17 Free New Mexico Life Insurance Exam Practice Questions (2026)

The life questions in this set draw on two sections of PSI's content outline for the combined Series 18-27 exam, the Life, Accident and Health or Sickness Insurance Producer exam: Types of Life Insurance Policies at 13 scored questions and Life Insurance Policy Provisions, Options, and Riders at 19. On that exam they sit beside the other sections of the thirteen-section outline, including Insurance Regulation (New Mexico law) at 15 and the accident and health sections. The exam is 150 scored questions in 150 minutes (2.5 hours) for $75, with one score for the whole exam and a pass mark of 70 percent. A candidate who wants only the Life line can book the single-line Life exam (Series 18-25) instead: 100 questions in 2 hours for $75, with the same 70 percent standard. Either exam is taken at a PSI test center or online proctored, as you choose at registration. New Mexico requires no pre-licensing course, and for resident applicants the national criminal history background check through IdentoGo ($67) comes after you pass the exam and before you apply through NIPR.

The 17 questions are drawn from Chapters 4 and 5 of LanePrep's New Mexico Life & Health quiz bank, and none repeats a question from the free 25-question sample across the whole exam: 7 on the types of life policies (Chapter 4) and 10 on life policy provisions, options and riders (Chapter 5). On the combined exam those chapters are worth 13 and 19 of the 150 scored items. The grouping is LanePrep's own, not PSI's: the eight chapters regroup the thirteen PSI sections. The New Mexico law questions and the annuity questions are in the free 25-question set. Every question is labeled with its chapter, so each miss points you to the audio lesson to replay.

For context, the NAIC reports first-time pass rates for the combined exam, the exam this course follows, of 33.6 percent in 2024 and 37.0 percent in 2025, counting both testing modes together.

Answer each one before you open the explanation. The explanation is folded underneath every question. A guess you have to defend is worth more than an answer you only agree with.

Chapter 4 opens the Life set with the types of life policies. It asks what a producer must hold to sell Variable Life in New Mexico, what an employer calls a group plan in which the employees pay the full premium through payroll deduction, and which document a producer delivers at or before solicitation because a variable policy carries investment risk. The next three questions cover when a Whole Life policy matures if the insured is still living, the policy that combines Universal Life's premium flexibility with Variable Life's investment choices, and the Whole Life structure for an applicant who wants to stop paying premiums at a chosen age yet keep coverage for life.

Chapter 4 closes with what the floor in an Indexed Universal Life policy guarantees. Chapter 5 then turns to provisions, options and riders: whether an insurer can still contest a policy after years in force when the applicant lied about heart disease, how the Waiver of Premium rider treats premiums paid while the insured was disabled, and when a producer must present and read the Notice Regarding Replacement. It continues with the dividend option that buys one year of term insurance and with how the law classifies an applicant's statements about health history.

Chapter 5 closes the Life set with the beneficiary and the policy. It asks what a spendthrift clause protects when a beneficiary fears her creditors, what happens to the remaining payments when a beneficiary who chose Life Income with Period Certain dies early, and, from a second angle, the producer's duty on a replacement application. The last two questions cover which benefit the incontestability statute leaves outside its two-year limit and what an insurer may require when a lapsed policy is reinstated.

Forgetting what a variable policy adds. To sell Variable Life in New Mexico a producer needs a life insurance license and a securities license (NMSA 59A-12-17(B)); a life license alone, a life license plus a property license and a securities credential without the life license do not qualify (question 1). The cash value of a variable policy sits in separate investment accounts, so the policy carries investment risk and is treated as a security, and the applicant must receive a prospectus at or before solicitation (question 3). The buyer's guide and the policy summary belong to the life insurance disclosure rule (NMAC 13.9.5.9), which has its own timing: they go to the applicant before the insurer accepts the initial premium, unless the policy has an unconditional refund provision of at least ten days, in which case they may come with the policy. An illustration shows projected values. None of the three discloses the risks and expenses of the separate account the way a prospectus does. Variable Universal Life joins Universal Life's adjustable premiums with Variable Life's investment choices (question 5), which is why Indexed Universal Life, Adjustable Whole Life and Current Assumption Whole Life are wrong.

Mixing up the group-plan vocabulary. A group plan in which the employees pay some or all of the premium, here through payroll deduction, is contributory (question 2). A non-contributory plan is paid for by the employer, a participating contract is one that pays dividends, and adverse selection is a risk the insurer manages, not a type of plan. Insurers usually require a minimum percentage of the eligible employees to enroll in a contributory plan to guard against adverse selection, and the explanation under question 2 gives the usual figure.

Misplacing whole life maturity and the premium-paying period. A traditional Whole Life policy matures when its cash value equals the face amount, and if the insured is still living the face amount is then paid to the policyowner; the explanation under question 4 gives the age at which that traditionally happens. The other ages offered are not maturity ages for whole life. In question 6, an applicant who wants to stop paying premiums at a chosen age but keep the coverage for life needs Limited Payment Whole Life, such as a policy paid up at a stated age. Continuous Premium (Straight Life) keeps charging premiums for life, Single Premium Whole Life takes one payment up front, and Adjustable Life is built around flexibility, not a fixed premium-paying period.

Overstating the Indexed Universal Life floor. The floor in an Indexed Universal Life policy is a guarantee that the cash value will not lose money because the linked index falls (question 7). That safety net is what a variable policy lacks. The floor is not a limit on the interest the policy can earn, which is the job of a cap, it is not a minimum premium, and it does not stop the death benefit from decreasing.

Misreading the incontestable clause. Under NMSA 59A-20-5 a life insurance policy becomes incontestable once it has been in force during the insured's lifetime for two years from its date of issue, except for nonpayment of premiums and for the benefits for disability and accidental death. In question 8 the policy is past that point, so the insurer cannot contest it over the heart disease, even though the applicant lied. The statute lists its own exceptions, and a lie on the application is not one of them, so the option that says fraud is never protected by time limits is wrong. It also carves out no shorter discovery window, and what matters is that the policy has been in force for two years during the insured's lifetime, not whether the insured is still alive when the lie comes to light. Question 16 asks which item the statute leaves outside the two-year limit: the provisions relative to benefits in the event of total and permanent disability. Misstatements about tobacco use, occupation or family medical history are ordinary misstatements that become incontestable like the rest.

Treating application statements as warranties. Under NMSA 59A-20-6, statements made by the insured in the application are, absent fraud, representations and not warranties (question 12). Warranties, guarantees and absolute truths are the wrong labels. A representation is a statement made to the best of the applicant's knowledge and belief, while a warranty would have to be true in every respect.

Missing the replacement duty. When an application involves replacing an existing policy, the producer presents and reads the Notice Regarding Replacement to the applicant no later than when the application is taken, both sign it and a copy is left with the applicant (NMAC 13.9.6, questions 10 and 15). The notice is not delayed until after delivery or until the first premium is collected, and it is not triggered by a written request. Collecting premiums in advance, phoning the existing insurer to verify values and waiting before submitting the application are not the producer's duty either. The replacing insurer then notifies the existing insurer within five business days, and the existing insurer offers in-force information within five business days. The 30 days that do belong to a replacement are the owner's right to return the new policy or contract for a full refund (NMAC 13.9.6.10), not a waiting period before the application. That right is specific to replacements: New Mexico sets no statutory free look for an ordinary new life policy, although a policy may contain one.

Choosing the wrong rider, dividend option or settlement option. The Waiver of Premium rider waives future premiums while the insured is totally disabled, and when the disability continues past the rider's waiting period the premiums paid during that waiting period are refunded (question 9). It does not pay the insured a monthly income, and it has no minimum-age condition. The One-Year Term, or Fifth Dividend, option uses the dividend to buy one year of term insurance, often equal to the cash value (question 11); Paid-Up Additions buys permanent paid-up insurance, Accumulation at Interest leaves the dividend with the insurer to earn interest, and Extended Term is a nonforfeiture option, not a dividend option. A Spendthrift Clause protects proceeds still held by the insurer from the beneficiary's creditors (question 13); it does not make the benefit tax-exempt, let the insurer withhold for the beneficiary's debts, or govern changes of beneficiary. With Life Income with Period Certain, a beneficiary who dies during the certain period leaves the remaining guaranteed payments to a contingent payee (question 14). Only the rest of the certain period is paid: the payments do not stop at once, they do not run on to the original beneficiary's expected lifetime, and they are not restarted for the estate.

Forgetting the reinstatement terms. NMSA 59A-20-12 allows a lapsed policy to be reinstated within three years of default if the owner pays the back premiums with interest and gives evidence of insurability satisfactory to the insurer (question 17). The owner in question 17 applies within that period, so the insurer may require evidence of insurability. A new suicide exclusion, a higher premium rate based on her current age and the surrender of past dividends are not what the statute lets the insurer demand. A reinstated policy also becomes incontestable after the same two-year period (NMSA 59A-20-16).

How did you score?

13 or more correct: That is a strong result on the life sections. Take the Health insurance exam set next, then read how to pass the New Mexico Life & Health exam on the first try for the full study plan.

9-12 correct: You have a base but not yet a margin. Note which chapter each miss came from and replay that chapter's audio lesson before you retest.

Under 9 correct: Begin with Chapter 4 of the LanePrep New Mexico Life & Health course and work through Chapter 5 before you test yourself again. A free preview is available at /nm/l-and-h/preview.

Want a sample across the whole exam instead? The free practice set has 25 questions.

Exam format, fees and content outline item counts from PSI's New Mexico Office of Superintendent of Insurance Candidate Information Bulletin (footer-dated 6/4/2026) and PSI's Examination Content Outlines effective 7/1/2026 (Series 18-25 and 18-27); passing score from NMSA 59A-11-6; variable product licensing from NMSA 59A-12-17; incontestability, representations and reinstatement from NMSA 59A-20-5, 59A-20-6, 59A-20-12 and 59A-20-16; life insurance disclosure and replacement from NMAC 13.9.5.9, 13.9.6 and 13.9.6.10; pass rates from the NAIC compiled pass-rate workbooks for 2024 and 2025. Read October 2026.