Free Nevada life insurance practice test with twenty questions.

Answer: A. Universal life

Universal life is flexible-premium, adjustable-death-benefit insurance whose cash value earns a current interest rate with a guaranteed minimum floor. Variable life ties returns to subaccounts, not a declared interest rate. Whole life has fixed premiums and a fixed death benefit. Level term has no cash value and no flexibility.

Types of Policies - universal life

Answer: B. Fixed period

The fixed period option pays equal installments over a set number of years until the proceeds and interest are used up. Life income pays for the beneficiary's lifetime, not a fixed span. Interest only pays just the earnings while the principal stays with the insurer. Lump sum pays everything at once, not in installments.

Life provisions and options: settlement options (outline concept)

Answer: A. At the time the application is taken

For life insurance, insurable interest must exist at the time the policy is issued, not at the time of loss. This is different from property insurance. It does not need to continue until death, so choice B is wrong. It does not exist at just any point during the term, so choice C is wrong. Choice D confuses claim timing with the moment interest must be present.

Life insurance insurable interest concept (application/underwriting outline)

Answer: A. To match the recommended coverage to the client's actual financial needs and ensure suitability

A needs analysis identifies the client's real financial obligations and goals so the recommendation is suitable and appropriate. It is not meant to inflate premiums, and it exists to protect the client, not to earn the producer a bonus. It also does not replace or bypass the insurer's underwriting, which still happens separately.

Retirement and Other Insurance Concepts: needs analysis and suitability

Answer: B. Twisting, which is misrepresenting a policy to induce a replacement

Twisting, which is using misrepresentation to persuade someone to drop one policy and buy another, is a prohibited unfair trade practice. Accurately explaining benefits, making suitable recommendations, and disclosing the free look are all proper conduct, not violations.

NRS 686A (unfair trade practices; twisting)

Answer: B. The right to convert to an individual policy without proving insurability

Nevada group life law provides a conversion privilege allowing a terminated member to convert to an individual policy without evidence of insurability, usually within a set number of days. Suing the employer is not the remedy, free continued group coverage is not required, and coverage is not automatically doubled on conversion.

Nevada group life conversion provisions (NRS Chapter 688B), tested as a concept

Answer: B. A written notice regarding replacement and required disclosures

In a replacement, the producer must provide the applicant a written replacement notice and required disclosures so the consumer understands the consequences. Providing only the policy with no paperwork violates the rules, so that is wrong. No cash payment is required from the producer, so that is wrong. The producer cannot guarantee the old insurer's response, so that is wrong.

NAC/NRS Nevada replacement disclosure requirements

Answer: B. It provides coverage only for a specified period and pays only if death occurs during that period

Term life covers a set period and pays a death benefit only if the insured dies during that term; it is pure protection with no savings element. Cash value and policy loans are features of permanent insurance, not term. Dividends come from participating whole life policies. Level premiums for life describe whole life, not most term policies.

Types of Policies - term life

Answer: B. Revocable beneficiary designation

A revocable beneficiary designation lets the policyowner change the beneficiary at any time without that beneficiary's consent. An irrevocable designation cannot be changed without the beneficiary's permission, so it is wrong. The assignment provision transfers ownership rights, not beneficiary status. The incontestability clause limits when the insurer can contest a claim, not who gets paid.

Life provisions and options: beneficiaries (outline concept)

Answer: A. To prevent policies from being purchased for investors who have no insurable interest in the insured

STOLI rules stop arrangements where a stranger or investor with no insurable interest funds a policy to profit from someone's death. They are not about exam requirements, so choice B is wrong. They do not cap the number of policies a person can own, so choice C is wrong. They have nothing to do with claim payment speed, so choice D is wrong.

STOLI/IOLI prohibition concept

Answer: A. Individual members usually receive a certificate of insurance rather than an individual policy

In group life, the employer or association holds the master policy and each covered person gets a certificate of insurance. Group plans typically use simplified or guaranteed issue underwriting, so individual paramedical exams are usually not required. The employer, not the employee, owns the master contract. Benefit amounts often vary, such as a multiple of salary, so they are not always identical.

Retirement and Other Insurance Concepts: group life insurance

Answer: B. Defamation of an insurer

Making false statements that harm the reputation of an insurer is defamation, a prohibited unfair practice. Rebating is giving something of value to induce a sale. Coercion is using pressure such as threats to force insurance placement. Commingling is mixing client premium funds with personal funds. Only defamation fits false statements about another company.

NRS 686A (unfair trade practices; defamation)

Answer: B. To prevent advertising that is untrue, deceptive, or misleading

Advertising rules exist to protect consumers from false, deceptive, or misleading statements about policies. They do not guarantee profits, do not restrict ads to newspapers, and do not set premium rates, which are handled through separate rate filing rules.

Nevada insurance advertising regulations (NAC Chapter 686A), tested as a concept

Answer: B. The sale of a life insurance policy by a terminally or chronically ill insured to a third party for cash

A viatical settlement is the sale of a life policy by an ill insured to a third party in exchange for a cash payment less than the death benefit. A policy loan comes from the insurer using cash value, so that is wrong. A rider adjusting death benefit is a policy feature, not a viatical, so that is wrong. A premium refund is unrelated, so that is wrong.

NRS 688C - Viatical settlements

Answer: B. A contract designed to accumulate funds and then pay out income, often for life

An annuity is designed to accumulate money and then liquidate it into a stream of income, often protecting against outliving one's money. It is essentially the opposite of life insurance, which pays at death. Accidental death coverage is a life insurance rider, not an annuity. Automatic conversion describes a convertible term feature, not an annuity.

Types of Policies - annuities

Answer: B. Paid-up additions

Paid-up additions use dividends to buy small blocks of fully paid single-premium insurance, increasing the death benefit and cash value. Cash payment simply sends her the dividend money. Accumulation at interest leaves dividends on deposit to earn interest. Reduction of premium applies dividends toward the next premium due, none of which buy additional insurance.

Life provisions and options: dividends (outline concept)

Answer: B. Coverage effective from the receipt date if the applicant proves insurable under the insurer's rules

A conditional receipt provides coverage back to the receipt or exam date only if the applicant is found insurable at the rate applied for. It is not a guarantee regardless of health, so choice A is wrong. It is not a refund promise, so choice C is wrong. It does not create borrowable cash value, so choice D is wrong.

Conditional receipt concept (policy delivery/contract law)

Answer: A. Survivors benefits

Social Security survivors benefits are paid to eligible family members, such as a surviving spouse and dependent children, after a covered worker dies. Retirement benefits are paid to the worker in old age, and disability benefits are paid to a living worker who cannot work. SSI is a needs-based program, not a benefit tied to a deceased worker's earnings record.

Retirement and Other Insurance Concepts: Social Security survivor benefits

Answer: A. It allows a person to sell, solicit, or negotiate insurance

A producer license authorizes a person to sell, solicit, or negotiate insurance in Nevada. It does not set commission levels, which are agreements between agents and insurers. It does not give underwriting authority, which stays with the insurer. It provides no tax exemption.

NRS 683A (producer licensing; definition of sell, solicit, negotiate)

Answer: B. The amount of the unpaid indebtedness

Credit life insurance is meant only to pay off a debt if the debtor dies, so Nevada limits coverage to the amount of the unpaid indebtedness. Doubling the debt or issuing any requested amount would allow profit and is not allowed. A flat statutory cap unrelated to the loan is not how the rule works because coverage tracks the balance owed.

Nevada credit life insurance statutes (NRS Chapter 690A), tested as a concept