insurance sold in connection with loans or other credit transactions, except transactions of more than fifteen years and isolated transactions not tied to a plan for insuring the creditor's debtors. [2]
- Definitions: credit life insurance is insurance on the life of a debtor in connection with a specific loan or credit transaction. Credit disability insurance pays the payments that come due while the debtor is disabled as defined in the policy. [3]
- Form: credit life is issued only on the term plan, as individual policies to debtors or group policies to creditors. [4]
- Amount: credit life may not exceed the initial indebtedness, and on a loan repaid in substantially equal installments it may not exceed the scheduled or actual unpaid balance, whichever is greater. [5]
- Delivery: the debtor must receive an individual policy or a group certificate. [6]
- Refunds: if the insurance ends before the debt's scheduled maturity, any refund of what the debtor paid must be paid or credited promptly. [7]
- Choice of insurer: when credit insurance is required as security for a debt, the debtor may, on request, use existing policies they own or control, or buy the coverage from any insurer authorized in Idaho. [8]
The Department's credit insurance rule adds that a credit life policy using the standard rates may exclude only suicide within six months of the debt, and that benefits are reasonable in relation to premium if the expected loss ratio is at least fifty percent. [9]
The guaranty association (Idaho Code chapter 43)
- Purpose: to protect covered persons, within limits, when a member insurer that issued their life, health or annuity contracts becomes impaired or insolvent. Member insurers are subject to assessment to fund it. [10]
- Membership: all member insurers must remain members as a condition of their authority to do business in Idaho. The association keeps three accounts: life insurance, health insurance and annuity. [11]
- Not covered: any portion of a policy not guaranteed by the insurer, or under which the owner bears the risk. [12]
- Limits per life: $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and withdrawal values; $250,000 in present value of annuity benefits; $500,000 for major medical insurance; and an overall aggregate of $300,000 per life except for major medical, where the cap is $500,000. [12]
- Advertising: no person may use the existence of the guaranty association to sell insurance. [13]
Assignment (Idaho Code 41-1826, 41-2025)
A policy may be assignable or not, as its terms provide. If the insured or owner can change the beneficiary alone, the policy may be assigned by pledge or transfer of title signed by the insured or owner and delivered to the insurer. [14] A person insured under a group life policy may assign the incidents of ownership, including the conversion privilege and the right to name a beneficiary. [15]
Practice questions
1. A loan runs 18 years and includes credit life. Does Idaho's credit insurance chapter apply?
A. Yes, always
B. No, transactions of more than fifteen years are outside the chapter
C. Only if the debtor is over 65
D. Only for group policies
Answer: B. (Idaho Code 41-2303) [2]
2. On what plan must credit life insurance be issued?
Answer: The term plan. (Idaho Code 41-2305) [4]
3. What is the most credit life insurance allowed on a new loan?
Answer: The initial indebtedness. (Idaho Code 41-2306(1)(a)) [5]
4. A lender requires credit life on a loan. What option does the borrower have?
Answer: To furnish the coverage through existing policies they own or control, or through any authorized insurer, on request to the creditor. (Idaho Code 41-2313) [8]
5. The loan is paid off early. What happens to the credit insurance premium the debtor paid?
Answer: Any refund must be paid or credited promptly, using the refund formula filed with the director. (Idaho Code 41-2310(2)) [7]
6. What is the purpose of the Idaho Life and Health Insurance Guaranty Association?
Answer: To protect covered persons, within limits, when a member insurer becomes impaired or insolvent. (Idaho Code 41-4302) [10]
7. What is the most the association covers in life insurance death benefits for one life?
Answer: $300,000. (Idaho Code 41-4303(3)(b)(i)) [12]
8. What is the limit for the present value of annuity benefits?
Answer: $250,000. (41-4303(3)(b)(iv)) [12]
9. An agent tells a client, "Don't worry, the guaranty association backs this policy." Is that allowed?
Answer: No. Using the existence of the guaranty association to sell insurance is prohibited. (Idaho Code 41-4319) [13]
10. Can a person insured under group life assign the right to convert to an individual policy?
Answer: Yes. Incidents of ownership, including the conversion privilege, may be assigned. (Idaho Code 41-2025) [15]
Study tips
- Credit insurance numbers: fifteen year scope limit, term plan only, no more than the initial debt.
- Guaranty association numbers: $300,000 death benefit, $100,000 cash value, $250,000 annuity, $500,000 major medical.
- Never mention the guaranty association in a sales talk.
Practice more with the free Idaho insurance law practice test.
Prep Retention is independent and is not affiliated with Pearson VUE or the state.
Sources
Laws and exam documents quoted as of October 2026.
- Pearson VUE, Idaho content outlines 121301 (effective July 31, 2025): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/121301.pdf
- Idaho Code 41-2303: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2303/
- Idaho Code 41-2304: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2304/
- Idaho Code 41-2305: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2305/
- Idaho Code 41-2306: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2306/
- Idaho Code 41-2308: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2308/
- Idaho Code 41-2310: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2310/
- Idaho Code 41-2313: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH23/SECT41-2313/
- IDAPA 18.03.05: https://adminrules.idaho.gov/rules/current/18/180305.pdf
- Idaho Code 41-4302: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH43/SECT41-4302/
- Idaho Code 41-4306: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH43/SECT41-4306/
- Idaho Code 41-4303: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH43/SECT41-4303/
- Idaho Code 41-4319: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH43/SECT41-4319/
- Idaho Code 41-1826: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH18/SECT41-1826/
- Idaho Code 41-2025: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH20/SECT41-2025/