2024 Edition

Life and Health Insurance Agent Licensing Practice Exam

Take this free practice test to get an idea of what is on your state's life and health insurance agent licensing exam.

As an insurance agent, one is allowed to offer many different lines of coverage – provided that the required training and testing qualifications have been met. Those who wish to sell life and health insurance are required to possess the proper licensing for each state in which they conduct business. In order to obtain a life and health insurance license, individuals must take and successfully pass an exam that is offered by the state licensing boards.

To prepare for your licensing exam, use the full-length Life & Health Insurance Agent Practice Exam with answers fully explained for ideal study. 

The practice exam is written by Susan Wright, MBA, CLU, RHU, REBC, who has over 20 years of experience in the insurance industry and Noah Sobin, a life insuance underwriting expert.

The following practice exam is a sample from the full-length test.  


General Life Insurance Basics, Insurable Interest, Parties and Regulations

1. All of the following are parties to a life insurance contract EXCEPT:
  1. Insurer
  2. Underwriter
  3. Beneficiary
  4. Owner
  5. Insured
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2. Mr. Smith, a whole life insurance policy holder, needs funds for his nursing home expenses. Which part of the policy could he access for these funds?
3. James makes a good living and got a life insurance policy for the benefit of his wife. He recently experienced a life-changing event with the birth of his daughter. James should:
4. Which term refers to the period during which a policyholder can pay the overdue premium without losing the policy?
James makes a good living and got a life insurance policy for the benefit of his wife. He recently experienced a life-changing event with the birth of his daughter. James should:

Types of Life Insurance Policies and Individual versus Group Life Insurance

6. Jack and his wife Lyn just purchased a home with a 15-year mortgage. Wanting to make sure that Lyn would be able to pay off the mortgage balance in the event of Jack's death, Jack had a "temporary" need for life insurance. What type of policy should Jack purchase?
7. Which of the following is a type of permanent life insurance that offers both a death benefit and a cash value component?
8. What is a key characteristic of Group Life Insurance?
9. Which type of life insurance policy covers the insured for a specific period and pays out a benefit only if the insured dies during that period?
10. Which type of life insurance is considered to be more risky based on its investment component?

Life Insurance Application and Underwriting

11. Life insurance underwriters look at a variety of factors when determining the acceptance of an applicant. These factors can include:
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12. What does underwriting in life insurance involve?
13. In a life insurance contract, the principle of "Utmost Good Faith" implies:
14. Which of the following needs to have an insurable interest for an underwriter to issue an insurance policy?

Selling Life Insurance, Determining Coverage Needs and Issuance and Delivery

15. Which of the following deals with a set of relationships where one person is authorized to act on behalf of another in order to create a legal relationship with a third party.
16. When conducting a life insurance needs analysis, what factors should be considered to determine the amount of coverage needed?
17. All of the following can be considered life-changing events that could result in a change in the amount of life insurance coverage needed EXCEPT:

I. Birth of a child
II. Divorce
III. Marriage
IV. Change in job title

Life Insurance for Business Owners and in Estate Planning

18. Term life insurance should always be used in buy / sell agreements.
19. In estate planning, how does life insurance typically benefit the policyholder's beneficiaries?
20. For a small business owner, how can life insurance be instrumental in ensuring business continuity?
21. Corporate owned life insurance proceeds may be used for the following purposes:

I. To find, replace, and train a new employee or executive
II. To fund other corporate debt obligations
III. To redeem the deceased employee's stock


Policy Components, Riders and Non-forfeiture Options

22. What is the most common component in all life insurance policies?
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23. Which of the following is a type of 'Non-forfeiture Option' in a life insurance policy?
24. Permanent life insurance policies always have two components. What are they?

I. Death benefit
II. Cash value
III. Living Benefits
IV. Conversion Benefit


Claims, Settlement Options and Tax Concepts

25. A beneficiary on a life insurance policy will receive what value upon the death of the insured?
26. What is a 'Settlement Option' in a life insurance policy?
27. John, who had a life insurance policy with a death benefit, died on August 31st, after a long bout with cancer. He had been hospitalized for a month before his death. His wife contacted the insurance company to file her claim for the death benefit on September 5th, after John's burial, and after she had time to collect her emotions to deal with her personal loss. The insurance agent filed the papers to process the claim with his supervisor, and the death benefit was settled on October 30th. Were any laws violated in this scenario?

Living Benefits and Viatical and Life Settlements

28. Which of the following is a rider that allows a terminally ill person to access at least a portion of the death benefit proceeds prior to death?
29. What distinguishes a 'Viatical Settlement' from a 'Life Settlement'?
30. Living benefits on a life insurance policy can be typically be accessed via:

General Health Insurance Basics, Regulation and Social Health Insurance

31. The insured party has no part in determining the wording of an insurance contract. In this respect, insurance contracts are considered to be __________.
32. What role does government regulation typically play in health insurance?
33. A(n) __________ in an insurance contract is a statement by the issuing insurance company that sets out the essential element of insurance - to pay for losses covered in the policy.

Types of Health Insurance Policies and HMO and PPO

34. Which of the following is not a form of health insurance?

I. Dental insurance
II. Vision insurance
III. Disability insurance
IV. Long-term care insurance

35. What is a key difference between a PPO (Preferred Provider Organization) and an HMO (Health Maintenance Organization)?
36. A business client is looking for ways to decrease its monthly premiums. To get down to the premium level sought after by the company, the agent realizes they have to go to a high deductible health plan. As part of your advice to the business, what should you include in your discussion?

Health Insurance Policy Components and Exclusions

37. The components of a long-term care insurance policy include all of the following EXCEPT:
38. Which of the following is a common exclusion in most health insurance policies?
39. When constructing a major medical insurance policy, several criteria must be established, including:

Selling Health Insurance, Issuance and Delivery and Tax Considerations

40. As a marketing tool, Ted, a health insurance agent, offered to send an applicant and his wife on a weekend vacation to a local resort to induce the applicant to purchase a policy. Is this practice permitted and, if not, what is it called?
41. Sara, a health insurance agent, is finalizing the delivery of a health insurance policy to a client. She explains that policy delivery is more than just handing over the document. What additional step should Sara emphasize is crucial during the policy delivery process?
42. An agent is in need of generating business. He gets an idea of asking his client to let his policy lapse so that the agent can sell him a new similar policy. Is this permissible and, if not, what is this action called?

Deductibles and Copayments

43. A __________ is the amount that an insured person is expected to pay for a medical expense at the time of the visit.
44. How does the choice of deductible affect health insurance premiums?
45. The "deductible" in a long-term care insurance policy is referred to as the __________.
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Health Insurance Claims and Indemnity vs. Reimbursement

46. On a health insurance claim form, the exact procedures that were performed for the insured are represented by standard codes that are referred to as __________.
47. What is the difference between indemnity and reimbursement in health insurance?
48. What type of notice is used to show all of the services or supplies that were billed to Medicare during a 3-month period, what Medicare paid, and what the patient may owe the provider?

Disability and Related Insurance and Seniors and Special Needs Individuals

49. As a professional surgeon, which type of disability coverage would offer the most liberal definition of benefit triggers for the policy holder in terms of benefit receipt if the insured were to break his or her hand?
50. Social Security should be considered one's primary source of disability income coverage.
51. What does "Own Occupation" mean in a disability insurance policy?

Life & Health Exam

Quality starts with who wrote the material.
Our practice exam writer
Michael Broadway, PMP,
is a Master Certified PMP. He provided writing and editing services to the PMI on the 4th and 5th editions of the PMBOK Guide, as well as created test questions for the CBAP, CCBA and CISSP certification exams.

Donna Kurtz, PMP,
is the Director of Program Management at QuanteqUSA, where she developed the project management office focusing on Agile project management. She is a certified PMP through PMI, a certified ICP-ACC Agile coach and a certified professional scrum master, PSM 1. Donna formerly taught business and technology courses at Concordia University as an adjunct professor and worked as a financial advisor with Morgan Stanley.

The Project Management Institute (PMI) is the professional organization responsible for creating and maintaining the global standards for project management and the project management profession.

The actual PMP Certification Exam consists of 200 multiple choice questions from the nine Knowledge Areas in the Project Management Body of Knowledge (PMBOK) Guide, including:

Integration Management
Scope Management
Time Management
Cost Management
Quality Management
Human Resource Management
Communications Management
Risk Management
Procurement Management