Alabama Department of
H TL A E H · E F I L
Insurance
Life & Health Insurance Licensing Examination
ALABAMA
P R O T E C T I N G A L A B A M A C O N S U M E R S T H R O U G H E F F E C T I V E R E G U L AT I O N
Contract of Adhesion concept — Alabama Life & Health
Insurance Exam fully solved & updated 2025-2026
CO M P R E H E N S I V E R E V I E W — L I F E & H E A LT H I N S U RA N C E L I C E N S I N G
INSTITUTION Alabama Department of Insurance PROGRAM Life & Health Insurance Licensing
COURSE CODE LIFE-HEALTH-AL COURSE TITLE Life & Health Insurance Exam
ACADEMIC YEAR EXAM TITLE Contract of Adhesion concept —
Alabama Life & Health Insurance
Exam fully solved & updated 2025-
2026
TOTAL QUESTIONS 132 Questions FORMAT Multiple Choice — Select the
Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question unless otherwise instructed.
▸ Life insurance products, policy features, taxation, and business applications are all testable content.
▸ Understanding the differences between term, whole life, and universal life is emphasized.
▸ Correct answers and rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance licensing exam standards.
, SECTION I — LIFE & HEALTH INSURANCE: PRODUCTS,
Questions 1 – 132
FEATURES & TAXATION
1. Contract of Adhesion concept: Insurance contracts found to have ambiguous language will
always have the ambiguous language interpreted in favor of the policyholder. This is
known as:
A. Contra proferentem
B. Utmost good faith
C. Indemnity
D. Insurable interest
CORRECT ANSWER A — Contra proferentem
RATIONALE The contra proferentem rule states that ambiguous language in an insurance
contract will be interpreted against the insurer (the party that drafted the
contract) and in favor of the policyholder. This is a key principle of contract law as
applied to insurance policies.
2. The Insurance Commissioner may hold a hearing upon written demand of an aggrieved
person within how many days?
A. 15 days
B. 30 days
C. 60 days
D. 90 days
CORRECT ANSWER B — 30 days
RATIONALE The Insurance Commissioner may hold a hearing upon written demand of an
aggrieved person within 30 days. This provides a timely mechanism for
addressing insurance-related complaints and disputes.
,3. Which of the following is not one of an insurance producer's duties?
A. Writing the provisions of a customer's policy
B. Soliciting insurance applications
C. Collecting premiums
D. Providing policy information to clients
CORRECT ANSWER A — Writing the provisions of a customer's policy
RATIONALE Insurance producers are not responsible for writing policy provisions — that is the
insurer's function. Producers are licensed to solicit, negotiate, and sell insurance
policies. The policy language is drafted by the insurer's legal and underwriting
departments.
4. Insurance companies incorporated under Alabama state law are:
A. Domestic companies
B. Foreign companies
C. Alien companies
D. Non-admitted companies
CORRECT ANSWER A — Domestic companies
RATIONALE Insurance companies incorporated under Alabama state law are classified as
domestic companies in Alabama. Foreign companies are incorporated in other
states but admitted to do business in Alabama. Alien companies are incorporated
outside the United States.
, 5. One of the following is considered misrepresentation and is illegal:
A. Issuing a statement which is not entirely true about the terms of a policy
B. Comparing policy features accurately
C. Explaining policy exclusions correctly
D. Describing policy benefits accurately
CORRECT ANSWER A — Issuing a statement which is not entirely true about the terms of a
policy
RATIONALE Misrepresentation is the act of making false or incomplete statements about a
policy's terms, benefits, or conditions. It is illegal and can result in penalties,
license suspension, or revocation. Producers must provide accurate information
to clients.
6. The Commissioner of Insurance in Alabama may do all the following except:
A. Change the law to meet the public's best interest
B. License insurance producers
C. Conduct hearings and investigations
D. Enforce insurance laws and regulations
CORRECT ANSWER A — Change the law to meet the public's best interest
RATIONALE The Insurance Commissioner cannot change the law — only the legislature has
that authority. The Commissioner enforces existing laws, licenses producers,
conducts hearings, and investigates violations. Changing the law is a legislative
function, not an executive/regulatory one.
H TL A E H · E F I L
Insurance
Life & Health Insurance Licensing Examination
ALABAMA
P R O T E C T I N G A L A B A M A C O N S U M E R S T H R O U G H E F F E C T I V E R E G U L AT I O N
Contract of Adhesion concept — Alabama Life & Health
Insurance Exam fully solved & updated 2025-2026
CO M P R E H E N S I V E R E V I E W — L I F E & H E A LT H I N S U RA N C E L I C E N S I N G
INSTITUTION Alabama Department of Insurance PROGRAM Life & Health Insurance Licensing
COURSE CODE LIFE-HEALTH-AL COURSE TITLE Life & Health Insurance Exam
ACADEMIC YEAR EXAM TITLE Contract of Adhesion concept —
Alabama Life & Health Insurance
Exam fully solved & updated 2025-
2026
TOTAL QUESTIONS 132 Questions FORMAT Multiple Choice — Select the
Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question unless otherwise instructed.
▸ Life insurance products, policy features, taxation, and business applications are all testable content.
▸ Understanding the differences between term, whole life, and universal life is emphasized.
▸ Correct answers and rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance licensing exam standards.
, SECTION I — LIFE & HEALTH INSURANCE: PRODUCTS,
Questions 1 – 132
FEATURES & TAXATION
1. Contract of Adhesion concept: Insurance contracts found to have ambiguous language will
always have the ambiguous language interpreted in favor of the policyholder. This is
known as:
A. Contra proferentem
B. Utmost good faith
C. Indemnity
D. Insurable interest
CORRECT ANSWER A — Contra proferentem
RATIONALE The contra proferentem rule states that ambiguous language in an insurance
contract will be interpreted against the insurer (the party that drafted the
contract) and in favor of the policyholder. This is a key principle of contract law as
applied to insurance policies.
2. The Insurance Commissioner may hold a hearing upon written demand of an aggrieved
person within how many days?
A. 15 days
B. 30 days
C. 60 days
D. 90 days
CORRECT ANSWER B — 30 days
RATIONALE The Insurance Commissioner may hold a hearing upon written demand of an
aggrieved person within 30 days. This provides a timely mechanism for
addressing insurance-related complaints and disputes.
,3. Which of the following is not one of an insurance producer's duties?
A. Writing the provisions of a customer's policy
B. Soliciting insurance applications
C. Collecting premiums
D. Providing policy information to clients
CORRECT ANSWER A — Writing the provisions of a customer's policy
RATIONALE Insurance producers are not responsible for writing policy provisions — that is the
insurer's function. Producers are licensed to solicit, negotiate, and sell insurance
policies. The policy language is drafted by the insurer's legal and underwriting
departments.
4. Insurance companies incorporated under Alabama state law are:
A. Domestic companies
B. Foreign companies
C. Alien companies
D. Non-admitted companies
CORRECT ANSWER A — Domestic companies
RATIONALE Insurance companies incorporated under Alabama state law are classified as
domestic companies in Alabama. Foreign companies are incorporated in other
states but admitted to do business in Alabama. Alien companies are incorporated
outside the United States.
, 5. One of the following is considered misrepresentation and is illegal:
A. Issuing a statement which is not entirely true about the terms of a policy
B. Comparing policy features accurately
C. Explaining policy exclusions correctly
D. Describing policy benefits accurately
CORRECT ANSWER A — Issuing a statement which is not entirely true about the terms of a
policy
RATIONALE Misrepresentation is the act of making false or incomplete statements about a
policy's terms, benefits, or conditions. It is illegal and can result in penalties,
license suspension, or revocation. Producers must provide accurate information
to clients.
6. The Commissioner of Insurance in Alabama may do all the following except:
A. Change the law to meet the public's best interest
B. License insurance producers
C. Conduct hearings and investigations
D. Enforce insurance laws and regulations
CORRECT ANSWER A — Change the law to meet the public's best interest
RATIONALE The Insurance Commissioner cannot change the law — only the legislature has
that authority. The Commissioner enforces existing laws, licenses producers,
conducts hearings, and investigates violations. Changing the law is a legislative
function, not an executive/regulatory one.
