Free Ohio life insurance practice test.

Answer C. A lapsed license can typically be reinstated by meeting renewal conditions, while a revoked license requires a new application after the revocation period and may be denied

A lapse is an administrative failure to renew and can usually be cured by satisfying renewal requirements within the allowed reinstatement window. A revocation for misconduct is a disciplinary action that ends the license, and the person must apply anew after any prohibited period, with the Department able to deny the application. The two are not treated the same, since one is administrative and one is disciplinary. A revoked license is harder, not easier, to restore. Lapsed licenses can be reinstated, so it is false that neither can be restored.

Ohio Rev. Code 3905.481 and 3905.14 (renewal/reinstatement versus revocation)

Answer D. A written notice regarding replacement of the existing coverage

Ohio's replacement regulation requires the producer to give the applicant a written notice explaining the consequences of replacing existing coverage so the client can make an informed decision. The client's choice does not remove the disclosure duty. The old insurer, not the producer, handles any premium refunds and does not have to approve the replacement.

Ohio Admin. Code 3901-6-05 (replacement of life insurance)

Answer C. Provide an adverse action notice to the applicant

FCRA requires that when a consumer report is used to take adverse action, such as charging more or denying coverage, the insurer must give the consumer an adverse action notice telling them and identifying the reporting agency. Refunding premium is not required. Reporting to the state department is not an FCRA duty here. Permission from the bureau is not needed to take adverse action.

Fair Credit Reporting Act, 15 U.S.C. 1681m (adverse action notice)

Answer D. Pure risk

Pure risk involves only the chance of loss or no loss, with no possibility of gain, and this is the only kind insurers cover. Speculative risk involves the chance of both loss and gain, like gambling or investing, and is not insurable. Financial market risk and business investment risk are both forms of speculative risk with a chance of profit.

Answer D. Alien insurer

An alien insurer is one formed under the laws of a country other than the United States. Because this company was organized in France, it is alien. A domestic insurer is formed in Ohio, and a foreign insurer is formed in another US state. Fraternal describes an organizational form, not the country of formation.

Answer C. Aleatory

Aleatory means the amounts exchanged may be very unequal and depend on chance: a small premium may buy a large payout, or the insurer may pay nothing. Unilateral describes that only the insurer makes a legally enforceable promise. Executed means fully performed, but this contract is still ongoing. Personal refers to insuring a person's interest, not this exchange.

Answer A. Yes, every person is presumed to have an insurable interest in their own life

A person always has an unlimited insurable interest in their own life and may insure it and name any beneficiary. No proof of financial loss is required for one's own life. The choice of beneficiary does not create or remove the interest, and employment status is irrelevant.

Ohio Rev. Code 3911.091

Answer D. To replace the lost income of a wage earner who dies

The most common personal reason to own life insurance is income replacement, so a family can keep living if the breadwinner dies. Paying off a mortgage early is not the primary purpose, though proceeds can cover a mortgage balance. Life insurance is protection first, not primarily an investment. Avoiding income tax is not the purpose, though death benefits are generally income tax free.

Answer C. Needs analysis approach

The needs analysis approach totals specific goals such as income replacement, debt payoff, and future costs like college, so it best fits Maria's situation. The human life value approach focuses only on lost income and skips itemized goals like college. The minimum issue amount is an underwriting floor set by the insurer, not a sizing method. The free look period is a cancellation right, not a way to determine coverage amount.

Answer C. The broker represents the viator to negotiate a sale while the provider actually purchases the policy

Under Chapter 3916 a broker works on behalf of the viator to solicit and negotiate viatical settlements, while the provider is the party that actually buys the policy. The roles are not reversed, and they are not the same role. Neither is the issuing insurer.

Ohio Rev. Code Chapter 3916 (broker vs. provider definitions)

Answer B. Universal life

Universal life is a flexible permanent policy that allows the owner to adjust premiums and, within limits, the death benefit. Level term has fixed premiums and no adjustability or cash value. Whole life has fixed premiums and a fixed death benefit. Decreasing term has a benefit that shrinks over time and is not adjustable by the owner.

Answer D. Single premium

A single premium policy is fully funded with one payment up front, with no more premiums ever owed. Level premium means the same payment repeats over time. Flexible premium lets the owner vary payment amounts (as in universal life). Modified premium starts lower and then increases after a set period, but payments still continue.

Answer D. As a fiduciary

Money an agent collects on behalf of an insurer is held in a fiduciary capacity, meaning it must be handled for the benefit of the insurer or insured and kept separate from personal funds. It is not a personal loan, not commission until earned, and never a gift.

Ohio Rev. Code 3905.30

Answer D. Substandard, or rated

When an applicant is accepted but charged more because of higher risk, that is a substandard or rated classification. Preferred means lower-than-average risk with a discount. Standard means average risk at normal rates. Uninsurable would mean the insurer declines entirely, but here coverage is issued.

Answer C. The policyowner, usually the employer or association

In group life, the employer or association that sponsors the plan is the policyowner and holds the single master contract. The correct answer is the policyowner. Individual employees do not hold the master contract; they receive a certificate of coverage instead. The insurance department regulates but does not hold contracts. The producer sells the plan but does not hold the contract.

Answer D. Credit disability (credit health) insurance

Credit disability, also called credit health insurance, makes the loan payments while the borrower is disabled and cannot earn income. Credit life pays only upon the borrower's death. Credit property insurance covers the collateral, such as goods purchased. Group whole life is a permanent life product, not tied to loan payments during disability.

Answer C. The benefit is adjusted to what the premiums paid would have bought at the correct age

The misstatement of age provision adjusts the benefit to the amount the premium actually paid would have purchased at the true age, rather than voiding the policy. The claim is not denied just because of an age error. There is no rule requiring a full premium refund with no benefit. There is no penalty doubling the benefit for an age error.

Ohio Rev. Code 3915.05 (misstatement of age provision)

Answer A. A revocable beneficiary can be changed by the policyowner without the beneficiary's consent, while an irrevocable one cannot be changed without consent

A revocable designation lets the policyowner change the beneficiary freely; an irrevocable designation locks the choice in place unless the named beneficiary agrees to a change. Speed of payment has nothing to do with revocability. The insurer does not control who the beneficiary is. Beneficiaries do not have to be relatives.

Answer A. No premiums are waived because the waiting period was not met

Because Karen did not stay disabled through the rider's waiting or elimination period, no premiums are waived. The rider does not pay from day one, that is why a waiting period exists. There is no refund of a paid premium under this rider. Failing a single short claim does not terminate the rider, it simply does not trigger benefits.

Answer B. Ohio recognizes the applicant's home state license if that state extends the same courtesy and requirements are met

Reciprocity means Ohio grants a nonresident license to a producer already licensed and in good standing in their home state, provided the states extend the same treatment and the application requirements are met. Reciprocity specifically means the person does not have to retake Ohio's exam. The applicant keeps the home state license, since that is the basis for the nonresident license. The nonresident license is limited to lines the producer holds in their home state, not everything Ohio offers.

Ohio Rev. Code 3905.062 (nonresident reciprocity)