Free South Carolina Life Insurance Practice Exam Online

Correct answer: C. It continues on a biennial basis, with renewal due by the last day of the licensee's birth month

Correct. Under S.C. Code Ann. § 38-43-110, a resident producer license continues on a biennial basis and must be renewed by the last day of the licensee's birth month, subject to the applicable renewal conditions.

• A: South Carolina producer licenses are not permanent; they require periodic renewal to remain in force.
• B: Renewal is not tied to a single fixed calendar date of January 1 for every licensee; it is tied to the individual's birth month on a biennial cycle.
• D: A 90-day reissuance cycle would be far shorter than South Carolina's actual biennial renewal structure.

Correct answer: B. Term life insurance

Correct. Term insurance covers a fixed period (e.g., 10, 20, or 30 years), accumulates no cash value, and is priced purely for mortality risk, making it the least expensive form of pure protection initially.

• A: Whole life is permanent coverage that builds guaranteed cash value, so its premium is higher than term for the same face amount at issue.
• C: Universal life is a permanent, flexible-premium policy with an unbundled cash value account, not the lowest-cost pure-protection product.
• D: Variable life is a permanent policy whose cash value is invested in separate accounts and carries investment risk; it is not the low-cost term product.

Correct answer: C. Universal life insurance

Correct. Universal life unbundles the mortality charge, expense charge, and interest credited to cash value, giving the owner flexibility over premium payments and, within limits, the death benefit.

• A: Term insurance has no cash value and no flexible-premium feature.
• B: Traditional whole life has fixed, scheduled premiums and a guaranteed cash value schedule; it does not offer flexible premiums.
• D: Credit life insurance is a small, decreasing-term product sold to cover an outstanding loan balance, not a flexible-premium permanent product.

Correct answer: B. The performance of separate account investment subaccounts chosen by the policyowner

Correct. Variable life premiums (net of charges) are invested in separate account subaccounts selected by the owner, so cash value and, subject to any guaranteed minimum, the death benefit move with market performance.

• A: Dividends apply to participating whole life policies, not to the investment-driven cash value of variable life.
• C: The South Carolina Department of Insurance does not publish an interest rate that drives variable life cash value; that is a market-based product feature, not a regulatory one.
• D: Health status affects underwriting at issue, not the ongoing cash value performance of an in-force variable policy.

Correct answer: B. Participating policies may pay policyowner dividends from divisible surplus; non-participating policies do not pay dividends

Correct. Participating (mutual-style) policies may return a share of the insurer's divisible surplus to owners as dividends, which are not guaranteed; non-participating policies pay no dividends.

• A: Both term and permanent policies can be structured as participating or non-participating; the distinction is unrelated to policy duration.
• C: There is no South Carolina rule limiting residents to non-participating policies.
• D: Participating whole life policies do build cash value; the dividend feature is separate from cash value accumulation.