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Insurance Practice Questions

Life Insurance License Practice Questions

Life Insurance License Exam — Getting your life insurance license starts with passing the state licensing exam - and these practice questions give you a realistic preview of what to expect. From policy types to beneficiary rules to state regulations, these 5 sample questions hit the key areas. Ready to go deeper? Unlock the full 450-question bank.

100
Total Questions
2-3 hours (varies by state)
Time Limit
70% passing (varies by state, typically 70-75%)
Passing Score
$40-$75 per attempt (varies by state)
Registration Fee

Free Sample Questions

Here are 5 free sample questions from our full bank of 450+ Life Insurance Licensepractice questions. Try them out below — click "Show Answer" to reveal the correct response and explanation.

1

A client is comparing term, whole life, and universal life insurance policies. Which of the following statements BEST describes a key difference between term and permanent life insurance?

AA) Term insurance builds cash value; whole life does not
BB) Whole life insurance coverage expires after a set period; term does not
CC) Term insurance provides coverage for a specific period with no cash value accumulation, while permanent policies build cash value over time
DD) Universal life requires fixed premiums, while term premiums are flexible
2

A life insurance policy has been in force for three years. The insured misrepresented a health condition on the original application. Under the incontestability clause, which of the following is TRUE?

AA) The insurer can no longer contest the policy's validity based on misrepresentation in the application
BB) The insurer may deny the death claim at any time if fraud is discovered
CC) The policy automatically voids after the contestability period ends
DD) The insured must re-disclose all health conditions after two years
3

An insured names his spouse as primary beneficiary and his two adult children as contingent beneficiaries. The insured and his spouse die simultaneously in an accident. Who receives the death benefit?

AA) The insured's estate, because both primary and contingent beneficiaries predeceased him
BB) The spouse's estate, because she was the primary beneficiary
CC) The two adult children equally, as contingent beneficiaries
DD) The state, under escheat laws
4

A policyholder wants to exchange an old whole life insurance policy for a new annuity contract without triggering a taxable event. Which provision allows this?

AA) The rollover provision under ERISA guidelines
BB) A 1035 exchange under the Internal Revenue Code
CC) A tax-deferred transfer under Section 72 of the IRC
DD) A like-kind exchange under Section 1031 of the IRC
5

An insurance producer recommends that a client replace an existing life insurance policy with a new one primarily because the producer will earn a higher commission on the new policy. The existing policy is performing well and meets the client's needs. This behavior BEST describes:

AA) Twisting, which is an unfair trade practice that violates state insurance regulations
BB) Replacement, which is always permissible when fully disclosed to the client
CC) Rebating, which involves offering financial incentives to induce a sale
DD) Churning, which is only prohibited in securities transactions

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About the Life Insurance License

Format & Structure

Total Questions
100
Time Limit
2-3 hours (varies by state)
Format
Computer-based, multiple choice

Scoring & Cost

Passing Score
70% passing (varies by state, typically 70-75%)
Registration Fee
$40-$75 per attempt (varies by state)

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Frequently Asked Questions

What is on the life insurance licensing exam?

The life insurance licensing exam covers a broad range of topics related to life insurance products, regulations, and ethics. You can expect questions on policy types (term, whole life, universal life, variable life), policy provisions (grace period, incontestability clause, free look period), beneficiary designations, annuity products, basic health insurance concepts (in states that combine life and health), insurance regulations, unfair trade practices, and producer ethics. Many states also include state-specific laws and insurance department rules. The exact content outline varies by state, so check your state's candidate handbook for the precise topic breakdown.

How many questions are on the life insurance exam?

The number of questions varies by state. Most state life insurance licensing exams have somewhere between 50 and 150 multiple-choice questions. Many states use around 60-100 questions for a life-only exam, while combined life and health exams may have more. Some states also include a separate state law section on top of the general insurance portion. Your state's testing provider - usually PSI, Pearson VUE, or Prometric - will publish the exact question count in the candidate handbook.

What score do I need to pass the life insurance exam?

Most states require a passing score of 70% to 75%, though the exact threshold varies. A few states set the bar slightly lower or higher. Here's the thing - you don't want to aim for just barely passing. Shooting for 80% or above on practice materials gives you a real buffer for the pressure of test day. If you're consistently scoring in the high 70s on practice questions, you're in good shape. Anything lower and you'll want more review time before sitting for the actual exam.

How many times can I retake the life insurance exam?

Most states allow unlimited retakes of the life insurance licensing exam, but there's usually a mandatory waiting period between attempts - often 24 hours to a few days after a failed attempt. You'll pay the exam fee again each time you retake it, typically $40-$75 depending on your state and testing provider. Some states may have additional requirements after multiple failed attempts, like requiring additional coursework. Always check your state insurance department's rules - they vary more than you'd think.

How long should I study for the life insurance exam?

Most candidates need 40-60 hours of total study time to feel prepared. That includes your pre-licensing coursework - which most states require you to complete before you can even sit for the exam. The pre-licensing course itself covers a lot of the material, so treat it seriously rather than just going through the motions. After your course, plan on a week or two of focused review, practice questions, and concept reinforcement. If the material feels unfamiliar or you're not scoring well on practice tests, give yourself more time. Cramming the night before rarely ends well.

Do I need a pre-licensing course before taking the exam?

Yes - the vast majority of states require candidates to complete a state-approved pre-licensing education course before they can take the life insurance licensing exam. The required number of hours typically ranges from 20 to 40 hours, depending on the state. Some states require more for a combined life and health license. The course covers the foundational concepts you'll see on the exam, so it's not just a box to check - it's actually useful preparation. You'll need to submit proof of completion when you register for the exam.

What's the difference between a life-only license and a life and health license?

A life-only license authorizes you to sell life insurance products - term life, whole life, universal life, variable life - as well as annuities. A life and health license covers everything a life-only license does, plus health insurance products like major medical, disability income, long-term care, and Medicare supplement plans. Many producers choose to get the combined life and health license because it significantly expands the products they can offer clients. The combined exam is longer and covers more material, but it opens up more earning opportunities. Whether you need one or both depends on the products you plan to sell.

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