Free Hawaii Life insurance exam practice test

Last updated October 14, 2026

These 25 questions follow the mix of the Hawaii Life Producer exam on the Pearson VUE outline effective January 1, 2026: 15 general life insurance questions and 10 on Hawaii law. Pick your answers, then check them. Every question explains all four choices and quotes the law or official source it comes from.

These are practice questions written by Prep Retention, not questions from the actual exam.

Question 1 Types of life policiesUnder the NAIC Modified Guaranteed Annuity Model Regulation (#255), which description fits a modified guaranteed annuity?

A. A deferred annuity, backed by separate account assets, with values guaranteed if held for set periods
B. An immediate annuity, backed by general account assets, with payments that rise each year by an index
C. A deferred annuity, backed by general account assets, with interest credits tied to a stock market index
D. A variable annuity, backed by separate account assets, with values that are never guaranteed for any period

Show the answer and explanation

Correct answer: A. A deferred annuity, backed by separate account assets, with values guaranteed if held for set periods

A. Correct. Section 4A defines it as a deferred annuity contract whose underlying assets are held in a separate account and whose values are guaranteed if held for specified periods.
B. Incorrect. The definition describes a deferred annuity with separate account assets, not an immediate annuity with indexed payments.
C. Incorrect. The underlying assets are held in a separate account, and the definition does not describe index-linked interest.
D. Incorrect. The definition says the values are guaranteed if held for specified periods.

"Modified guaranteed annuity" means a deferred annuity contract, the underlying assets of which are held in a separate account, and the values of which are guaranteed if held for specified periods.
Source: NAIC Modified Guaranteed Annuity Model Regulation (#255), Section 4A

Question 2 Types of life policiesLena, age 45, pays $300 a month into a deferred annuity and plans to start taking income from it at age 67. According to the Key Terms on FINRA's annuities page, what is the period called during which she makes these payments and builds up assets?

A. The annuity payout phase
B. The surrender period
C. The accumulation period
D. The free look period

Show the answer and explanation

Correct answer: C. The accumulation period

A. Incorrect. The payout phase is when the insurer makes income payments, not when the owner pays in.
B. Incorrect. A surrender period relates to charges on withdrawals; FINRA's term for the pay-in stage is the accumulation period.
C. Correct. FINRA defines the accumulation period as the time during which the owner makes payments into the annuity and accumulates assets.
D. Incorrect. A free look period is a short review window after the contract is received, not the multi-year pay-in stage.

The accumulation period is the time period during which the owner of an annuity makes payments into their annuity and accumulates assets.
Source: FINRA, Annuities, Key Terms

Question 3 Types of life policiesTwo years after buying a deferred annuity, Ben takes part of his money out of the contract during the set period stated in the contract. According to the NAIC Buyer's Guide for Deferred Annuities, what may apply to this transaction?

A. A free look refund of his premium
B. A late enrollment penalty
C. A guaranteed interest bonus
D. A surrender or withdrawal charge

Show the answer and explanation

Correct answer: D. A surrender or withdrawal charge

A. Incorrect. A free look lets a buyer cancel soon after receiving the contract; Ben is taking money out two years later.
B. Incorrect. A late enrollment penalty is not an annuity charge described in the NAIC guide.
C. Incorrect. Taking money out early does not earn a bonus; the NAIC guide describes a charge.
D. Correct. The NAIC guide says a surrender or withdrawal charge is a charge if you take part or all of the money out of your annuity during a set period of time.

A surrender or withdrawal charge is a charge if you take part or all of the money out of your annuity during a set period of time.
Source: NAIC Buyer's Guide for Deferred Annuities (2022), surrender or withdrawal charges

Question 4 Types of life policiesUnder Section 4D(1) of the NAIC Variable Life Insurance Model Regulation (#270), the cover page of a variable life policy must include a prominent statement, in contrasting color or bold-faced type, about the policy's cash values. What must that statement say?

A. Cash values are guaranteed never to fall below the premiums paid
B. Cash values may rise or fall with the separate account's results
C. Cash values are fixed by the insurer's general account interest rate
D. Cash values begin to build after the third policy year is complete

Show the answer and explanation

Correct answer: B. Cash values may rise or fall with the separate account's results

A. Incorrect. The required statement warns that cash values can decrease; it does not promise they stay above premiums paid.
B. Correct. Section 4D(1)(b) requires a prominent statement that cash values may increase or decrease in accordance with the experience of the separate account, subject to any specified minimum guarantees.
C. Incorrect. Variable life cash values follow the separate account, not a fixed general account rate.
D. Incorrect. The required cover page statement is about cash values moving with the separate account, not when they begin.

The cover page or pages corresponding to the cover page of each policy shall contain: [...] A prominent statement in either contrasting color or in bold-faced type that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;
Source: NAIC Variable Life Insurance Model Regulation (#270), Section 4D(1) and 4D(1)(b)

Question 5 Life policy riders, provisions and optionsA terminally ill federal employee irrevocably assigned his FEGLI coverage to a trust several years ago. He now wants to elect a Living Benefit. Under 5 CFR 870.1101(d), what is the result?

A. He may elect it if the trust consents in writing first
B. The trust may elect it on his behalf as the new owner
C. Neither he nor the trust may elect a Living Benefit
D. He may elect it for Basic coverage only, not Optional

Show the answer and explanation

Correct answer: C. Neither he nor the trust may elect a Living Benefit

A. Incorrect. 870.1101(d) bars the election after an assignment; assignee consent does not change that.
B. Incorrect. The rule expressly says an assignee cannot elect a Living Benefit on behalf of the insured.
C. Correct. If the insured has assigned his insurance, he cannot elect a Living Benefit, and an assignee cannot elect one on his behalf.
D. Incorrect. After an assignment no Living Benefit election is available at all.

If the insured individual has assigned his/her insurance, he/she cannot elect a Living Benefit; nor can an assignee elect a Living Benefit on behalf of an insured individual.
Source: 5 CFR 870.1101(d)

Question 6 Life policy riders, provisions and optionsLeo, insured under the Federal Employees' Group Life Insurance (FEGLI) program, named his brother as beneficiary and promised him in writing never to change it. Under 5 CFR 870.802(f), may Leo later name his wife instead?

A. Yes, once the brother consents to the change in writing
B. No, because his written promise waived the right to change
C. Yes, after he gives the brother 30 days' advance notice
D. Yes, at any time, and the brother need not know or consent

Show the answer and explanation

Correct answer: D. Yes, at any time, and the brother need not know or consent

A. Incorrect. The previous beneficiary's consent is not needed under section 870.802(f).
B. Incorrect. Section 870.802(f) says the right to change the beneficiary cannot be waived or restricted.
C. Incorrect. The change can be made without the previous beneficiary's knowledge, so no notice period applies.
D. Correct. Section 870.802(f) lets the insured change the beneficiary at any time without the knowledge or consent of the previous beneficiary, and this right cannot be waived or restricted.

An insured individual (or an assignee) may change his/her beneficiary at any time without the knowledge or consent of the previous beneficiary. This right cannot be waived or restricted.
Source: 5 CFR 870.802(f)

Question 7 Life policy riders, provisions and optionsMia's life insurance policy has a rider that lets her use the policy's death benefit early to pay long-term care expenses. She uses it to pay for care. According to the NAIC Shopper's Guide to Long-Term Care Insurance, what is the likely effect on the death benefit the policy pays after she dies?

A. It will likely rise by the amount used
B. It will likely be reduced
C. It stays the same, as care costs are separate
D. It is replaced by a refund of premiums

Show the answer and explanation

Correct answer: B. It will likely be reduced

A. Incorrect. Using the death benefit early for care does not increase it; the NAIC says it likely reduces it.
B. Correct. The NAIC says life policies and some annuities offer add-on riders usable for long-term care expenses, and that long-term care benefits paid as an accelerated death benefit likely will reduce the death benefit paid after death.
C. Incorrect. The NAIC says benefits paid as an accelerated death benefit likely reduce the death benefit, so it does not stay the same.
D. Incorrect. The NAIC describes a reduced death benefit, not a refund of premiums.

An increasing number of life insurance policies and some annuity contracts now offer an add-on rider that you could use to pay long-term care expenses. [...] Long-term care benefits paid as an accelerated death benefit likely will reduce the death benefit the policy will pay after you die.
Source: NAIC, A Shopper's Guide to Long-Term Care Insurance (2022), life insurance riders

Question 8 Life policy riders, provisions and optionsAn insured meets the qualifying event in her policy's accelerated benefit rider, which follows the NAIC Accelerated Benefits Model Regulation (#620). The insurer now wants her to also get a second opinion from a doctor it picks, a condition not found in the policy or rider. Under Section 9 of #620, may the insurer do this?

A. Yes, for any claim made in the first policy year
B. No, unless the commissioner approves it in advance
C. No, it cannot add conditions beyond the policy or rider
D. Yes, as long as the insurer pays for the second opinion

Show the answer and explanation

Correct answer: C. No, it cannot add conditions beyond the policy or rider

A. Incorrect. Section 9 has no first-year exception.
B. Incorrect. Section 9 has no commissioner approval exception for added conditions.
C. Correct. Section 9 says an insurer shall not apply further conditions on paying accelerated benefits other than those specified in the policy or rider.
D. Incorrect. Paying for the exam does not allow a condition the policy or rider does not specify.

An insurer shall not apply further conditions on the payment of the accelerated benefits other than those conditions specified in the policy or rider.
Source: NAIC Accelerated Benefits Model Regulation (#620), Section 9 (Discrimination)

Question 9 Life applications, underwriting and deliveryUnder the NAIC Variable Life Insurance Model Regulation (#270), the application for a variable life policy must contain a prominent statement about cash values. What must that statement say?

A. Cash values may rise or fall with the separate account's experience
B. Cash values are guaranteed to grow at the policy's stated minimum rate
C. Cash values follow the insurer's general account dividend scale
D. Cash values cannot be borrowed during the first policy year

Show the answer and explanation

Correct answer: A. Cash values may rise or fall with the separate account's experience

A. Correct. Section 8B requires a prominent statement that cash values may increase or decrease in accordance with the experience of the separate account, subject to any specified minimum guarantees.
B. Incorrect. The required statement warns that cash values may decrease as well as increase with separate account experience.
C. Incorrect. The statement ties cash values to the separate account's experience, not a general account dividend scale.
D. Incorrect. Section 8 says nothing about a first-year loan restriction; the statement concerns changes in cash values.

The application for a variable life insurance policy shall contain: [...] A prominent statement that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees); and
Source: NAIC Variable Life Insurance Model Regulation (#270), Section 8 (lead-in) and 8B

Question 10 Life applications, underwriting and deliveryAn insurer that is a financial institution wants to share a customer's nonpublic personal information with a nonaffiliated marketing company. Under 15 U.S.C. 6802, which of the following must happen before the information is first disclosed?

A. The customer is told and given a chance to direct that it not be shared
B. The customer signs a written consent form that is renewed every year
C. The state insurance commissioner approves the information sharing
D. The marketing company becomes an affiliate of the insurer beforehand

Show the answer and explanation

Correct answer: A. The customer is told and given a chance to direct that it not be shared

A. Correct. Section 6802(b)(1) bars disclosure to a nonaffiliated third party unless the consumer gets a clear disclosure, an opportunity before the initial disclosure to direct that the information not be disclosed, and an explanation of how to use that option.
B. Incorrect. The statute uses an opt-out approach: notice and a chance to say no, not a signed consent renewed each year.
C. Incorrect. The statute does not require the commissioner to approve each sharing arrangement; it requires notice and an opt-out opportunity to the consumer.
D. Incorrect. The rule governs sharing with nonaffiliated third parties; the insurer must give notice and an opt-out chance, not turn the company into an affiliate.

A financial institution may not disclose nonpublic personal information to a nonaffiliated third party unless [...] (A) such financial institution clearly and conspicuously discloses to the consumer, in writing or in electronic form or other form permitted by the regulations prescribed under section 6804 of this title, that such information may be disclosed to such third party; (B) the consumer is given the opportunity, before the time that such information is initially disclosed, to direct that such information not be disclosed to such third party; and (C) the consumer is given an explanation of how the consumer can exercise that nondisclosure option.
Source: 15 U.S.C. 6802(b)(1)

Question 11 Life applications, underwriting and deliveryIn 2026, a life insurer files a suspicious activity report (SAR) with FinCEN about a transaction involving a covered product. Under 31 CFR 1025.320(d), how long must the insurer keep a copy of the SAR and the supporting documentation?

A. 3 years after the date of the transaction
B. 7 years after the SAR is filed
C. 5 years after the SAR is filed
D. Until the next state examination is closed

Show the answer and explanation

Correct answer: C. 5 years after the SAR is filed

A. Incorrect. The period runs from the SAR filing date and lasts five years, not three.
B. Incorrect. 1025.320(d) requires five years, not seven.
C. Correct. 1025.320(d) requires the insurer to keep a copy of any SAR filed and the supporting documentation for five years from the date of filing the SAR.
D. Incorrect. 1025.320(d) sets a fixed five-year period, not one tied to a state examination.

An insurance company shall maintain a copy of any SAR filed and the original or business record equivalent of any supporting documentation for a period of five years from the date of filing the SAR.
Source: 31 CFR 1025.320(d) (Retention of records)

Question 12 Life applications, underwriting and deliveryA direct response applicant leaves blank the application question about replacing existing coverage. Under Section 7A of the NAIC Life Insurance and Annuities Replacement Model Regulation (#613), what must the insurer do?

A. Send the replacement notice in Appendix B with the policy
B. Return the application as incomplete and refuse to issue the policy
C. Treat it as no replacement and take no further steps
D. Tell the existing insurer within five business days of receipt

Show the answer and explanation

Correct answer: A. Send the replacement notice in Appendix B with the policy

A. Correct. If the applicant indicates no replacement is intended or fails to respond, the insurer must send the applicant, with the policy or contract, the notice regarding replacement in Appendix B or a substantially similar approved form.
B. Incorrect. The model does not require the insurer to reject the application; it requires sending the replacement notice with the policy.
C. Incorrect. A failure to respond triggers the duty to send the replacement notice with the policy.
D. Incorrect. Section 7A addresses a notice to the applicant, not a five-day notice to the existing insurer.

If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B, or other substantially similar form approved by the commissioner.
Source: NAIC Life Insurance and Annuities Replacement Model Regulation (#613), Section 7A (second sentence)

Question 13 Retirement plans and other life topicsA consumer buying an annuity refuses to give the producer relevant consumer profile information, and the producer does not recommend the annuity. Under Section 6B(1)(c) of the NAIC Suitability in Annuity Transactions Model Regulation (#275), what obligation does the producer have to the consumer under Subsection A(1) for this transaction?

A. The full A(1) duty, the same as for any sale
B. A duty to collect the missing data first
C. A duty to stop the sale until data is given
D. No A(1) obligation for this sale

Show the answer and explanation

Correct answer: D. No A(1) obligation for this sale

A. Incorrect. Section 6B(1)(c) removes the Subsection A(1) obligation when the consumer refuses profile information and the transaction is not recommended.
B. Incorrect. The model sets no duty here to collect the missing data; the producer has no A(1) obligation.
C. Incorrect. The model does not require stopping the sale; it states the producer has no A(1) obligation.
D. Correct. A producer has no obligation under Subsection A(1) if the consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended.

Except as provided under Paragraph (2), a producer shall have no obligation to a consumer under Subsection A(1) related to any annuity transaction if: [...] A consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended; or
Source: NAIC Suitability in Annuity Transactions Model Regulation (#275), Section 6B(1) (lead-in) and 6B(1)(c)

Question 14 Retirement plans and other life topicsAccording to IRS News Release IR-2025-111 (Nov. 13, 2025), what is the 2026 income phase-out range for a single taxpayer making contributions to a Roth IRA?

A. $153,000 to $168,000
B. $150,000 to $165,000
C. $242,000 to $252,000
D. $236,000 to $246,000

Show the answer and explanation

Correct answer: A. $153,000 to $168,000

A. Correct. For 2026 the Roth IRA income phase-out range for singles and heads of household is between $153,000 and $168,000.
B. Incorrect. $150,000 to $165,000 was the 2025 range for singles and heads of household.
C. Incorrect. $242,000 to $252,000 is the 2026 range for married couples filing jointly.
D. Incorrect. $236,000 to $246,000 was the 2025 range for married couples filing jointly.

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $153,000 and $168,000 for singles and heads of household, up from between $150,000 and $165,000 for 2025. [...] For married couples filing jointly, the income phase-out range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025.
Source: IRS News Release IR-2025-111 (Nov. 13, 2025), 2026 Roth IRA income phase-out ranges

Question 15 Retirement plans and other life topicsFor federal tax purposes, a universal life contract relies on the guideline premium requirements and must also fall within the cash value corridor of 26 U.S.C. 7702(d). At the beginning of the contract year the insured's attained age is 35, and the cash surrender value is $100,000. What is the lowest death benefit that keeps the contract within the corridor?

A. $250,000
B. $215,000
C. $150,000
D. $100,000

Show the answer and explanation

Correct answer: A. $250,000

A. Correct. The death benefit must be at least the applicable percentage of the cash surrender value, and the 7702(d)(2) table sets 250 percent for attained ages over 0 and not over 40, so 250% of $100,000 is $250,000.
B. Incorrect. 215 percent is where the table ends for age 45; age 35 falls in the 250 percent row.
C. Incorrect. 150 percent applies around age 55, not to an insured age 35.
D. Incorrect. A death benefit equal to the cash value is far below the 250 percent required at age 35.

A contract falls within the cash value corridor of this subsection if the death benefit under the contract at any time is not less than the applicable percentage of the cash surrender value. [...] In the case of an insured with an attained age as of the beginning of the contract year of: [...] More than: [...] But not more than: [...] The applicable percentage shall decrease by a ratable portion for each full year: [...] From: [...] To: [...] 0 | 40 | 250 | 250
Source: 26 U.S.C. 7702(d)(1) and (d)(2) (cash value corridor table)

Question 16 Hawaii laws for all linesAfter receiving a felony offender's request under HRS §431:2-201.3, which response is available to the Hawaii Commissioner?

A. Granting a limited consent
B. Referring it to a jury panel
C. Sending it to the governor
D. Issuing a two-year waiver

Show the answer and explanation

Correct answer: A. Granting a limited consent

A. Correct. HRS §431:2-201.3(b) lets the Commissioner, in writing, consent, provide a limited consent, or deny the privilege of engaging in the business of insurance.
B. Incorrect. The statute gives the decision to the Commissioner, not a jury.
C. Incorrect. The governor has no role under this section.
D. Incorrect. The statute does not describe a two-year waiver.

(b) After receipt of the request, the commissioner, in writing, may: (1) Consent to the person engaging in the business of insurance; (2) Provide a limited consent; or (3) Deny the individual the privilege of engaging in the business of insurance.
Source: HRS §431:2-201.3(b)

Question 17 Hawaii laws for all linesUnder HRS §431:2-303, how often may the Hawaii Commissioner examine the insurance accounts and records of a licensed insurance producer?

A. Whenever the Commissioner sees fit
B. Only once in each license term
C. Only after a consumer complaint is filed
D. Only once every five years at most

Show the answer and explanation

Correct answer: A. Whenever the Commissioner sees fit

A. Correct. HRS §431:2-303 lets the Commissioner examine the accounts, records, documents, and transactions of any insurance producer as often as the Commissioner deems advisable, to check its condition or compliance.
B. Incorrect. The statute does not limit examinations to once per license term.
C. Incorrect. A complaint is not a precondition.
D. Incorrect. The five-year minimum applies to domestic insurers, not a limit on producer examinations.

§431:2-303 Examination of producers, adjusters, promoters, and independent bill reviewers. For the purpose of ascertaining its condition, or compliance with this code, the commissioner may as often as the commissioner deems advisable examine the insurance accounts, records, documents, and transactions of: (1) Any insurance producer, adjuster, or independent bill reviewer, including insurance agencies and surplus lines agencies; or
Source: HRS §431:2-303(1)

Question 18 Hawaii laws for all linesUnder HRS §431:3-204, which classes of insurance is a reciprocal insurer barred from transacting in Hawaii?

A. Property and vehicle insurance
B. General casualty and surety
C. Marine and transportation
D. Life and accident and health

Show the answer and explanation

Correct answer: D. Life and accident and health

A. Incorrect. The statute's bar on reciprocals is not about property and vehicle.
B. Incorrect. Casualty and surety are not the classes barred to reciprocals.
C. Incorrect. Marine and transportation are not the barred classes.
D. Correct. HRS §431:3-204(2) says a reciprocal insurer shall not transact life or accident and health or sickness insurance.

(2) A reciprocal insurer shall not transact life or accident and health or sickness insurance.
Source: HRS §431:3-204(2)

Question 19 Hawaii laws for all linesWhen applying for a Hawaii producer license on the uniform application, the applicant declares the statements are true, accurate, and complete. Under HRS 431:9A-106, what is that declaration made under penalty of?

A. Having the license denied, suspended, or revoked
B. A perjury charge filed by the Commissioner's office
C. A civil fine assessed for each incorrect statement
D. Losing all commissions earned in the first license year

Show the answer and explanation

Correct answer: A. Having the license denied, suspended, or revoked

A. Correct. HRS 431:9A-106(a) states the applicant declares under penalty of denial, suspension, or revocation of the license that the statements are true, accurate, and complete.
B. Incorrect. The penalty named in 431:9A-106(a) is denial, suspension, or revocation of the license.
C. Incorrect. The declaration is made under penalty of license denial, suspension, or revocation, not a per-statement fine.
D. Incorrect. Forfeiture of commissions is not the penalty named; the license may be denied, suspended, or revoked.

§431:9A-106 Application for license. (a) A person applying for an insurance producer license shall make application to the commissioner on the uniform application and declare under penalty of denial, suspension, or revocation of the license that the statements made in the application are true, accurate, and complete to the best of the applicant's knowledge and belief.
Source: HRS 431:9A-106(a)

Question 20 Hawaii laws for all linesUnder HRS 431:9A-114, what must a Hawaii producer do with a client if the producer has not become an appointed agent of the insurer involved?

A. Have the client sign a waiver of the appointment rule
B. Hold the client's premium until an appointment is filed
C. Tell the client that this condition has not been met
D. Ask the Commissioner to issue a temporary appointment

Show the answer and explanation

Correct answer: C. Tell the client that this condition has not been met

A. Incorrect. The section requires disclosure to the client, not a client waiver.
B. Incorrect. The section requires disclosure; it says nothing about holding premiums for this reason.
C. Correct. HRS 431:9A-114(b) states a producer shall disclose to a client if the conditions of subsection (a), becoming an appointed agent of the insurer, have not been met.
D. Incorrect. The section requires disclosure to the client, not a temporary appointment.

§431:9A-114 Appointments. (a) An insurance producer shall not act as an agent of an insurer unless the producer becomes an appointed agent of that insurer. [...] A producer shall disclose to a client if the conditions of subsection (a) have not been met.
Source: HRS 431:9A-114(a), (b)

Question 21 Hawaii laws for all linesA Hawaii life producer's policy records are customarily maintained in the offices of the insurer. Under HRS 431:9A-123, does the producer record-keeping section apply to those life policies?

A. No, the section does not apply in that case
B. Yes, the producer must also keep duplicate files
C. Yes, but only for the first year after issue
D. No, but only if the producer stores them electronically

Show the answer and explanation

Correct answer: A. No, the section does not apply in that case

A. Correct. HRS 431:9A-123(c) states the section does not apply to life or accident and health or sickness insurance if the records are customarily maintained in the offices of the insurer.
B. Incorrect. Subsection (c) removes the requirement when the insurer customarily maintains the records.
C. Incorrect. Subsection (c) makes the section inapplicable, not shorter.
D. Incorrect. The electronic records condition in subsection (d) is for motor vehicle or homeowners insurance.

(c) This section shall not apply to life or accident and health or sickness insurance if the records required of the insurance are customarily maintained in the offices of the insurer. (d) This section shall not apply to motor vehicle or homeowners insurance if the records required of the insurance are maintained electronically, accessible by the producer, and available within one business day.
Source: HRS 431:9A-123(c), (d)

Question 22 Hawaii life insurance lawsUnder HRS 431:10D-502, which change to an existing policy, if known to the proposing producer as a result of a new purchase, makes the sale a replacement in Hawaii?

A. Its beneficiary will be changed to a trust
B. It will be continued as extended term
C. Its premium mode will switch to monthly
D. Its owner will update the mailing address

Show the answer and explanation

Correct answer: B. It will be continued as extended term

A. Incorrect. A beneficiary change is not one of the listed events in the definition.
B. Correct. The definition of replacement includes an existing policy continued as extended term insurance.
C. Incorrect. A change in payment mode does not reduce value or benefits and is not listed.
D. Incorrect. An address update is not a listed replacement event.

"Replacement" means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be: [...] (2) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
Source: HRS 431:10D-502 ("Replacement")(2)

Question 23 Hawaii life insurance lawsHawaii's annuity suitability part applies to any recommendation or sale of an annuity. Under HRS 431:10D-621, which transaction is outside its scope?

A. An annuity recommended in a home visit
B. A formal prepaid funeral contract
C. An annuity replacing an older annuity
D. An annuity sold to a retired consumer

Show the answer and explanation

Correct answer: B. A formal prepaid funeral contract

A. Incorrect. A recommendation made in person is within scope.
B. Correct. Paragraph (b)(4) excludes formal prepaid funeral contracts.
C. Incorrect. Exchanges and replacements based on a recommendation are within scope.
D. Incorrect. Sales to retirees are within scope.

§431:10D-621 Scope. (a) This part applies to any recommendation or sale of an annuity. (b) This part does not apply to transactions involving: [...] (4) Formal prepaid funeral contracts.
Source: HRS 431:10D-621(a), (b)(4)

Question 24 Hawaii life insurance lawsUnder HRS 431:10D-118(b), what must appear on the first page of a variable contract delivered in Hawaii?

A. A statement that benefits are on a variable basis
B. The producer's license number and address
C. A guaranteed minimum rate of return
D. The Commissioner's approval date for the contract form

Show the answer and explanation

Correct answer: A. A statement that benefits are on a variable basis

A. Correct. The contract must contain on its first page a statement that the benefits are on a variable basis.
B. Incorrect. The statute requires the variable basis statement, not producer details.
C. Incorrect. Variable benefits vary with investment experience; no guaranteed rate is required.
D. Incorrect. The statute does not require an approval date on the first page.

(b)(1) Any variable contract providing benefits payable in variable amounts delivered or issued for delivery in this State shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state that such dollar amount will vary to reflect investment experience and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.
Source: HRS 431:10D-118(b)(1)

Question 25 Hawaii life insurance lawsUnder HRS 431:10D-213(a)(1), what grace period must a Hawaii group life policy give the policyholder for premiums after the first?

A. Not fewer than ten days
B. Not fewer than fifteen days
C. Not fewer than thirty days
D. Not fewer than seven days

Show the answer and explanation

Correct answer: C. Not fewer than thirty days

A. Incorrect. Ten days is shorter than the statutory minimum.
B. Incorrect. Fifteen days is shorter than the statutory minimum.
C. Correct. The policyholder is entitled to a grace period of not fewer than thirty days.
D. Incorrect. Seven days is shorter than the statutory minimum.

§431:10D-213 Standard provisions required. (a) No policy of group life insurance shall be delivered or issued for delivery in this State unless it contains in substance the standard provisions set forth below, or provisions that in the opinion of the commissioner are more favorable to the individuals insured. The policy shall provide that: [...] (1) Grace period. The policyholder is entitled to a grace period of not fewer than thirty days, for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy.
Source: HRS 431:10D-213(a)(1)

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