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
Alabama Life & Health Insurance Exam fully solved &
updated 2025-2026 (latest version verified for accuracy) |
2025\2026 Latest!!
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 Alabama Life & Health Insurance
Exam fully solved & updated 2025-
2026 (latest version verified for
accuracy) | 2025\2026 Latest!!
TOTAL QUESTIONS 99 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 – 99
FEATURES & TAXATION
1. Term insurance provides what is known as _________________.
A. Pure death protection
B. Cash value accumulation
C. Living benefits
D. Investment returns
CORRECT ANSWER A — Pure death protection
RATIONALE Term insurance provides what is known as pure death protection. It offers a death
benefit only if the insured dies during the policy term, with no cash value or living
benefits. This makes it the most cost-effective form of life insurance for temporary
coverage needs.
2. Term insurance has no _____________.
A. Death benefit
B. Premium
C. Cash value
D. Term
CORRECT ANSWER C — Cash value
RATIONALE Term insurance has no cash value. It is pure protection with no savings or
investment component. Premiums pay for the death benefit only, and the policy
does not accumulate any cash value that can be borrowed or surrendered.
,3. Term insurance provides the greatest amount of coverage for the _______________.
A. Highest premium
B. Lowest premium
C. Same premium as whole life
D. No premium
CORRECT ANSWER B — Lowest premium
RATIONALE Term insurance provides the greatest amount of coverage for the lowest
premium. Because it offers no cash value and only temporary coverage, the cost
per dollar of coverage is lower than any other type of life insurance.
4. Three basic types of term coverage are available, based on how the face amount changes
during the policy term. These include all EXCEPT which?
A. Level term
B. Increasing term
C. Decreasing term
D. Flexible term
CORRECT ANSWER D — Flexible term
RATIONALE The three basic types of term coverage are level, increasing, and decreasing term.
Flexible term is not a standard term insurance type. Level term has a constant
death benefit, increasing term has a death benefit that grows, and decreasing
term has a death benefit that declines over time.
, 5. Level in level term insurance refers to the ________________, which does NOT change.
A. Premium
B. Death benefit
C. Cash value
D. Policy term
CORRECT ANSWER B — Death benefit
RATIONALE Level in level term insurance refers to the death benefit, which does not change
throughout the life of the policy. The premium may be level or increasing
depending on the specific term product, but the death benefit remains constant.
6. Annually Renewable Term (ART) is the purest form of term insurance. Which statement is
true about ART?
A. The death benefit increases each year
B. The premium remains level throughout the policy term
C. The death benefit remains level, and the premium increases annually
D. The policy cannot be renewed without proof of insurability
CORRECT ANSWER C — The death benefit remains level, and the premium increases annually
RATIONALE Annually Renewable Term (ART) features a level death benefit with premiums that
increase each year. The policy is guaranteed renewable without proof of
insurability, but premiums rise annually based on attained age as mortality risk
increases.
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
Alabama Life & Health Insurance Exam fully solved &
updated 2025-2026 (latest version verified for accuracy) |
2025\2026 Latest!!
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 Alabama Life & Health Insurance
Exam fully solved & updated 2025-
2026 (latest version verified for
accuracy) | 2025\2026 Latest!!
TOTAL QUESTIONS 99 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 – 99
FEATURES & TAXATION
1. Term insurance provides what is known as _________________.
A. Pure death protection
B. Cash value accumulation
C. Living benefits
D. Investment returns
CORRECT ANSWER A — Pure death protection
RATIONALE Term insurance provides what is known as pure death protection. It offers a death
benefit only if the insured dies during the policy term, with no cash value or living
benefits. This makes it the most cost-effective form of life insurance for temporary
coverage needs.
2. Term insurance has no _____________.
A. Death benefit
B. Premium
C. Cash value
D. Term
CORRECT ANSWER C — Cash value
RATIONALE Term insurance has no cash value. It is pure protection with no savings or
investment component. Premiums pay for the death benefit only, and the policy
does not accumulate any cash value that can be borrowed or surrendered.
,3. Term insurance provides the greatest amount of coverage for the _______________.
A. Highest premium
B. Lowest premium
C. Same premium as whole life
D. No premium
CORRECT ANSWER B — Lowest premium
RATIONALE Term insurance provides the greatest amount of coverage for the lowest
premium. Because it offers no cash value and only temporary coverage, the cost
per dollar of coverage is lower than any other type of life insurance.
4. Three basic types of term coverage are available, based on how the face amount changes
during the policy term. These include all EXCEPT which?
A. Level term
B. Increasing term
C. Decreasing term
D. Flexible term
CORRECT ANSWER D — Flexible term
RATIONALE The three basic types of term coverage are level, increasing, and decreasing term.
Flexible term is not a standard term insurance type. Level term has a constant
death benefit, increasing term has a death benefit that grows, and decreasing
term has a death benefit that declines over time.
, 5. Level in level term insurance refers to the ________________, which does NOT change.
A. Premium
B. Death benefit
C. Cash value
D. Policy term
CORRECT ANSWER B — Death benefit
RATIONALE Level in level term insurance refers to the death benefit, which does not change
throughout the life of the policy. The premium may be level or increasing
depending on the specific term product, but the death benefit remains constant.
6. Annually Renewable Term (ART) is the purest form of term insurance. Which statement is
true about ART?
A. The death benefit increases each year
B. The premium remains level throughout the policy term
C. The death benefit remains level, and the premium increases annually
D. The policy cannot be renewed without proof of insurability
CORRECT ANSWER C — The death benefit remains level, and the premium increases annually
RATIONALE Annually Renewable Term (ART) features a level death benefit with premiums that
increase each year. The policy is guaranteed renewable without proof of
insurability, but premiums rise annually based on attained age as mortality risk
increases.
