CLU Cheat Sheet 2026

The 30 highest-yield CLU facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is a key advantage of a noncontributory group life insurance plan from the employer's perspective? → 100% participation is automatic, eliminating adverse selection
2. In both consumption and saving. Define the PV to FV exchange rate ratio. → FV/PV
3. In the context of qualified retirement plans, which annuity form is required as the default payout option for married participants under ERISA? → Qualified joint and survivor annuity (QJSA)
4. Under ERISA, what is the primary fiduciary duty of a plan administrator for a group life insurance plan? → Act solely in the interest of plan participants and beneficiaries
5. The elimination period in a disability income policy serves a function most similar to which feature found in other insurance lines? → A deductible
6. What is the required minimum distribution (RMD) starting age for qualified annuities and IRAs under current federal law (SECURE 2.0)? → Age 73
7. Regarding the federal income taxation of life insurance, which of the following statements is generally TRUE? → The death benefit paid in a lump sum to a named beneficiary is received income tax-free.
8. How are withdrawals from a nonqualified deferred annuity taxed prior to annuitization? → Last-in, first-out (LIFO) — gain withdrawn first, then cost basis
9. Under group life insurance, what is the 'master contract' and who holds it? → The primary policy issued to and held by the employer or group policyholder
10. In a group insurance context, what is a 'benefit trigger' in a long-term care insurance policy? → A condition that must be met before benefits are payable
11. What is the '1035 exchange' and what tax benefit does it provide to annuity owners? → A tax-free transfer of a life insurance policy to another life policy or to an annuity
12. What is the typical time it takes for an IPO to end if one is going to happen? → Four to six months
13. Which phase of an annuity contract is characterized by the owner making premium payments and the contract value growing tax-deferred? → Accumulation phase
14. How does dependent life insurance under a group plan typically differ from the employee's own coverage? → Dependent coverage amounts are usually smaller flat amounts
15. Which of the following are the primary means through which the insurance sector is regulated? → Federal regulation
16. What is the penalty for withdrawals from a tax-deferred annuity before age 59½, in addition to ordinary income tax? → 10% federal early withdrawal penalty
17. What is the maximum amount of employer-provided group term life insurance excludable from an employee's gross income under IRC Section 79? → $50,000
18. What happens if you stop making life insurance premium payments? → The beneficiaries lose all claims to the death benefit
19. Which of the following is completely covered by the insurance provided by the dental plan? → Diagnostic x-rays
20. Which of the following types of price-setting is the least common? → Auction
21. What is the primary purpose of an annuity in the context of retirement planning? → To convert accumulated assets into a guaranteed stream of income
22. Which annuity type credits interest based on the performance of an external market index while protecting against negative index returns? → Fixed indexed annuity
23. Which elimination period option in a disability income policy would result in the LOWEST premium for the insured? → 180 days
24. Which type of group life insurance provides coverage that remains level throughout the insured's working life and does not increase with salary? → Flat benefit plan
25. What is a 'joint and survivor' annuity payout option? → Payments continue over the lifetimes of two named individuals
26. In a split-dollar life insurance arrangement under the collateral assignment method, who is typically the owner of the life insurance policy? → The employee
27. How is an annuity death benefit treated for income tax purposes when paid to a named beneficiary? → The gain (earnings) portion is subject to ordinary income tax
28. What will happen if all IPOs are somewhat oversubscribed? → The book runner will pull the offer
29. Which group insurance benefit is designed to replace a portion of an employee's income if they cannot work due to illness or injury for an extended period? → Group long-term disability insurance
30. Which of the aforementioned assertions regarding deferred annuities is accurate? → Income payments will begin further into the future