10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The LACP exam has 150 questions and runs 3 hours.
These 10 free LACP questions are organized by exam domain, so you can see how each part of the Life and Annuity Certified Professional (LACP) blueprint is tested. Reveal the answer and explanation under each question.
“My annuity rider says its income base grows by a guaranteed 6% each year before I start withdrawals. Does that mean my investment cannot lose money?” The client owns a variable annuity, and the rider's conditions are being met. Which explanation accurately separates the two values?
Correct answer: B - The 6% growth applies to the income-calculation base; the account value can still decline.
To cover an unexpected expense, a 50-year-old owner proposes an $18,000 loan from her only modified endowment contract, issued in 2021. Immediately before the loan, cash value before surrender charges is $84,000 and adjusted investment in the contract is $72,000. There have been no prior loans or distributions, the policy will remain in force, and no federal additional-tax exception applies. What federal tax treatment must she include in her comparison?
Correct answer: C - $12,000 of ordinary income and a $1,200 additional tax.
A long-term-care rider uses the federal tax-qualified chronic-illness criteria. The insured independently bathes, dresses, eats, toilets, transfers, and maintains continence. A licensed health care practitioner has nevertheless certified severe cognitive impairment requiring continual supervision to prevent unsafe wandering. The insurer's initial response cites the absence of two impaired activities of daily living. How should the producer address that reason?
Correct answer: A - Request review under the cognitive-impairment trigger; two impaired ADLs are not required for that route.
Marisol earns the household's wages; Daniel provides full-time care for their two preschool children, transportation, and household work. If Daniel dies, Marisol intends to keep working full time. Her existing life insurance replaces her earnings if she dies. In assessing coverage on Daniel, which input most directly measures the family's economic exposure?
Correct answer: D - The cost and duration of replacing Daniel's childcare and household services.
Two consulting-firm owners have an executed cross-purchase agreement. Each personally owns and is beneficiary of a policy on the other, with benefits matching the agreed purchase price. The firm separately projects a substantial operating loss during the year needed to replace its technical partner if that partner dies. The owners ask how to address this exposure without disturbing their fully funded ownership-transfer arrangement. Which recommendation most directly fits that need?
Correct answer: C - Evaluate a firm-owned key-person policy with the firm as the beneficiary.
A client needs $750,000 of protection for the next 20 years and can spend $120 a month. A 20-year term quote meets both requirements. Looking at a $100,000 whole-life quote for the same premium, the client says, "That seems better because it lasts for life." The client confirms that covering the full 20-year need remains the priority. Which explanation resolves the comparison?
Correct answer: D - The term policy meets your priority; the smaller permanent benefit leaves that protection need largely unmet.
A family wants the mortgage paid off at the insured's death and ten years of survivor support. The $36,000 annual shortfall includes $12,000 of mortgage principal and interest payments that would end after payoff. The mortgage balance is $180,000. Final expenses are $20,000 and education funding is $60,000. Available assets are $50,000, and existing net life coverage is $150,000. No other resources or needs apply. Ignore growth, inflation, taxes, and discounting. How much additional life insurance does this needs analysis indicate?
Correct answer: B - $300,000
A retired couple needs annuity income to continue unchanged while either spouse is alive. Both available contracts fit their premium budget and leave adequate emergency reserves. Contract A reduces payments after the first death; Contract B maintains them. After comparing costs, guarantees, and other terms, the producer finds that B meets the couple's objectives but pays the producer a higher commission. The state applies the 2020 version of NAIC Model Regulation 275, and required disclosures have been made. What should the producer do?
Correct answer: A - Recommend Contract B and document why its benefits and costs meet the couple's needs.
A 76-year-old client is about to wire funds from her account at a FINRA-member firm. In a private conversation, she says her nephew threatened to stop bringing food unless she sends him the money. The firm reasonably believes financial exploitation is occurring. The nephew is her only trusted contact and has no transaction authority. Which response best uses the protective authority available to a designated supervisor under FINRA Rule 2165?
Correct answer: A - Place a temporary hold, begin internal review, and notify the client; the suspected nephew need not be notified.
A producer is preparing an application for a new permanent life policy with a check covering the initial premium. The client explains that the check is funded by a loan just taken from an existing whole-life policy. The existing policy will remain in force, and the client plans to repay the loan next year. The jurisdiction has adopted NAIC Model Regulation 613, and no exemption applies. How should the producer classify the transaction?
Correct answer: B - Treat it as a financed purchase and satisfy the replacement requirements.
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