Alabama Department of
MAXE H&L
Insurance
★ ★
AL
State of Alabama
EST. 1819
PROTECTING ALABAMA CONSUMERS
Alabama Health & Life Insurance Exam
CO M P L E T E ST U DY G U I D E | A L R E A DY G RA D E D A +
INSTITUTION Alabama Department of Insurance COURSE CODE L&H Exam
PROGRAM Life & Health Insurance Licensing ACADEMIC YEAR
EXAM TITLE Alabama Health & Life Insurance TOTAL QUESTIONS 97 Questions
Exam
COURSE TITLE Health & Life Insurance Pre- FORMAT Multiple Choice — Select the
Licensing Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question.
▸ Life insurance, health insurance, annuities, and Alabama-specific regulations are all testable content.
▸ Correct answers and detailed rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance licensing requirements.
, SECTION I — HEALTH & LIFE INSURANCE PRINCIPLES Questions 1 – 97
1. Which of the following situations constitutes an insurable interest?
A. The policyowner must expect to suffer a loss when the insured dies or becomes disabled
B. The policyowner must be related to the insured
C. The policyowner must be the insured
D. The policyowner must be a business partner
CORRECT ANSWER A — The policyowner must expect to suffer a loss when the insured dies or
becomes disabled
RATIONALE Insurable interest exists when the policyowner expects to suffer a financial or
emotional loss if the insured dies or becomes disabled. This is the fundamental
requirement for obtaining insurance on another person's life.
2. Term Life Insurance is not based on which rider?
A. Not based on the waiver of premium rider
B. Based on the waiver of premium rider
C. Based on the guaranteed insurability rider
D. Based on the accidental death rider
CORRECT ANSWER A — Not based on the waiver of premium rider
RATIONALE Term life insurance is pure protection with no cash value. The waiver of premium
rider is typically attached to permanent policies with cash value to waive
premiums during disability. Term insurance policies generally do not include this
rider.
,3. What is the gross premium called in a life insurance policy?
A. Loaded Premium
B. Net Premium
C. Level Premium
D. Single Premium
CORRECT ANSWER A — Loaded Premium
RATIONALE The gross premium is called a loaded premium. It consists of the net premium
(mortality cost) plus loading (expenses, commissions, and profit margin). The
loaded premium is what the policyowner actually pays.
4. Twisting is defined as:
A. Making misrepresentations to induce a policyowner to lapse or surrender a policy
B. Offering a rebate to induce policy purchase
C. Charging excessive premiums
D. Misrepresenting policy benefits
CORRECT ANSWER A — Making misrepresentations to induce a policyowner to lapse or
surrender a policy
RATIONALE Twisting is the illegal practice of making misrepresentations to induce a
policyowner to lapse, surrender, or replace an existing policy with a new one. This
is considered an unfair trade practice and is prohibited by law.
, 5. The Time of Payment of Claims Provision requires that:
A. Claims must be paid immediately after the insurer receives a written proof of loss
B. Claims must be paid within 30 days
C. Claims must be paid within 60 days
D. Claims must be paid after an investigation
CORRECT ANSWER A — Claims must be paid immediately after the insurer receives a written
proof of loss
RATIONALE The Time of Payment of Claims Provision requires that claims be paid
immediately after the insurer receives a written proof of loss. This ensures prompt
payment to beneficiaries and prevents unnecessary delays.
6. The Commissioner of Insurance is responsible for:
A. Enforcing all laws that relate to insurance in Alabama, issuing licenses to insurers and
agents, and conducting hearings and investigations
B. Setting insurance rates
C. Writing insurance laws
D. Selling insurance policies
CORRECT ANSWER A — Enforcing all laws that relate to insurance in Alabama, issuing licenses
to insurers and agents, and conducting hearings and investigations
RATIONALE The Commissioner of Insurance enforces all insurance laws in Alabama, issues
licenses to insurers and agents, and conducts hearings and investigations. The
Commissioner is the chief regulatory officer of the state's insurance industry.
MAXE H&L
Insurance
★ ★
AL
State of Alabama
EST. 1819
PROTECTING ALABAMA CONSUMERS
Alabama Health & Life Insurance Exam
CO M P L E T E ST U DY G U I D E | A L R E A DY G RA D E D A +
INSTITUTION Alabama Department of Insurance COURSE CODE L&H Exam
PROGRAM Life & Health Insurance Licensing ACADEMIC YEAR
EXAM TITLE Alabama Health & Life Insurance TOTAL QUESTIONS 97 Questions
Exam
COURSE TITLE Health & Life Insurance Pre- FORMAT Multiple Choice — Select the
Licensing Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question.
▸ Life insurance, health insurance, annuities, and Alabama-specific regulations are all testable content.
▸ Correct answers and detailed rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance licensing requirements.
, SECTION I — HEALTH & LIFE INSURANCE PRINCIPLES Questions 1 – 97
1. Which of the following situations constitutes an insurable interest?
A. The policyowner must expect to suffer a loss when the insured dies or becomes disabled
B. The policyowner must be related to the insured
C. The policyowner must be the insured
D. The policyowner must be a business partner
CORRECT ANSWER A — The policyowner must expect to suffer a loss when the insured dies or
becomes disabled
RATIONALE Insurable interest exists when the policyowner expects to suffer a financial or
emotional loss if the insured dies or becomes disabled. This is the fundamental
requirement for obtaining insurance on another person's life.
2. Term Life Insurance is not based on which rider?
A. Not based on the waiver of premium rider
B. Based on the waiver of premium rider
C. Based on the guaranteed insurability rider
D. Based on the accidental death rider
CORRECT ANSWER A — Not based on the waiver of premium rider
RATIONALE Term life insurance is pure protection with no cash value. The waiver of premium
rider is typically attached to permanent policies with cash value to waive
premiums during disability. Term insurance policies generally do not include this
rider.
,3. What is the gross premium called in a life insurance policy?
A. Loaded Premium
B. Net Premium
C. Level Premium
D. Single Premium
CORRECT ANSWER A — Loaded Premium
RATIONALE The gross premium is called a loaded premium. It consists of the net premium
(mortality cost) plus loading (expenses, commissions, and profit margin). The
loaded premium is what the policyowner actually pays.
4. Twisting is defined as:
A. Making misrepresentations to induce a policyowner to lapse or surrender a policy
B. Offering a rebate to induce policy purchase
C. Charging excessive premiums
D. Misrepresenting policy benefits
CORRECT ANSWER A — Making misrepresentations to induce a policyowner to lapse or
surrender a policy
RATIONALE Twisting is the illegal practice of making misrepresentations to induce a
policyowner to lapse, surrender, or replace an existing policy with a new one. This
is considered an unfair trade practice and is prohibited by law.
, 5. The Time of Payment of Claims Provision requires that:
A. Claims must be paid immediately after the insurer receives a written proof of loss
B. Claims must be paid within 30 days
C. Claims must be paid within 60 days
D. Claims must be paid after an investigation
CORRECT ANSWER A — Claims must be paid immediately after the insurer receives a written
proof of loss
RATIONALE The Time of Payment of Claims Provision requires that claims be paid
immediately after the insurer receives a written proof of loss. This ensures prompt
payment to beneficiaries and prevents unnecessary delays.
6. The Commissioner of Insurance is responsible for:
A. Enforcing all laws that relate to insurance in Alabama, issuing licenses to insurers and
agents, and conducting hearings and investigations
B. Setting insurance rates
C. Writing insurance laws
D. Selling insurance policies
CORRECT ANSWER A — Enforcing all laws that relate to insurance in Alabama, issuing licenses
to insurers and agents, and conducting hearings and investigations
RATIONALE The Commissioner of Insurance enforces all insurance laws in Alabama, issues
licenses to insurers and agents, and conducts hearings and investigations. The
Commissioner is the chief regulatory officer of the state's insurance industry.
