Alabama Life and Health Insurance Exam
Questions and Answers (Verified by
Expert 2025)
Alabama Life & Health Insurance Practice
Exam (Original)
1. Which of the following is a characteristic of a whole life
insurance policy?
A. Coverage lasts for a specified term only
B. Builds cash value over time
C. Premiums decrease with age
D. Only pays a death benefit if death occurs within 10 years
Answer: B
Explanation: Whole life insurance provides lifelong coverage and accumulates cash value.
2. What is the purpose of underwriting in life insurance?
A. To advertise the policy
B. To determine the risk of insuring an applicant
C. To calculate commissions for agents
D. To process claims
,Answer: B
Explanation: Underwriting assesses risk to decide coverage eligibility and premiums.
3. Which type of health insurance covers the cost of
hospital stays and major medical expenses?
A. Disability income insurance
B. Term life insurance
C. Major medical insurance
D. Whole life insurance
Answer: C
Explanation: Major medical insurance provides coverage for hospitalization and large medical
bills.
4. In Alabama, what is the minimum age requirement to
become a licensed life insurance agent?
A. 16
B. 18
C. 21
D. 25
Answer: B
Explanation: The Alabama Department of Insurance requires applicants to be at least 18
years old.
5. Which provision allows a policyholder to reinstate a
lapsed life insurance policy?
A. Free-look provision
B. Reinstatement provision
C. Grace period
D. Dividend option
,Answer: B
Explanation: The reinstatement provision allows a lapsed policy to be restored under certain
conditions.
6. Which type of life insurance provides coverage for a
set number of years?
A. Whole life
B. Term life
C. Universal life
D. Variable life
Answer: B
Explanation: Term life insurance provides coverage for a specific term, such as 10, 20, or 30
years.
7. What does the “grace period” in a life insurance policy
allow?
A. Canceling the policy without penalty
B. Making late premium payments without policy lapse
C. Changing beneficiaries
D. Increasing the death benefit
Answer: B
Explanation: A grace period is a time after the premium due date during which coverage
remains in effect.
8. Which of the following is considered a hazard in life
insurance?
A. High blood pressure
B. Risky hobbies
C. Smoking
D. All of the above
, Answer: D
Explanation: All these factors increase the risk of death and affect underwriting decisions.
9. What is the primary purpose of an annuity?
A. Provide a death benefit
B. Accumulate and distribute funds for retirement
C. Cover short-term disability
D. Provide health insurance
Answer: B
Explanation: Annuities are designed to provide income over time, often for retirement.
10. Which type of policy allows the policyholder to adjust
premiums and death benefits?
A. Whole life
B. Term life
C. Universal life
D. Accidental death
Answer: C
Explanation: Universal life policies are flexible and allow adjustments to premiums and death
benefits.
11. Which health insurance plan combines the features of
HMO and PPO?
A. Exclusive provider organization (EPO)
B. Health savings account (HSA)
C. Point-of-service (POS) plan
D. Indemnity plan
Answer: C
Explanation: POS plans allow patients to choose providers outside a network, like PPO, but
have features similar to HMOs.
Questions and Answers (Verified by
Expert 2025)
Alabama Life & Health Insurance Practice
Exam (Original)
1. Which of the following is a characteristic of a whole life
insurance policy?
A. Coverage lasts for a specified term only
B. Builds cash value over time
C. Premiums decrease with age
D. Only pays a death benefit if death occurs within 10 years
Answer: B
Explanation: Whole life insurance provides lifelong coverage and accumulates cash value.
2. What is the purpose of underwriting in life insurance?
A. To advertise the policy
B. To determine the risk of insuring an applicant
C. To calculate commissions for agents
D. To process claims
,Answer: B
Explanation: Underwriting assesses risk to decide coverage eligibility and premiums.
3. Which type of health insurance covers the cost of
hospital stays and major medical expenses?
A. Disability income insurance
B. Term life insurance
C. Major medical insurance
D. Whole life insurance
Answer: C
Explanation: Major medical insurance provides coverage for hospitalization and large medical
bills.
4. In Alabama, what is the minimum age requirement to
become a licensed life insurance agent?
A. 16
B. 18
C. 21
D. 25
Answer: B
Explanation: The Alabama Department of Insurance requires applicants to be at least 18
years old.
5. Which provision allows a policyholder to reinstate a
lapsed life insurance policy?
A. Free-look provision
B. Reinstatement provision
C. Grace period
D. Dividend option
,Answer: B
Explanation: The reinstatement provision allows a lapsed policy to be restored under certain
conditions.
6. Which type of life insurance provides coverage for a
set number of years?
A. Whole life
B. Term life
C. Universal life
D. Variable life
Answer: B
Explanation: Term life insurance provides coverage for a specific term, such as 10, 20, or 30
years.
7. What does the “grace period” in a life insurance policy
allow?
A. Canceling the policy without penalty
B. Making late premium payments without policy lapse
C. Changing beneficiaries
D. Increasing the death benefit
Answer: B
Explanation: A grace period is a time after the premium due date during which coverage
remains in effect.
8. Which of the following is considered a hazard in life
insurance?
A. High blood pressure
B. Risky hobbies
C. Smoking
D. All of the above
, Answer: D
Explanation: All these factors increase the risk of death and affect underwriting decisions.
9. What is the primary purpose of an annuity?
A. Provide a death benefit
B. Accumulate and distribute funds for retirement
C. Cover short-term disability
D. Provide health insurance
Answer: B
Explanation: Annuities are designed to provide income over time, often for retirement.
10. Which type of policy allows the policyholder to adjust
premiums and death benefits?
A. Whole life
B. Term life
C. Universal life
D. Accidental death
Answer: C
Explanation: Universal life policies are flexible and allow adjustments to premiums and death
benefits.
11. Which health insurance plan combines the features of
HMO and PPO?
A. Exclusive provider organization (EPO)
B. Health savings account (HSA)
C. Point-of-service (POS) plan
D. Indemnity plan
Answer: C
Explanation: POS plans allow patients to choose providers outside a network, like PPO, but
have features similar to HMOs.
