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Colorado Life Insurance Final Exam – 95 Official-Style Questions with Answers 2025, Exams of Nursing

Western Colorado University(WCU)Nursing

Master the Colorado Life Insurance licensing exam with this complete guide featuring 95 multiple-choice questions and accurate answers. Covers policy types, annuities, state regulations, taxation, riders, and underwriting—ideal for pre-licensing and final exam preparation. colorado insurance exam, life insurance questions, state licensure prep, insurance final test, life insurance practice, insurance producer exam, insurance regulation quiz, annuities exam review, insurance prep printable, colorado life license

Typology: Exams

2024/2025

Available from 07/16/2025

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Colorado Life Insurance
Final Exam Study Guide
A+ Score Guide
1. Continuous Premium Whole Life
Answer Premiums are the same each year for the
duration of the policy, if policyowner continues to make payments they will receive
cash value of policy.
- Also called straight life or ordinary life
- endows at age 100
2. Limited-Payment Whole Life
Answer Allow for a lifetime of premiums to be paid in a shorter period of time
- 10 pay or 20 pay - premiums payable in 10-20 level annual installments
- life paid up at age 65 - level annual installments from date of purchase to age 65
- cash value accumulates faster than continuous premium policy
- endows at age 100
3. Single Premium Whole Life
Answer One payment made at time of purchase, covers all future costs of
maintaining policy, create immediate cash value
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Download Colorado Life Insurance Final Exam – 95 Official-Style Questions with Answers 2025 and more Exams Nursing in PDF only on Docsity!

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Colorado Life Insurance

Final Exam Study Guide

A+ Score Guide

  1. Continuous Premium Whole Life Answer Premiums are the same each year for the duration of the policy, if policyowner continues to make payments they will receive cash value of policy.
  • Also called straight life or ordinary life
  • endows at age 100
  1. Limited-Payment Whole Life Answer Allow for a lifetime of premiums to be paid in a shorter period of time
  • 10 pay or 20 pay - premiums payable in 10-20 level annual installments
  • life paid up at age 65 - level annual installments from date of purchase to age 65
  • cash value accumulates faster than continuous premium policy
  • endows at age 100
  1. Single Premium Whole Life Answer One payment made at time of purchase, covers all future costs of maintaining policy, create immediate cash value

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  1. Universal Life (UL) Answer Premiums are flexible, not fixed, and accumulate as interest in the policy's cash value
  • only policyowner can change death benefits
  • cost of insurance and fees withdrawn monthly
  • option 1 - level death benefit, cash value rises quicker
  • option 2 - increasing death benefit plus cash account
  1. Variable Life Insurance Answer Separate account instead of guaranteed cash value, so there is the insurance and an investment account
  • to sell, one must have life insurance and securities licenses
  • death benefit can increase, guaranteed benefit
  1. Variable Universal Life Answer Universal life with a separate investment account
  • death benefit will be paid as long as there is sufficient cash value to pay the costs of insurance
  • no guaranteed death benefit
  1. Interest-Sensitive Whole Life Answer Cash value can increase beyond the stated guar- antee if economic conditions warrant
  • fixed level death benefit
  • interest rate can fluctuate with economy
  • cash value and death benefit can increase/grow

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  1. Return of Premium Term Policy Answer Return all or part of premium paid for policy if insured is still alive at end of term, premium is higher and depends on percentage of premium returned (100%, 50%)
  2. Renewability Answer Term policy guaranteed to renew/extend with the same policy period at end of the term, no new application required, premium changes with each renewal based on age
  3. Convertability Answer Term policy can be converted to a permanent type of policy, no new application required, must be converted before the term expires Premium for converted policy based on one of two things
  • attained age - insured's age at time of conversion
  • original age - insured's age at time original policy was written
  1. Annuities Answer Upside down life insurance, tax deferred savings for retirement, protects people from living too long
  2. Immediate Annuities (SPIA) Answer Single lump-sum premium, payments to insured can start one month after or latest delay of 1 year, only interest part of payment is subject to tax
  3. Deferred Annuities (SPDA) Answer Owner chooses amount and frequency of premi- um payments (flexible), accumulated funds can be withdrawn at any time but may have surrender charge

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  1. Fixed Annuities Answer Guaranteed against loss, supported by general account with assets, earn interest during accumulation period, level payment during annuity period
  2. Variable Annuities Answer Supported by investments, not guaranteed against loss, separate account with investment risks, value expressed in accumulation units (like shares), annuity units can fluctuate with investments which can adjust the payments to the insured, regulated as insurance and securities (dual regulation)
  3. Equity-Indexed Annuities (EIA) Answer Fixed, interest linked to equity index, guaran- tees minimum interest rate (normally 1-3%), guarantees backed by insurer's general account
  4. Joint Life Policy Answer Covers two or more lives with death benefit being paid when first insured dies, helps other spouse/insured maintain a certain lifestyle
  5. Survivorship Policy Answer Covers two individuals and will pay death benefit when last insured dies, can help pay for estate settlements and other expenses after death
  6. Life Policy Rider Answer Add benefits to life insurance policy, similar to endorsement on personal and commercial lines

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ums paid during waiting period

  • if insured permanently disabled before age 60-65 premiums will be waived for life
  1. Waiver of Monthly Deductions Rider Answer For flexible premium policies (UL), suspends monthly cost of insurance deductions that are made from cash account instead of waiving premiums
  2. Payor Benefit Rider Answer Juvenile policies, if person responsible for premiums (parents/guardians) becomes disables or dies before child is an adult, premiums will be waived until child reaches stated age (usually 18 or 21)
  3. Guaranteed Insurability Rider (GIR) Answer Normally on permanent life, allows owner to purchase additional life insurance in future for certain amounts without evidence of insurability, must be exercised typically between ages 25 and 40 at 3 year intervals
  4. Term Rider Answer Added to permanent policy, premiums lower than purchasing sep- arate policy, both death benefits paid to beneficiary, expires at certain age or after certain amount of years
  5. Return of Premium Rider Answer Increasing term rider, death benefit totals all premi- ums paid, death must occur while rider in force
  6. Accidental Death Benefit Rider Answer Pays extra benefit if insured dies due to accident, insured must die within 90 days of accident, 2-3x the face amount of the policy, expires when insured is 60 or 65
  7. Accidental Death and Dismemberment Rider Answer Extra benefit for accidental death and if insured lives after suffering severe dismemberment, losing a limb will only have 50% benefit payout (multiple limbs would equal full benefit payout)

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  • Principal sum is death 100%
  • Capital sum is dismemberment 50%
  • also covers loss of sight, hearing, paralysis
  1. Other (Additional) Insured Term Rider Answer Convertible term insurance for spouse or immediate family member of primary insured (spouse or children's rider), family rider covers both spouse and children
  2. Long Term Care Rider Answer Advance of death benefits while insured is living, can be used to pay for long term care expenses, reduces death benefit payable upon death
  3. Accelerated Benefits Rider Answer Enables policyowner to apply for an advance on death benefit during lifetime of insured, insured must meet certain medical circumstances to be eligible
  4. Interest Income (Only) Settlement Option Answer Insurer retains death benefit and pays stated amount of interest on money, interest paid to beneficiary at regular intervals, death benefit paid at later late

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  1. Withdrawals/Partial Surrenders Answer Cannot be repaid, reduction of cash value and cash amount, only allowed on universal life, charges/fees apply
  2. Policy Dividends Answer Participating life policies, refund of portion of premium, not guaranteed, not taxable
  • life policies without dividends are nonparticipating
  • difference between gross premium charged and actual experience of insurer
  • options - CARPPO
  1. CARPPO Answer Cash Accumulate interest - left with insurer to earn interest Reduced premium Paid up additions - annual dividends used to purchase additional amount of life insurance Paid up insurance - applied to annual premium One-year term insurance - may be used to buy one-year term insurance equal to policy's cash value

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  1. Nonforfeiture Options Answer Allows insured to receive all or portion of benefits or partial refund on premiums paid if a payment is missed
  • Cash surrender - policy cancelled and insured receives current cash value
  • Reduced paid-up insurance - buy new single premium policy with less face value than old policy
  • Extended term insurance - buy new single premium term insurance with same face value and old policy
  1. Life Insurance Policy Provision Answer Terms of life insurance policy, rights, obliga- tions, and how certain common situations will be handled
  2. Free Look Answer Period of time to return policy for any reason within 10 days of delivery and receive all premiums paid
  3. Insuring Clause Answer Also called insuring agreement, insurer's promise to pay benefits upon insured's death, what will be paid, amount, and to whom
  4. Ownership Rights Answer Owner can exercise all policy rights and privileges without consent of any beneficiary
  • choose and change beneficiary (if not irrevocable)
  • select settlement/conversion/nonforfeiture options
  • receive/borrow any cash values and/or dividends
  • cancel the policy
  • assign or transfer ownership of policy
  • select or change premium payment mode
  • receive policy proceeds upon maturity or endowment
  1. Assignment

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  1. Incontestability Provision Answer Company cannot claim that a statement made in application was meant to defraud insurer after life policy has been in effect for 2 years
  2. Suicide Clause Answer If insured commits suicide within first 2 years of policy, only premiums paid by insured will be returned
  • commits suicide after 2 years, full face value of policy will be paid out
  1. Misstatement of Age Answer If deceased insured misrepresented their age the face amount of the policy will be adjusted by age and when policy was purchased
  • insured is older - death benefit reduced
  • insured is younger - death benefit increased
  • incontestability provision does not apply
  • premiums are higher the older you are and for males
  1. Beneficiary Designations Answer Individuals - clearly identified by name w/ middle name or initial Classes - "my children", "my siblings", no name needed Trusts - legal entity that can hold property, has grantor (who sets it up), trustee (who manages it, could be a bank), and beneficiary Minors - under 18, deemed legally incompetent, benefit would go to legal guardian/trustee of that minor Estates - used to pay debts and costs of legally closing estate, remaining proceeds would go to heirs
  2. Primary Beneficiary Answer First in line to receive policy's death benefit
  3. Contingent Beneficiary Answer Next in line to receive policy's death benefit if primary beneficiary dies

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before the insured

  1. Revocable Beneficiary Answer Designations can be changed or revoked without no- tice and without their knowledge or consent
  2. Irrevocable Beneficiary Answer When policyowner gives up the right to change a beneficiary designation, this can only be changed with the beneficiaries written consent
  3. Common Disaster Provision Answer If primary beneficiary dies within short specified amount of time after the insured due to a common accident (30-90 days), insurance assumes that the primary beneficiary died first, benefits now go to contingent beneficiary
  4. Policy Exclusions Answer Suicide Aviation - does not apply to passengers, pilots, and crews of commercial flights War/Military Service - status type excludes coverage during entire service period (even if home on leave), results type excludes only military service related
  5. Elements of a Contract (CLOAC) Answer Consideration - exchange of money/info Legal Purpose - legal, doesn't violate law

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  1. Required Signatures Answer Insured, producer/agent, and the applicant/owner if not the insured
  2. Collecting the Premium Answer "Offer to buy" insurance exists with first premium payment, coverage delayed until premium is paid
  3. Conditional Receipt Answer Effective date is date of application or date of required medical exam, whichever is later
  • deceased insured meets requirements, death benefit will be paid
  • deceased insured uninsurable, no coverage will be in force and premium returned
  1. Binding Receipt Answer Not common in life insurance (called temporary insurance agreements), effective for 30-60 days from date of application even if applicant is uninsurable
  2. US Patriot Act Answer Anti-money laundering provision, deter terrorist activity both globally and in the US
  • receipt of any cash payment excess of $10K
  • greater interest in early termination feature
  • fictitious identification or reluctance to provide identification
  1. Attending Physician's Statement Answer Regular doctor's statement about the in- sured's current condition and medical history, may ask for medical records

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  1. Medical Examination and Testing Answer Insurer usually requires proposed insured to take medical exam for larger death benefit amounts, insurer pays for medical exams and tests
  2. Medical Information Bureau Answer Non-profit insurance trade association that main- tains underwriting info on applicants, member companies account for 99% of indi- vidual life and 80% of health and disability policies in US and Canada
  3. Consumer Reports Answer Used to determine consumer's eligibility for personal credit (credit report), insurance, or employment
  4. Standard Risk Answer Average health and normal live expectancy
  5. Preferred Risk Answer Excellent health, below average loss risk
  6. Substandard Risk Answer Below average life expectancy, high risk life insurance
  7. Declined Risk Answer Applicant is not insurable at any price
  8. Personal Delivery of Policy Answer Producer's responsibility to deliver policy to the policyowner, can be mailed or physically handed, will receive receipt with date that policyholder acknowledges receipt of the policy
  9. Policy Review Answer During delivery appointments, producer will review with the policyholder the policy, riders, exclusions, and other details, as well as answer any questions
  10. Effective Date of Coverage

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  1. Estate creation
  2. Estate conservation
  3. Liquidity - bank savings/checking, cash, life insurance proceeds (illiquid assets are precious metals, real estate, small/privately held business interests)
  4. Cash accumulation - permanent life insurance has cash value and it's called living benefits
  5. Human Life Value Answer Purpose of life insurance is to replace an individual's eco- nomic value Answer amount of income X number of years until retirement
  6. Needs Approach Answer Looks at financial situation the survivors will face if individual dies Cash Needs - can be met with lump some of money, final expenses, debt payoff, children's education, emergency fund Income Needs - ongoing living expenses like food, clothing, utilities, mortgage
  7. Income Need Period Answer 1. Family dependency - surviving children too young to support themselves and depend on surviving parent
  8. Preretirement - children are self-supporting but surviving spouse has not reached retirement age
  9. Retirement - surviving spouse no longer earning income
  10. Blackout Period Answer When last/youngest surviving child turns 16 and Social Security Administration stops paying benefits until surviving spouse turns 60
  11. Key Person Coverage Answer Insurance proceeds can be used to offset direct finan- cial losses of a business as a result from death of employee whose contributions are key to its success

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  1. Buy-Sell Funding Answer Agreement that provides for sale of a business interest at death or disability of an owner, also called business continuation plans
  2. Interest Income (Only) Option Answer Insurer retains death benefit and pays stated amount of interest on the money, interest paid to beneficiary at regular intervals, death benefit paid at a later date
  3. Fixed Period Option Answer Will pay both amount of death benefit and interest to the beneficiary over certain stated period of time, if interest greater than guaranteed rate final payment will be larger
  4. Fixed Amount Option Answer Proceeds will be paid out in fixed amount over time until death benefit and interest have been completely paid to beneficiary, beneficiary can increase or decrease payments, excess interest increases payment period not last check amount
  5. Life Income Option Answer Beneficiary will be guaranteed to receive income for rest of their life, amount dependent on death benefit and life expectancy of beneficiary