Alabama Department of
MAXE · H&L LA
Insurance
★ ★
AL
Life & Health Insurance Exam
EST. 1901
P R O T E C T I N G A L A B A M A' S I N S U R A N C E C O N S U M E R S
Alabama Life and Health Insurance Exam
CO M P R E H E N S I V E I N S U RA N C E P R I N C I P L E S & P RACT I C E S
INSTITUTION Alabama Department of Insurance PROGRAM Life & Health Insurance Licensing
COURSE CODE AL L&H COURSE TITLE Life & Health Insurance Exam Prep
ACADEMIC YEAR EXAM TITLE Alabama Life and Health
Insurance Exam
TOTAL QUESTIONS 56 Questions FORMAT Multiple Choice — Select the
Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question unless otherwise instructed.
▸ Insurance principles, contract law, and Alabama regulations are all testable content.
▸ Producer responsibilities and underwriting concepts are emphasized.
▸ Correct answers and rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance regulations.
, SECTION I — INSURANCE PRINCIPLES & ALABAMA
Questions 1 – 56
REGULATIONS
1. The Fair Credit Reporting Act is what law that protects consumers from the circulation of
inaccurate or obsolete information?
A. The Fair Credit Reporting Act (FCRA)
B. The Gramm-Leach-Bliley Act
C. The Health Insurance Portability and Accountability Act (HIPAA)
D. The Sarbanes-Oxley Act
CORRECT ANSWER A — The Fair Credit Reporting Act (FCRA)
RATIONALE The Fair Credit Reporting Act (FCRA) protects consumers from the circulation of
inaccurate or obsolete information. It regulates the collection and use of
consumer credit information by reporting agencies.
2. Domestic, foreign, and alien: Insurers are classified according to their domicile. What are
the 3 types of insurers?
A. Domestic, Foreign, and Alien
B. Stock, Mutual, and Fraternal
C. Commercial, Industrial, and Personal
D. State, Federal, and International
CORRECT ANSWER A — Domestic, Foreign, and Alien
RATIONALE Insurers are classified according to their domicile as Domestic (incorporated in
the state), Foreign (incorporated in another state), or Alien (incorporated outside
the United States).
, 3. What type of insurer is a voluntarily formed organization that provides religious
organizations with a representative form of government?
A. Fraternal insurer
B. Stock insurer
C. Mutual insurer
D. Lloyd's Association
CORRECT ANSWER A — Fraternal insurer
RATIONALE A Fraternal insurer is a voluntarily formed organization that provides insurance
benefits for members of an affiliated lodge, religious organization, or fraternal
organization with a representative form of government.
4. The type of insurance company organized to return any surplus money to its policyholders
is known as what?
A. Stock company
B. Mutual company
C. Fraternal company
D. Lloyd's Association
CORRECT ANSWER B — Mutual company
RATIONALE A mutual company is organized to return any surplus money to its policyholders.
Policyowners are the owners of the company and may receive dividends.
MAXE · H&L LA
Insurance
★ ★
AL
Life & Health Insurance Exam
EST. 1901
P R O T E C T I N G A L A B A M A' S I N S U R A N C E C O N S U M E R S
Alabama Life and Health Insurance Exam
CO M P R E H E N S I V E I N S U RA N C E P R I N C I P L E S & P RACT I C E S
INSTITUTION Alabama Department of Insurance PROGRAM Life & Health Insurance Licensing
COURSE CODE AL L&H COURSE TITLE Life & Health Insurance Exam Prep
ACADEMIC YEAR EXAM TITLE Alabama Life and Health
Insurance Exam
TOTAL QUESTIONS 56 Questions FORMAT Multiple Choice — Select the
Single Best Answer
EXAMINATION INSTRUCTIONS
▸ Select the single best answer for each question unless otherwise instructed.
▸ Insurance principles, contract law, and Alabama regulations are all testable content.
▸ Producer responsibilities and underwriting concepts are emphasized.
▸ Correct answers and rationales appear below each question for review purposes.
▸ All content reflects current Alabama insurance regulations.
, SECTION I — INSURANCE PRINCIPLES & ALABAMA
Questions 1 – 56
REGULATIONS
1. The Fair Credit Reporting Act is what law that protects consumers from the circulation of
inaccurate or obsolete information?
A. The Fair Credit Reporting Act (FCRA)
B. The Gramm-Leach-Bliley Act
C. The Health Insurance Portability and Accountability Act (HIPAA)
D. The Sarbanes-Oxley Act
CORRECT ANSWER A — The Fair Credit Reporting Act (FCRA)
RATIONALE The Fair Credit Reporting Act (FCRA) protects consumers from the circulation of
inaccurate or obsolete information. It regulates the collection and use of
consumer credit information by reporting agencies.
2. Domestic, foreign, and alien: Insurers are classified according to their domicile. What are
the 3 types of insurers?
A. Domestic, Foreign, and Alien
B. Stock, Mutual, and Fraternal
C. Commercial, Industrial, and Personal
D. State, Federal, and International
CORRECT ANSWER A — Domestic, Foreign, and Alien
RATIONALE Insurers are classified according to their domicile as Domestic (incorporated in
the state), Foreign (incorporated in another state), or Alien (incorporated outside
the United States).
, 3. What type of insurer is a voluntarily formed organization that provides religious
organizations with a representative form of government?
A. Fraternal insurer
B. Stock insurer
C. Mutual insurer
D. Lloyd's Association
CORRECT ANSWER A — Fraternal insurer
RATIONALE A Fraternal insurer is a voluntarily formed organization that provides insurance
benefits for members of an affiliated lodge, religious organization, or fraternal
organization with a representative form of government.
4. The type of insurance company organized to return any surplus money to its policyholders
is known as what?
A. Stock company
B. Mutual company
C. Fraternal company
D. Lloyd's Association
CORRECT ANSWER B — Mutual company
RATIONALE A mutual company is organized to return any surplus money to its policyholders.
Policyowners are the owners of the company and may receive dividends.
