17 Free Louisiana Life & Health Practice Questions: Life Policy Provisions (2026)

Question 1 (Chapter 6)

An insured individual in Shreveport dies 18 months after their life insurance policy was issued. During the claims process, the insurer discovers the insured failed to disclose a history of heart disease on the original application. Which provision determines the insurer's course of action?

• A) The Entire Contract provision
• B) The Reinstatement provision
• C) The Misstatement of Age provision
• D) The Incontestability provision

Question 2 (Chapter 6)

Which nonforfeiture option allows the policyowner to have a permanent life insurance policy with a lower face amount than the original, but with no further premiums due?

• A) Reduced Paid-Up
• B) Extended Term
• C) Cash Surrender
• D) Paid-Up Additions

Question 3 (Chapter 6)

An insured has a $100,000 life insurance policy with a Double Indemnity Accidental Death rider. The insured dies in a plane crash. How much will the insurer pay the beneficiary?

• A) $200,000
• B) $100,000
• C) $150,000
• D) $300,000

Question 4 (Chapter 6)

A policyowner has paid $10,000 in total premiums for a whole life policy. The cash value is now $15,000. If the owner surrenders the policy for cash, what is the taxable amount?

• A) $0
• B) $10,000
• C) $15,000
• D) $5,000

Question 5 (Chapter 6)

A 40-year-old worker in Alexandria contributes to a Traditional IRA. They withdraw $5,000 to pay for a vacation. What is the tax consequence?

• A) The withdrawal is taxed as ordinary income plus a 10% penalty.
• B) The withdrawal is tax-free because it is their own money.
• C) The withdrawal is taxed as a capital gain.
• D) The withdrawal is only taxed if their income exceeds $100,000.

Question 6 (Chapter 6)

A policyowner in Lafayette receives dividends from their participating policy and chooses to use them to pay part of the next year's premium. Which dividend option is this?

• A) Paid-up additions
• B) Accumulation at interest
• C) Cash payment
• D) Reduction of premium

Question 7 (Chapter 6)

A policyowner in Alexandria wants to withdraw $10,000 from their Universal Life policy. The total premiums paid (cost basis) are $15,000, and the current cash value is $25,000. How is this withdrawal taxed?

• A) The entire $10,000 is taxable as ordinary income
• B) Only the interest portion of the $10,000 is taxable
• C) The $10,000 is taxable plus a 10% penalty
• D) The $10,000 is tax-free because it is a return of cost basis

Question 8 (Chapter 6)

A beneficiary in Kenner receives death benefit proceeds and chooses a settlement option where the insurer pays a specific dollar amount each month until the principal and interest are exhausted. Which option is this?

• A) Fixed-amount installments
• B) Fixed-period installments
• C) Life income
• D) Interest only

Question 9 (Chapter 6)

Which of the following describes a 'Collateral Assignment' of a life insurance policy in Louisiana?

• A) A permanent transfer of all policy rights to a new owner
• B) Naming a new beneficiary who cannot be changed
• C) The process of reinstating a lapsed policy
• D) A temporary transfer of partial rights to a creditor to secure a debt

Question 10 (Chapter 6)

A policyowner in Shreveport discovers that their life insurance policy was issued with the 'Sex' listed as Male, even though the insured is Female. Since female mortality rates are generally lower, how will the insurer handle this under the Misstatement of Age or Sex provision?

• A) The insurer will cancel the policy for material misrepresentation.
• B) The insurer will refund the difference in premiums but keep the death benefit the same.
• C) The insurer will require a new medical examination to keep the policy in force.
• D) The insurer will increase the death benefit to the amount the premiums paid would have purchased for a female.

Question 11 (Chapter 6)

A policyowner in Lafayette stops paying premiums on their $100,000 Whole Life policy. They want to maintain the full $100,000 death benefit for as long as the current cash value will allow. Which nonforfeiture option should they choose?

• A) Reduced Paid-Up
• B) Cash Surrender
• C) Extended Term
• D) Fixed Amount

Question 12 (Chapter 6)

A life insurance policy in Louisiana is classified as a Modified Endowment Contract (MEC) because it failed the 7-pay test. Which of the following is a consequence of this classification?

• A) The death benefit becomes taxable as ordinary income.
• B) Policy loans and withdrawals are taxed on a Last-In, First-Out (LIFO) basis.
• C) The policy is automatically canceled by the IRS.
• D) Premiums are no longer tax-deductible.

Question 13 (Chapter 6)

Under the 'Entire Contract' provision of a Louisiana life insurance policy, which of the following is NOT part of the contract?

• A) The policy document itself
• B) The signed application (if attached)
• C) Any riders or amendments
• D) The insurer's internal underwriting manual

Question 14 (Chapter 6)

A resident of New Orleans purchased a life insurance policy three years ago. The insurer now discovers that the insured lied about their occupation on the application, claiming to be an accountant when they were actually a professional stunt driver. What action can the insurer take?

• A) Void the policy and return all premiums paid.
• B) Nothing; the policy is past the two-year incontestability period.
• C) Increase the premium retroactively to the date of issue.
• D) Cancel the policy immediately but keep the cash value.

Question 15 (Chapter 6)

Under the Uniform Simultaneous Death Act as applied in Louisiana, if an insured and the primary beneficiary die in the same accident and there is no evidence of who died first, how are the proceeds handled?

• A) They are paid to the primary beneficiary's estate.
• B) They are split 50/50 between both estates.
• C) The proceeds are paid as if the primary beneficiary died first.
• D) The proceeds are escheated to the State of Louisiana.

Question 16 (Chapter 6)

An insured in Ruston has a Guaranteed Insurability Rider (GIR). Which of the following events would typically allow the insured to purchase additional coverage without a medical exam?

• A) The insured's 65th birthday
• B) The insured being diagnosed with a chronic illness
• C) The birth of the insured's child
• D) A decrease in the insured's credit score

Question 17 (Chapter 6)

Which of the following is a requirement for a 'Qualified' retirement plan to receive favorable tax treatment from the IRS?

• A) The plan must be available only to highly compensated employees.
• B) The plan must be in writing and communicated to employees.
• C) The plan must allow for unlimited annual contributions.
• D) The plan must be funded entirely by the state government.