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These 10 free AIRC questions are organized by exam domain, so you can see how each part of the Associate, Insurance Regulatory Compliance blueprint is tested. Reveal the answer and explanation under each question.
A South Carolina domestic life insurer reports total adjusted capital of $13.5 million, authorized control level RBC of $7.5 million, company action level RBC of $15 million, and GAAP equity of $18 million. No other event independently triggers regulatory action. Which ratio and capital-based response should its compliance officer identify?
Correct answer: D - 180%; the insurer must submit a corrective RBC plan.
A broker-dealer offers a cash bonus to the representatives who sell the most contracts of one registered variable annuity during a 30-day campaign. Representatives would recommend the annuity to retail customers, who would sign a disclosure acknowledging the bonus. For this arrangement to comply with Regulation Best Interest's Conflict of Interest Obligation, the firm must:
Correct answer: C - Eliminate the product-specific, time-limited sales bonus.
A policyowner paid $62,000 in premiums for a personally owned whole life policy that is not a modified endowment contract. No premium refunds, dividends, or prior withdrawals occurred. On full surrender, the value before the loan offset is $94,000. The insurer extinguishes a $27,000 policy loan and pays $67,000 in cash. The loan was not previously taxed, and there is no surrender charge. How much ordinary income does the surrender produce?
Correct answer: B - $32,000, including the extinguished loan in the surrender proceeds.
An insurer experiences an unexpected surge in annuity surrender requests. Its statutory surplus remains positive, its borrowers are paying on time, and its reserve estimates remain supportable. Most assets are long-term private placements and commercial mortgages. Available cash cannot meet the requests, and immediate asset sales would require deep discounts. Which risk is materializing most directly?
Correct answer: D - Liquidity risk from funding current outflows only by selling assets at substantial losses.
An insurer is authorized to write life insurance in a state and holds approval for its base policy. A new optional rider changes a benefit, but its SERFF filing status is only 'received.' State law requires affirmative prior approval of that rider; the approved base form is unaffected. Marketing wants to start sales on Monday. Which release decision is warranted?
Correct answer: A - Continue selling the approved base policy; withhold the rider until it is approved.
A Virginia agent recommends that a 67-year-old use part of a traditional IRA to buy an immediate fixed annuity with joint-and-survivor payments. The consumer wants income for both spouses and will retain adequate liquid savings. The file documents consideration of alternatives, costs, liquidity restrictions, and compensation. A reviewer objects that the IRA already provides tax deferral. Which conclusion is sound?
Correct answer: B - The documented income need can justify the annuity, although the IRA receives no additional tax deferral.
Six years after a New York individual life policy was issued, the insured dies and the insurer discovers that the application understated the insured's age. The policy contains the required misstatement-of-age provision. The $400,000 policy carried a $1,600 annual premium. At the correct issue age, the premium rate is $5 annually per $1,000 of coverage, with no fixed fees. All premiums were paid; there are no policy loans or other coverage issues. What death benefit is payable?
Correct answer: A - Pay $320,000 under the misstatement-of-age provision.
Ten minutes before a life insurance benefit payment is released, security staff confirm that the beneficiary's email account has been compromised. That account was used to request new wiring instructions, which have not been authenticated. The policy and beneficiary's entitlement are verified, and the incident team is preserving evidence. The payment supervisor's immediate priority is to:
Correct answer: A - Hold this payment; independently authenticate the destination through a previously verified customer contact channel.
A private employer's ERISA-covered plan provides group life insurance through a policy issued in New York. An employee loses coverage solely because employment ends and is entitled to convert the full group benefit. The employee dies 18 days later without applying or paying for an individual policy. No other policy defense applies. How should the insurer handle the beneficiary's claim?
Correct answer: B - Pay the full convertible amount under the group policy's statutory conversion-period death protection.
A registered representative plans to send the same newly written variable-annuity sales brochure in individual emails to 42 retail customers over 30 calendar days. She labels it personal correspondence because no email is a mass mailing. The brochure has no prior approval or filing on which the firm may rely, and no review exception applies. Under FINRA Rule 2210, the brochure is:
Correct answer: C - Retail communication; an appropriately qualified principal must approve it before use or FINRA filing.
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