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Pennsylvania life insurance basics practice questions

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Section 3.0 Life Insurance Basics is 20% of the Pennsylvania Life exam (Series 16-01). [1] The outline lists insurable interest, personal and business uses of life insurance, how to determine the amount needed, viatical and life settlements, classes of policies, premium factors, producer responsibilities (sales presentations, advertising, the guaranty association, disclosure statements, illustrations, surrender comparison index), and field and company underwriting. [1] This page covers the parts Pennsylvania law and the Insurance Department address, with 10 practice questions.

Key rules

Practice questions

1. A person wants to buy a policy on a neighbor's life and name themselves beneficiary. What does Pennsylvania law require?
A. Nothing, if premiums are paid
B. The beneficiary must have an insurable interest in the insured's life
C. Only a medical exam
D. Approval from the neighbor's employer

Answer: B. (Insurance Company Law, section 412) [2]

2. An employer wants to insure key employees without each signing an application. What must it do?
Answer: Tell the employees in writing that it intends to buy the coverage and get their prior written consent. (section 412) [2]

3. When must the life insurance disclosure statement be given?
Answer: No later than the time the applicant signs the application form. (31 Pa. Code 83.4) [4]

4. Name two kinds of insurance the disclosure statement rule does not apply to.
Answer: Examples include annuities, group life, credit life, life insurance of $1,000 or less, and variable life. (31 Pa. Code 83.2(b)) [6]

5. When is the surrender comparison index provided?
Answer: On delivery of the policy, or earlier if requested. (31 Pa. Code 83.3(a)(9)) [3]

6. What does a surrender comparison index help a buyer compare, according to the Insurance Department?
Answer: Costs over a 10 or 20 year period, assuming the policy is surrendered for its cash value at the end. [7]

7. Can an agent use the existence of the guaranty association to sell a policy?
Answer: No. Advertising or statements that use the existence of the association for sales, solicitation or inducement are prohibited. (Insurance Company Law, section 1717) [8]

8. Before recommending variable life, what must the agent have?
Answer: Reasonable grounds to believe the purchase is suitable, based on information about the applicant's insurance and investment objectives, finances and needs. (31 Pa. Code 82.14(b)) [9]

9. What must a person file before selling variable life insurance in Pennsylvania?
Answer: Evidence that they hold any license or authorization required to sell variable life, and they must be an agent. (31 Pa. Code 82.81(a)) [10]

10. What does the Insurance Department suggest when deciding how much life insurance to buy?
Answer: Figure out what financial resources your dependents would have, including current insurance and other assets, compare that with their income needs and final costs, and buy coverage that comes as close to making up the difference as you can afford. [7]

Penalty to know

A person who issues a policy in violation of section 353 is guilty of a misdemeanor and faces a fine of not more than $500. [5]

Study tips

Practice more with the free Pennsylvania Life practice test.

Prep Retention is independent and is not affiliated with PSI or the state.

Sources

  1. PSI, Pennsylvania Life outline, Series 16-01 (effective 3/1/2026): https://proctor2.psionline.com/media/programs/PAINS/16-01xx.pdf
  2. Insurance Company Law of 1921 (Act of May 17, 1921, P.L. 682, No. 284), Section 412: https://www.palegis.us/statutes/unconsolidated/law-information/view-statute?iFrame=true&txtType=HTM&SessYr=1921&SessInd=0&ActNum=0284
  3. 31 Pa. Code 83.3: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter83/s83.3.html&d=reduce
  4. 31 Pa. Code 83.4: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter83/s83.4.html&d=reduce
  5. Insurance Company Law of 1921, Section 353: same URL as source 2
  6. 31 Pa. Code 83.2: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter83/s83.2.html&d=reduce
  7. Pennsylvania Insurance Department, A Consumer's Guide to Life Insurance: https://www.pa.gov/content/dam/copapwp-pagov/en/insurance/documents/coverage/documents/life-insurance/life.pdf
  8. Insurance Company Law of 1921, Section 1717: same URL as source 2
  9. 31 Pa. Code 82.14: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter82/s82.14.html&d=reduce
  10. 31 Pa. Code 82.81: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter82/s82.81.html&d=reduce

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