Free Idaho Life insurance exam practice test

Correct answer: B. Within 30 days after each policy anniversary

• A. Incorrect. Section 9A allows thirty days after each policy anniversary, not ten.
• B. Correct. Section 9A requires the statement within thirty (30) days after each anniversary of the policy.
• C. Incorrect. Section 9A sets thirty days after each anniversary; sixty days is not the mailing deadline.
• D. Incorrect. Section 9A runs from each policy anniversary, not the end of the calendar year, and allows thirty days.

An insurer delivering or issuing for delivery in this state a variable life insurance policy shall mail to each variable life insurance policyholder at his or her last known address the following reports: [...] Within thirty (30) days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, any optional payments allowed pursuant to Section 4E under the policy computed as of the policy anniversary date.

Correct answer: C. As a non-guaranteed element, since it is not guaranteed at issue

• A. Incorrect. Only the guaranteed minimum is guaranteed and determined at issue; the excess credit is not.
• B. Incorrect. Section 4F classifies elements by whether they are guaranteed and determined at issue, not by later crediting.
• C. Correct. Section 4F(2) defines non-guaranteed elements as premiums, benefits, values, credits or charges that are not guaranteed or not determined at issue.
• D. Incorrect. Section 4F expressly lists credits among the items that can be guaranteed or non-guaranteed elements.

(1) "Guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue. (2) "Non-guaranteed elements" means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

Correct answer: A. The money earns at least a minimum rate of interest

• A. Correct. Investor.gov states that fixed annuities guarantee the money will earn at least a minimum interest rate during the accumulation phase; the NAIC guide adds that the insurer sets the rates.
• B. Incorrect. Returns linked to a market index describe indexed annuities, not the fixed annuity guarantee.
• C. Incorrect. Returns based on chosen mutual funds describe variable annuities.
• D. Incorrect. Payments within one year describe an immediate annuity, not the fixed annuity accumulation guarantee.

Fixed annuities guarantee your money will earn at least a minimum interest rate during the accumulation phase. [...] Fixed annuities guarantee your money will earn at least a minimum interest rate [...] The insurance company sets the rates.

Correct answer: D. 5 years

• A. Incorrect. The period stated in 72(s)(1)(B) is 5 years after the holder's death, not 1 year.
• B. Incorrect. The statute sets a 5-year period, not 3 years.
• C. Incorrect. The statute requires distribution within 5 years after the holder's death, not 10 years.
• D. Correct. Under 72(s)(1)(B), if any holder dies before the annuity starting date, the entire interest must be distributed within 5 years after the holder's death.

A contract shall not be treated as an annuity contract for purposes of this title unless it provides that [...] if any holder of such contract dies before the annuity starting date, the entire interest in such contract will be distributed within 5 years after the death of such holder.

Correct answer: A. Policy value

• A. Correct. Section 3G defines policy value as the amount to which separately identified interest credits and mortality, expense, or other charges are made under a universal life policy.
• B. Incorrect. Net amount at risk is not the defined term in Section 3G.
• C. Incorrect. The face amount is the stated death benefit, not this defined amount.
• D. Incorrect. Cash surrender value is not the term the model defines for this amount.

G. "Policy value" means the amount to which separately identified interest credits and mortality, expense, or other charges are made under a universal life insurance policy.

Correct answer: A. It is subtracted from the death proceeds paid out

• A. Correct. Section 4E(3) states that any indebtedness shall be deducted from the proceeds payable on death.
• B. Incorrect. The indebtedness is not forgiven; it is deducted from the death proceeds.
• C. Incorrect. The model deducts the indebtedness from the proceeds rather than billing the beneficiary.
• D. Incorrect. The indebtedness is deducted from this policy's death proceeds.

Any indebtedness shall be deducted from the proceeds payable on death.

Correct answer: A. When the benefit carries a premium or cost-of-insurance charge

• A. Correct. Section 6C(2) requires a generic illustration if there is a premium or cost of insurance charge.
• B. Incorrect. Section 6C(2) turns on whether there is a premium or cost of insurance charge, not on the applicant's age.
• C. Incorrect. The illustration is triggered by a premium or cost of insurance charge, and it is given to the applicant.
• D. Incorrect. Section 6C(2) makes the illustration required when there is a premium or cost of insurance charge, without a request.

If there is a premium or cost of insurance charge, the insurer shall give the applicant a generic illustration numerically demonstrating any effect of the payment of a benefit on the policy's cash value, accumulation account, death benefit, premium, policy loans and policy liens.

Correct answer: D. One year

• A. Incorrect. Section 1970(b) uses a one-year period, not 90 days.
• B. Incorrect. Section 1970(b) uses a one-year period, not six months.
• C. Incorrect. Section 1970(b) uses a one-year period, not three years.
• D. Correct. Under 1970(b), if the person does not make claim within one year after the member's death, payment may be made in the order of precedence as if that person had predeceased the member.

If any person otherwise entitled to payment under this section does not make claim therefor within one year after the death of the member or former member, or if payment to such person within that period is prohibited by Federal statute or regulation, payment may be made in the order of precedence as if such person had predeceased the member or former member, and any such payment shall be a bar to recovery by any other person.

Correct answer: C. $30,000

• A. Incorrect. $20,000 is only 50 percent; the model requires at least 75 percent to be available.
• B. Incorrect. $36,000 is 90 percent; the model's minimum is 75 percent, or $30,000.
• C. Correct. Section 4E(1) requires that at least 75 percent of the cash surrender value may be borrowed, and 75 percent of $40,000 is $30,000.
• D. Incorrect. The model sets a minimum of 75 percent of the cash surrender value, not 100 percent.

At least seventy-five percent (75%) of the policy's cash surrender value may be borrowed.

Correct answer: A. A single lump sum payment of the benefit

• A. Correct. Section 5A requires that contract payment options include the option to take the benefit as a lump sum.
• B. Incorrect. Section 5B permits no restrictions on the use of the proceeds, so payment to providers is not the required option.
• C. Incorrect. Section 5A says the benefit shall not be made available as an annuity contingent on the life of the insured.
• D. Incorrect. Section 5A requires a lump sum option; it does not require installments.

Lump Sum Settlement Option Required. Contract payment options shall include the option to take the benefit as a lump sum. The benefit shall not be made available as an annuity contingent upon the life of the insured.

Correct answer: B. The 1-year period before the request

• A. Incorrect. The 2-year period applies to reports procured for employment purposes.
• B. Correct. For any purpose other than employment, the agency must identify each person that procured a report during the 1-year period preceding the request.
• C. Incorrect. The period for non-employment purposes is 1 year, not 6 months.
• D. Incorrect. 1681g(a)(3)(A) uses 1 year for non-employment purposes, not 7 years.

Every consumer reporting agency shall, upon request, and subject to section 1681h(a)(1) of this title, clearly and accurately disclose to the consumer: [...] Identification of each person (including each end-user identified under section 1681e(e)(1) of this title) that procured a consumer report [...] for employment purposes, during the 2-year period preceding the date on which the request is made; or [...] for any other purpose, during the 1-year period preceding the date on which the request is made.

Correct answer: D. When the customer relationship begins and at least once a year after that

• A. Incorrect. The disclosure is tied to establishing the customer relationship and to an annual schedule, not to claims or requests.
• B. Incorrect. The statute does not use a 30-day post-issue deadline or a renewal trigger; it requires notice when the relationship is established and at least annually.
• C. Incorrect. The required timing is at the start of the relationship and at least annually, not before each sharing with an affiliate.
• D. Correct. Section 6803(a) requires the disclosure at the time a customer relationship is established and not less than annually while the relationship continues.

At the time of establishing a customer relationship with a consumer and not less than annually during the continuation of such relationship, a financial institution shall provide a clear and conspicuous disclosure to such consumer, in writing or in electronic form or other form permitted by the regulations prescribed under section 6804 of this title, of such financial institution's policies and practices with respect to

Correct answer: A. Guard against unauthorized use of records that may badly harm customers

• A. Correct. 6801(b)(3) lists protection against unauthorized access to or use of records or information that could result in substantial harm or inconvenience to any customer.
• B. Incorrect. Opt-out rights are not among the safeguard purposes listed in 6801(b).
• C. Incorrect. Privacy notices are a separate GLBA requirement, not one of the 6801(b) safeguard goals.
• D. Incorrect. 6801(b) does not address fees for copies of records.

shall establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguards [...] to insure the security and confidentiality of customer records and information; [...] to protect against any anticipated threats or hazards to the security or integrity of such records; and [...] to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer.

Correct answer: A. A question on whether the applicant plans to replace existing coverage

• A. Correct. For direct response applications, the insurer must require a statement asking whether the applicant intends to replace, discontinue or change an existing policy or contract.
• B. Incorrect. Section 7A requires a statement about intent to replace, not a signed comparison of policy values.
• C. Incorrect. The model does not require copies of every existing policy with the application.
• D. Incorrect. Section 7A does not require a letter from the existing insurer.

In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract.

Correct answer: A. No, as he separated from service after reaching age 55

• A. Correct. The additional tax does not apply to a distribution made to an employee after separation from service after attainment of age 55.
• B. Incorrect. Age 59½ is one exception, but the separation-after-55 exception also applies to Gil.
• C. Incorrect. 72(t)(2)(A) lists age-based exceptions that apply to qualified plans, including after separation at 55.
• D. Incorrect. 401(k) distributions are generally subject to the additional tax unless an exception applies.

If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974(c)), the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income. [...] Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions: [...] made to an employee after separation from service after attainment of age 55,

Correct answer: C. $21,000

• A. Incorrect. That total uses the 2025 figures ($16,500 plus $3,500); for 2026 the limits are $17,000 plus $4,000.
• B. Incorrect. $17,000 is the 2026 SIMPLE limit before the $4,000 catch-up for those aged 50 and over.
• C. Correct. For 2026 the SIMPLE limit is $17,000 and the catch-up for employees aged 50 and over in most SIMPLE plans is $4,000, for $21,000 in total.
• D. Incorrect. $25,000 adds the 401(k)-type $8,000 catch-up; the 2026 SIMPLE catch-up is $4,000.

The amount individuals can generally contribute to their SIMPLE retirement accounts is increased to $17,000, up from $16,500 for 2025. [...] The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most SIMPLE plans is increased to $4,000, up from $3,500 for 2025.

Correct answer: D. $800

• A. Incorrect. No exception applies, and Lou has not reached age 59½, so the 10 percent increase applies.
• B. Incorrect. $1,600 would be 20 percent; 72(q)(1) uses 10 percent of the includible portion.
• C. Incorrect. $2,000 would be 25 percent; the additional tax is 10 percent of the includible portion.
• D. Correct. 72(q)(1) increases the tax by 10 percent of the portion includible in gross income, and 10 percent of $8,000 is $800. The age 59½ exception in 72(q)(2)(A) does not apply at age 52.

If any taxpayer receives any amount under an annuity contract, the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income. [...] Paragraph (1) shall not apply to any distribution [...] made on or after the date on which the taxpayer attains age 59½,

Correct answer: B. Five years

• A. Incorrect. The statute requires at least five years, not three.
• B. Correct. Idaho Code 41-202(3)(b) requires at least five years of practical experience in one or more of the regulated types of insurance business, or other adequate professional or business experience.
• C. Incorrect. Seven years is more than the five years the statute sets.
• D. Incorrect. Ten years is not the figure in 41-202(3)(b); it is five years.

(3) The governor shall not appoint as director any individual, and no individual shall hold the office of director, who is not qualified therefor as follows: [...] (b) Must have had at least five (5) years’ practical experience in one or more of the types of insurance business subject to regulation by the director, or have had other professional or business experience reasonably adequate in character and scope to equip him to discharge the duties and fulfill the responsibilities of the office of director.

Correct answer: C. No, servicing those in-force policies is an exception

• A. Incorrect. The statute creates an exception for this exact situation.
• B. Incorrect. No one year condition appears in 41-306(5).
• C. Correct. Idaho Code 41-306(5) exempts the continuation and servicing of life or disability policies or annuities in force for Idaho residents when the insurer has withdrawn and is not transacting new insurance.
• D. Incorrect. The statute does not require a producer to do the servicing.

41-306. Exceptions to certificate of authority requirement. A certificate of authority and application therefor pursuant to section 41-319, Idaho Code, shall not be required of an insurer with respect to the following: [...] (5) The continuation and servicing of life insurance or disability insurance policies or annuity contracts remaining in force as to residents of this state if the insurer has withdrawn from the state and is not transacting new insurance therein.

Correct answer: B. Reinstate with no exam; pay a penalty equal to twice the unpaid fee

• A. Incorrect. The penalty is double the unpaid renewal fee, not a flat $50.
• B. Correct. Idaho Code 41-1008(3) allows reinstatement within twelve months without an exam, with a penalty of double the unpaid renewal fee for a fee received after the due date.
• C. Incorrect. Within twelve months no exam is needed in this case.
• D. Incorrect. Reinstatement within twelve months does not require a new exam or application here.

(3) An individual insurance producer who allows his or her license to lapse may, within twelve (12) months from the due date of the renewal fee, reinstate the same license without passing a written examination unless the licensee would otherwise be required to retest under section 41-1013(7), Idaho Code. However, a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.

Correct answer: C. An insurer officer's certification that the forms meet Idaho law

• A. Incorrect. No producer recommendation is part of the filing.
• B. Incorrect. The certification required concerns compliance with Idaho law, by an officer.
• C. Correct. 41-1812(2) requires a certification by an officer of the insurer that each policy, form, endorsement or rider complies with Idaho law.
• D. Incorrect. Rating bureau approval is not required by subsection (2).

(2) Every such filing shall be submitted with a certification, in such form as may be determined by the director, by an officer of the insurer that each policy, form, endorsement, or rider in use complies with Idaho law.

Correct answer: C. Indemnity for loan payments that come due while the debtor is disabled

• A. Incorrect. Early payoff is not what the coverage insures.
• B. Incorrect. The benefit is tied to payments on the specific loan, not wages to retirement.
• C. Correct. 41-2304(2) defines credit disability insurance as indemnity for payments becoming due on a specific loan while the debtor is disabled.
• D. Incorrect. It is not medical expense coverage for family members.

41-2304. Definitions. For the purposes of this chapter: (1) "Credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction. (2) "Credit disability insurance" means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.

Correct answer: A. One month, with a minimum of 30 days

• A. Correct. The annuity grace period is one month, but not less than 30 days.
• B. Incorrect. Thirty-one days is the group life grace period (41-2011).
• C. Incorrect. The annuity grace period is one month, but not less than 30 days.
• D. Incorrect. The statute sets one month, but not less than 30 days.

In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that there shall be a period of grace of one month, but not less than thirty (30) days, within which any stipulated payment to the insurer falling due after the first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be specified in the contract but not exceeding six per cent (6%) per annum for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in full force; but in case a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement.

Correct answer: B. The amount the premium paid would have bought at the correct age

• A. Incorrect. The misstatement of age provision adjusts the benefit to the correct age.
• B. Correct. The amount payable is what the premium would have purchased at the correct age or ages.
• C. Incorrect. The statute adjusts the benefit; it does not limit the claim to a refund.
• D. Incorrect. The statute adjusts the benefit to what the premium would have purchased.

41-1907. Misstatement of age. There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages.

Correct answer: A. Two years

• A. Correct. Settling before issuance or within a two-year period from the issue date is a violation unless a listed condition is met.
• B. Incorrect. The statute uses a two-year period.
• C. Incorrect. The statute uses a two-year period.
• D. Incorrect. The statute uses a two-year period.

(1) It is a violation of the provisions of sections 41-1950 through 41-1965, Idaho Code, for any person to enter into a life settlement contract at any time prior to the issuance of a policy which is the subject of a life settlement contract or within a two (2) year period commencing with the date of issuance of the insurance policy or certificate unless the owner certifies to the life settlement provider that one (1) or more of the following conditions have been met within the two (2) year period: