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Alaska Life & Health study materials
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Alaska Life & Health practice questions

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Question 1Alaska Insurance Statutes, Regulations, and Producer Licensing

How long is a resident Alaska insurance producer license valid before renewal is required?

  1. Two years, expiring December 31 of even-numbered years
  2. Two years, expiring June 30 of odd-numbered years Correct answer.
  3. One year, expiring December 31 of each year
  4. Three years, expiring on the anniversary of issuance

Explanation

Alaska licenses producers on a fixed biennial cycle rather than an anniversary cycle. Every producer license expires on June 30 of an odd-numbered year and must be renewed to keep transacting insurance.

Question 2Alaska Insurance Statutes, Regulations, and Producer Licensing

Alaska's continuing education requirement for producers is 24 credit hours per license term, including at least how many hours of ethics?

  1. 2 hours
  2. 3 hours Correct answer.
  3. 1 hour
  4. 6 hours

Explanation

Alaska requires 24 hours of approved continuing education during each two-year license term. At least 3 of those hours must be in ethics.

Question 3Alaska Insurance Statutes, Regulations, and Producer Licensing

Which statement correctly describes prelicensing education for Alaska resident producer applicants?

  1. Alaska requires no prelicensing course; applicants must pass the licensing examination Correct answer.
  2. Applicants must complete 20 hours of prelicensing education in each line of authority
  3. Applicants must complete 40 hours of prelicensing education for life insurance only
  4. Applicants must complete a Division-approved 12-hour course before scheduling the exam

Explanation

Alaska does not impose a course-hour prelicensing education requirement on producer applicants. The gate to licensure is passing the qualifying examination for the line applied for, along with meeting the other licensing standards.

Question 4Alaska Insurance Statutes, Regulations, and Producer Licensing

Which state entity administers and enforces Alaska's insurance laws, including producer licensing?

  1. The Alaska Division of Insurance within the Department of Commerce, Community, and Economic Development Correct answer.
  2. The Regulatory Commission of Alaska
  3. The Governor's Office Division of Risk Management
  4. The Alaska Department of Labor and Workforce Development

Explanation

The Alaska Division of Insurance, housed in the Department of Commerce, Community, and Economic Development, is the agency that administers the Insurance Code and licenses, supervises, and disciplines producers.

Question 5Alaska Insurance Statutes, Regulations, and Producer Licensing

When may a person first solicit or sell insurance in Alaska?

  1. Immediately after passing the licensing examination
  2. After completing the required continuing education courses
  3. As soon as the application and license fee reach the Division
  4. Only after a license is issued and an appointment is filed Correct answer.

Explanation

Transacting insurance without a valid license is unlicensed activity. A producer must hold an issued license, and for an insurer's business the insurer must also file an appointment covering the producer.

Question 6Alaska Insurance Statutes, Regulations, and Producer Licensing

To whom may an insurer lawfully pay commissions for insurance sold in Alaska?

  1. To anyone the insurer names in a written agency notice
  2. To an unlicensed firm that generated the leads
  3. To any employee of the insured who made the referral
  4. To a currently licensed producer Correct answer.

Explanation

Alaska limits commission payments for selling, soliciting, or negotiating insurance to persons holding a current producer license, with narrow statutory exceptions. An insurer's internal designation cannot override the licensing statutes.

Question 7Alaska Insurance Statutes, Regulations, and Producer Licensing

An Alaska producer moves her agency to a new business address. Within what period must she notify the Division of Insurance?

  1. 90 days
  2. 10 days
  3. 30 days Correct answer.
  4. 15 days

Explanation

A licensed producer must keep the Division informed of current contact information and report a change of address within 30 days. Notice is important because licensing correspondence and official orders go to the address of record.

Question 8Alaska Insurance Statutes, Regulations, and Producer Licensing

An Alaska resident buys an individual life insurance policy delivered on March 1. How long does the owner have to return the policy for a full refund of premium?

  1. 3 days
  2. 20 days
  3. 10 days after delivery Correct answer.
  4. 5 days

Explanation

Individual life policies delivered in Alaska must give the owner a free-look right of at least 10 days after delivery. Returning the policy within that period entitles the owner to a refund of premium paid.

Question 9Alaska Insurance Statutes, Regulations, and Producer Licensing

For a life insurance policy issued in Alaska, insurable interest must exist at which point?

  1. At both application and death
  2. At the time the policy is applied for Correct answer.
  3. Whenever the beneficiary submits a claim
  4. At the time the insured dies

Explanation

Insurable interest is tested when the contract is formed, meaning at application or policy issuance. A policy lacking insurable interest at that point is void, while a later change in relationship does not invalidate it.

Question 10Alaska Insurance Statutes, Regulations, and Producer Licensing

A producer offers to pay a client's first month premium from personal funds to close a sale, without reflecting the concession in the policy or rate filing. This practice is best described as:

  1. Permitted as a one-time marketing promotion
  2. Permitted, because the insurer can approve it in writing
  3. Permitted, because the client is a first-time buyer
  4. Prohibited as illegal rebating Correct answer.

Explanation

Offering any inducement not specified in the policy or rate filing is rebating, an unfair trade practice under Alaska law. Neither the insurer's consent nor the promotional purpose cures the violation.

Question 11Alaska Insurance Statutes, Regulations, and Producer Licensing

A producer falsely tells a client that her current policy is worthless and induces her to lapse it and buy a replacement. This conduct is known as:

  1. Rebating
  2. Coercion
  3. Misappropriation
  4. Twisting Correct answer.

Explanation

Twisting is inducing a policyholder to lapse, surrender, or replace coverage through misrepresentation or incomplete comparison of policies. It is an unfair trade practice subject to regulatory discipline.

Question 12Alaska Insurance Statutes, Regulations, and Producer Licensing

An Alaska producer collects premiums from clients. How must those funds be handled?

  1. They may be used for agency expenses if replaced within 30 days
  2. They may be deposited in the producer's general business account if records are kept
  3. They must be forwarded to the Division of Insurance for safekeeping
  4. They must be held in a fiduciary capacity and not commingled with the producer's own funds Correct answer.

Explanation

Premiums collected on behalf of an insurer are held in trust for the insurer or insured. The producer must account for and remit them promptly and may not commingle them with personal or general operating funds.

Question 13Alaska Insurance Statutes, Regulations, and Producer Licensing

An insurer wants a newly licensed producer to begin selling its products in Alaska. What must happen before the producer transacts that insurer's business?

  1. The producer must post a surety bond naming the insurer
  2. The insurer must obtain the director's written approval of the producer
  3. The insurer must file an appointment with the Division Correct answer.
  4. The producer must complete insurer-specific product training

Explanation

A producer's authority to represent a particular insurer begins with appointment. The insurer files notice of the appointment with the Division, which links the licensed producer to that insurer's business.

Question 14Alaska Insurance Statutes, Regulations, and Producer Licensing

A nonresident producer licensed in Alaska is in good standing and has satisfied the continuing education requirements of her home state. What does Alaska require of her?

  1. Completion of 12 hours of Alaska-specific insurance law
  2. Completion of the full 24 hours of Alaska-approved courses
  3. No Alaska continuing education, if home-state requirements are met Correct answer.
  4. Completion of double the resident continuing education requirement

Explanation

Alaska grants reciprocity to nonresident producers who are compliant in their home state. Such producers are not required to duplicate continuing education in Alaska.

Question 15Alaska Insurance Statutes, Regulations, and Producer Licensing

Which circumstance is grounds for the director to deny an application for an Alaska producer license?

  1. Having been licensed in another state before moving to Alaska
  2. Having worked for an insurer that later became insolvent
  3. Having filed for bankruptcy many years earlier
  4. A prior conviction for a felony involving dishonesty or breach of trust Correct answer.

Explanation

Licensure requires honesty and trustworthiness, so a conviction involving dishonesty or breach of trust is a recognized ground for denial or discipline. The director weighs such conduct against the applicant's fitness to hold a license.

Question 16Alaska Insurance Statutes, Regulations, and Producer Licensing

Before an Alaska resident producer license is issued, the applicant generally must:

  1. Complete a 40-hour internship with a licensed agency
  2. Obtain a letter of recommendation from an insurer
  3. Post a surety bond with the Division of Insurance
  4. Pass the licensing examination for the line applied for Correct answer.

Explanation

Applicants must demonstrate minimum competence by passing the qualifying examination in the line of authority requested. The examination requirement may be waived only in limited circumstances set by statute or regulation.

Question 17Alaska Insurance Statutes, Regulations, and Producer Licensing

When a licensed producer dies or becomes disabled, Alaska law permits the director to issue a temporary producer license to a designated individual for a period not exceeding:

  1. 60 days
  2. 30 days
  3. One year
  4. 180 days Correct answer.

Explanation

A temporary license allows continuity of business when the licensed producer dies or is disabled. The director may issue it to a qualified designee, but the authority may not extend beyond 180 days.

Question 18Alaska Insurance Statutes, Regulations, and Producer Licensing

An insurer ends a producer's appointment. Under Alaska law, the insurer must notify the director of the termination within:

  1. 10 days
  2. 15 days
  3. 30 days Correct answer.
  4. 45 days

Explanation

The insurer, not the producer, bears the duty to report termination of an appointment. The notice must reach the director within 30 days of the termination, and the producer's authority to act for that insurer ends.

Question 19Alaska Insurance Statutes, Regulations, and Producer Licensing

Which of the following is an unfair claim settlement practice under Alaska law?

  1. Using an independent adjuster to inspect the loss
  2. Recording a telephone interview with the claimant
  3. Requesting a signed proof of loss from the claimant
  4. Denying a claim without a reasonable investigation Correct answer.

Explanation

Insurers must investigate claims reasonably before denying them. Refusing to pay or denying a claim without a reasonable investigation, and without a reasonable explanation, is an unfair claim settlement practice.

Question 20Alaska Insurance Statutes, Regulations, and Producer Licensing

A producer completes 21 hours of general continuing education but no ethics course by the June 30 renewal deadline. What is the result?

  1. The license stays valid because 21 hours exceeds the general requirement
  2. The license expires for failure to complete all required CE Correct answer.
  3. The producer may renew and make up the ethics hours later without penalty
  4. The license is automatically renewed with a written warning

Explanation

Renewal depends on completing the full continuing education requirement, including the ethics component, before the license expires. Because the ethics hours were never earned, the requirement is unmet and the license cannot be renewed on that record.

Question 21General Insurance Concepts and Principles

Which situation is an example of pure risk?

  1. Investing heavily in a new product line
  2. Wagering money on a horse race
  3. A fire damaging a business warehouse Correct answer.
  4. Buying stock that later loses value

Explanation

Pure risk involves only the chance of loss or no loss, with no possibility of financial gain. Fire damage to property is a classic pure risk. Speculative risks, such as gambling or investing, carry the possibility of gain as well as loss.

Question 22General Insurance Concepts and Principles

Which relationship ordinarily supports insurable interest in another person's life?

  1. A coworker in the same department
  2. A casual friend of ten years
  3. A neighbor who lives next door
  4. A business partner who is a co-owner Correct answer.

Explanation

Insurable interest in another person's life exists when the applicant would suffer a financial loss from that person's death. Business co-owners typically have such a financial stake in one another. Neighborliness, shared employment, or friendship alone usually does not create insurable interest.

Question 23General Insurance Concepts and Principles

An insurer drafts the policy and the applicant has essentially no ability to negotiate its terms. This contract is best described as:

  1. A unilateral contract
  2. A conditional contract
  3. An aleatory contract
  4. A contract of adhesion Correct answer.

Explanation

A contract of adhesion is prepared by one party and offered to the other on a take-it-or-leave-it basis. Because the insurer controls the wording, ambiguities are generally construed against the insurer.

Question 24General Insurance Concepts and Principles

What distinguishes an aleatory contract from other types of contracts?

  1. The terms are imposed by the stronger party
  2. Both parties exchange exactly equal values
  3. Only the insured is legally bound by the terms
  4. The amounts exchanged may be unequal Correct answer.

Explanation

Aleatory means the values exchanged are not necessarily equal. A small premium may purchase a large benefit, or a substantial premium may produce no benefit at all if no loss occurs.

Question 25General Insurance Concepts and Principles

Which statement accurately describes a mutual insurer?

  1. It is owned by shareholders
  2. It pays dividends only to investors
  3. Its shares trade on a stock exchange
  4. It is owned by its policyholders Correct answer.

Explanation

A mutual insurer is owned by its policyholders, who may receive dividends as a return of divisible surplus. A stock insurer, by contrast, is owned by shareholders.

Question 26General Insurance Concepts and Principles

Intentionally damaging insured property in order to collect benefits is an example of:

  1. A moral hazard Correct answer.
  2. A physical hazard
  3. A morale hazard
  4. A speculative risk

Explanation

A moral hazard arises from dishonesty or intent to defraud, such as deliberately causing a loss to collect insurance proceeds. It is treated differently from carelessness and from physical conditions of the property.

Question 27General Insurance Concepts and Principles

The principle of indemnity provides that after a loss the insured is:

  1. Required to accept whatever amount is offered
  2. Restored to a better financial position than before
  3. Permitted to collect the full limit from every policy held
  4. Restored to roughly the prior financial position Correct answer.

Explanation

Indemnity restores the insured to approximately the same financial position held immediately before the loss, no better and no worse. This principle is the reason for limits, deductibles, and actual cash value methods.

Question 28General Insurance Concepts and Principles

An insurer pays an insured's auto claim, then pursues the negligent driver who caused the accident. This right is called:

  1. Subrogation Correct answer.
  2. Reinsurance
  3. Coinsurance
  4. Salvage

Explanation

Subrogation lets an insurer that has paid a loss step into the insured's shoes and recover from the party responsible. It supports the indemnity principle by preventing the insured from collecting twice.

Question 29General Insurance Concepts and Principles

The law of large numbers assists insurers mainly by:

  1. Removing the need for underwriting
  2. Making actual losses more predictable Correct answer.
  3. Guaranteeing an underwriting profit
  4. Eliminating the possibility of loss

Explanation

As the number of similar exposure units increases, actual loss experience tends to conform more closely to the expected rate. This allows insurers to set rates with greater confidence.

Question 30General Insurance Concepts and Principles

Adverse selection is best described as:

  1. The insurer's practice of declining every applicant
  2. A general decline in policies sold in a market
  3. The tendency of higher-risk people to seek coverage Correct answer.
  4. The tendency of low-risk people to buy larger policies

Explanation

Adverse selection is the tendency of those at greater-than-average risk to buy or keep insurance, which can push claim costs above assumptions. Underwriting, exclusions, and appropriate rating are used to control it.

Question 31General Insurance Concepts and Principles

In insurance underwriting, a representation is:

  1. An intentional failure to disclose a fact
  2. A statement believed true when made Correct answer.
  3. A promise that a fact is absolutely true
  4. A guarantee that the policy will be renewed

Explanation

A representation is a statement of fact made by the applicant that is believed to be true to the best of his or her knowledge. It is not a guarantee of absolute accuracy, which distinguishes it from a warranty.

Question 32General Insurance Concepts and Principles

The intentional withholding of a material fact that would affect an insurer's decision to issue a policy is known as:

  1. Concealment Correct answer.
  2. Estoppel
  3. Waiver
  4. Subrogation

Explanation

Concealment is the deliberate failure to disclose a fact that is material to the insurer's decision to issue or rate coverage. Materiality and intent are the key elements.

Question 33General Insurance Concepts and Principles

A life or health insurance policy is a unilateral contract because:

  1. Only the insurer makes an enforceable promise Correct answer.
  2. The insured may cancel at any time without penalty
  3. The insurer may alter the terms at will
  4. Both parties make equally enforceable promises

Explanation

In a unilateral contract, only one party, the insurer, is legally bound to perform. The insured's premium payment is the consideration exchanged for that promise, but the insured is not obligated to keep paying.

Question 34General Insurance Concepts and Principles

A policy is a conditional contract, which means the insurer's duty to pay:

  1. Appears automatically whenever any loss occurs
  2. May be set aside only by a court order
  3. Depends on the insured meeting stated conditions Correct answer.
  4. Is capped at the total premiums paid

Explanation

Conditions are policy provisions such as giving prompt notice of loss or submitting proof of loss that must be met before the insurer's promise becomes due. Failure to satisfy them can affect the claim.

Question 35General Insurance Concepts and Principles

Authority that is not spelled out in the agency agreement but is reasonably necessary to carry out the agent's duties is called:

  1. Fiduciary authority
  2. Apparent authority
  3. Express authority
  4. Implied authority Correct answer.

Explanation

Implied authority flows from express authority because it is reasonably required to accomplish what the agent was appointed to do. Express authority is written or stated, and apparent authority arises from the insurer's conduct toward the public.

Question 36General Insurance Concepts and Principles

In a major medical policy, the coinsurance provision typically requires the insured to:

  1. Pay a fixed dollar amount before any benefits
  2. Pay the full annual premium in advance
  3. Pay a stated percentage of covered expenses Correct answer.
  4. Share premium cost with an employer

Explanation

Coinsurance is the insured's share of covered expenses after the deductible is satisfied, commonly expressed as a percentage such as 20 percent, with the insurer paying the remainder up to the policy limit.

Question 37General Insurance Concepts and Principles

An insured stops locking his bicycle because he knows a claim will be paid if it is stolen. This attitude illustrates:

  1. A morale hazard Correct answer.
  2. A moral hazard
  3. A physical hazard
  4. Adverse selection

Explanation

A morale hazard is carelessness or indifference toward loss that arises because insurance exists. It differs from a moral hazard, which involves deliberate dishonesty or intent to cause a loss.

Question 38General Insurance Concepts and Principles

In insurance terminology, a warranty is:

  1. A statement the applicant believes to be true
  2. An oral explanation given by a producer
  3. A promise in the policy that a condition is guaranteed Correct answer.
  4. A clause naming the location where coverage applies

Explanation

A warranty is a statement or promise in the contract that must be true; a breach can affect the insured's ability to recover. This is a stricter standard than a representation, which need only be believed true when made.

Question 39General Insurance Concepts and Principles

An agent accepts a premium after the grace period and tells the policyholder that coverage continues. The insurer is later barred from denying the claim. This is an example of:

  1. Coinsurance
  2. Subrogation
  3. Estoppel Correct answer.
  4. Concealment

Explanation

Estoppel prevents a party from asserting a right after conduct that led another to rely on the right being given up. The insurer's acceptance of the late premium and assurance of continued coverage supports the policyholder's reliance.

Question 40General Insurance Concepts and Principles

Reinsurance is best described as:

  1. A refund of unused premium returned at year end
  2. A federal program that pays all catastrophic claims
  3. A plan in which policyholders share in company profits
  4. An insurer's transfer of part of its risk to another insurer Correct answer.

Explanation

Reinsurance is insurance for insurers: the ceding company transfers a portion of its risk and premium to a reinsurer. It increases the ceding insurer's capacity to write business and stabilizes results from large or unusual losses.

Question 41Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

For a life insurance policy, insurable interest must exist at which point?

  1. At the time the beneficiary files a claim
  2. At both the time of application and the time of death
  3. At the time the insured dies
  4. At the time the application is made Correct answer.

Explanation

Insurable interest is tested when coverage begins. Once the policy is issued, the owner may keep it even if the relationship that created the interest later ends, such as after a divorce.

Question 42Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

A statement on an application that the applicant believes to be true to the best of their knowledge is called a:

  1. Warranty
  2. Concealment
  3. Representation Correct answer.
  4. Waiver

Explanation

A representation is an answer the applicant believes is true and complete. It does not have to be literally perfect, only substantially true and made in good faith.

Question 43Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

Which term describes a statement in an insurance application that the applicant guarantees to be literally true?

  1. Waiver
  2. Warranty Correct answer.
  3. Concealment
  4. Representation

Explanation

A warranty is a statement or promise the applicant guarantees as strictly true. Any material breach of a warranty can give the insurer grounds to void the contract.

Question 44Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

The beneficiary who is first in line to receive the death benefit is the:

  1. Irrevocable beneficiary
  2. Primary beneficiary Correct answer.
  3. Tertiary beneficiary
  4. Contingent beneficiary

Explanation

The primary beneficiary is paid first when the insured dies. Contingent and tertiary beneficiaries receive proceeds only if those ahead of them are unavailable.

Question 45Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

An applicant who presents average mortality risk and is charged the insurer's standard premium rate is classified as a:

  1. Preferred risk
  2. Declined risk
  3. Standard risk Correct answer.
  4. Substandard risk

Explanation

Standard risks show average mortality for their age group and pay the insurer's basic rate. Preferred risks receive a discount, while substandard risks pay an extra charge.

Question 46Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

In the underwriting process, the agent's primary role is to:

  1. Gather and report information about the applicant to the insurer Correct answer.
  2. Make the final underwriting decision
  3. Set the premium rate for the applicant's class
  4. Issue the policy after approval

Explanation

The agent acts as a field underwriter by collecting accurate information on the application and any agent's report. The home office underwriter evaluates that information and decides whether to issue coverage.

Question 47Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

A beneficiary designation that the policyowner can change without the beneficiary's consent is:

  1. Revocable Correct answer.
  2. Contingent
  3. Vested
  4. Irrevocable

Explanation

Under a revocable designation the owner keeps the right to change or remove the beneficiary at any time. Only an irrevocable designation requires the beneficiary's consent to change.

Question 48Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

When an applicant completes an application and submits it with the initial premium, the applicant has generally made:

  1. An acceptance
  2. A counteroffer
  3. An offer Correct answer.
  4. A warranty

Explanation

The completed application plus the initial premium is the applicant's offer to buy insurance. The insurer accepts that offer when it issues the policy and delivers it.

Question 49Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

In a life insurance contract, the consideration given by the applicant consists of:

  1. The first premium payment only
  2. The premium plus the statements made in the application Correct answer.
  3. The insurer's promise to pay the death benefit
  4. A promise to renew the policy every year

Explanation

Each party supplies consideration. The applicant contributes the premium and the accuracy of the application statements, while the insurer contributes its promise to pay.

Question 50Life Insurance Basics (underwriting, contract law, ownership, beneficiaries)

A life insurance contract is aleatory because:

  1. The parties exchange exactly equal value
  2. The amounts exchanged may be unequal and depend on an uncertain event Correct answer.
  3. Only one party is legally bound by the agreement
  4. The insurer writes all of the contract terms

Explanation

In an aleatory contract the dollar amounts exchanged can be very unequal and depend on chance. A small premium may produce a large death benefit, or the insured may die before much premium is paid.