17 Free Alabama Life & Health Practice Questions: Alabama Insurance Law (2026)
How to Use This Set
Alabama Insurance Law is Part IV of the content outline: 20 of the 150 questions on the combined exam, 18 of 125 on the Life-only exam and 16 of 100 on the Health-only exam. It is the smallest part and the one that national study guides cover least, which makes it the cheapest place to pick up marks if you study it.
The outline splits it into rules for all licensing candidates (the Commissioner's powers, licensing, continuing education, appointments, unfair trade practices), rules for life candidates (policy provisions, advertising, replacement, annuity suitability, the Alabama Life and Disability Insurance Guaranty Association) and rules for health candidates. These 17 questions come from LanePrep's Alabama L&H quiz bank and lean on continuing education, renewal fees, replacement, premium handling and repeat exams.
Practice Questions 1-6: Continuing Education, Late Fees, Premiums and Replacement Notices
Carryover of continuing education hours, the first-renewal exemption, the late renewal fee, handling client premiums, false statements about a competitor and the filing of a replacement notice.
Question 1 (Chapter 8)
A producer who has been licensed for 18 months receives a notice that their biennial renewal is due in their birth month. They completed 20 hours of CE in the current reporting period but have not yet taken any ethics hours. They ask if they can apply the 20 hours toward the current period and carry the remaining 4 hours (including the 3 ethics hours) forward to the next biennium. What is the correct answer under Alabama Regulation 482-1-110?
- A) Yes, excess hours may be carried forward to the next biennial period as long as the ethics requirement is met in the following period.
- B) No, Alabama does not permit any carryover of excess CE hours between biennial periods; all 24 hours, including 3 ethics hours, must be completed within the current reporting period.
- C) Yes, but only the non-ethics hours may be carried forward; ethics hours must be completed in the period they are earned.
- D) No, but the producer may apply for a one-time extension of 90 days to complete the remaining hours without penalty.
Show answer & explanation
Answer: B
Alabama Regulation 482-1-110 explicitly eliminated carryover of excess CE hours effective January 1, 2013. The regulation states that excess credit hours earned in the previous biennial renewal period cannot be carried over to the next reporting period; any excess is lost. The producer must complete all 24 hours (including 3 ethics hours) within the current biennium. A is incorrect because carryover is not permitted at all. C is incorrect because no hours of any type may be carried forward. D is incorrect because the regulation does not provide for a 90-day extension mechanism for CE completion; the renewal deadline is tied to the birth month with a late fee for filings in the following month.
Question 2 (Chapter 8)
A newly licensed Alabama producer receives their license on October 15, 2025. Their birth month is March. Their first renewal deadline is March 31, 2026 (less than 12 months after licensure). Under Regulation 482-1-110, what is their CE obligation for this first renewal?
- A) They must complete the full 24 hours including 3 ethics hours before the March 2026 renewal.
- B) They are exempt from the CE requirement at this first renewal because they have been licensed less than 12 months.
- C) They must complete 12 hours including 2 ethics hours because they qualify for the office-bound producer reduction.
- D) They must complete 24 hours but may carry forward any excess to the next biennium.
Show answer & explanation
Answer: B
Regulation 482-1-110-.03(3)(d) and -.05(4) provide that newly licensed producers are exempt from the CE requirement at their first renewal only, if licensed less than 12 months at that renewal. Since this producer was licensed in October 2025 and renews in March 2026 (approximately 5.5 months later), they qualify for the exemption. A is incorrect because the exemption applies precisely to this situation. C is incorrect because the office-bound reduction is a separate provision and does not apply to the first-renewal exemption analysis. D is incorrect because carryover of excess hours is not permitted under any circumstances per the 2013 rule change.
Question 3 (Chapter 8)
An Alabama producer's license renewal is due by their birth month deadline. They file the renewal application and pay the $70 renewal fee in the month following their birth month. What additional fee applies?
- A) No additional fee; there is a one-month grace period.
- B) $50 late fee.
- C) $25 late fee.
- D) $80 reinstatement fee.
Show answer & explanation
Answer: B
The ALDOI Fees page and Producer Requirements page both state a $50 late fee applies when renewal is filed in the month after the birth-month deadline. A is incorrect because there is no grace period; the late fee applies immediately after the birth month. C is the annual appointment renewal fee, not the late renewal fee. D is the initial license fee, not a reinstatement fee (reinstatement procedures are separate).
Question 4 (Chapter 8)
An Alabama producer receives premium payments from a client and deposits them into their personal checking account, intending to forward them to the insurer the next business day. The producer's personal account earns interest. Has the producer violated Alabama law?
- A) No, as long as the premiums are forwarded to the insurer within 30 days.
- B) Yes, this constitutes commingling of premium funds and violates the fiduciary handling requirement.
- C) No, because the producer intends to forward the funds promptly and the interest earned is minimal.
- D) Yes, but only if the producer fails to forward the funds within 10 business days.
Show answer & explanation
Answer: B
Alabama law requires producers to handle premiums in a fiduciary capacity. Depositing premium funds into a personal account constitutes commingling, which is prohibited regardless of how quickly the funds are forwarded or whether interest is earned. The producer must maintain separate fiduciary accounts for premium funds. A and C are incorrect because intent and timing do not cure commingling. D is incorrect because there is no 10-business-day safe harbor; commingling is a violation per se.
Question 5 (Chapter 8)
An Alabama producer tells a prospective client that a competing insurer is 'financially unstable and likely to go bankrupt soon,' knowing this statement is false. The producer does this to persuade the client to buy from the insurer the producer represents. Which unfair trade practice has the producer committed?
- A) Twisting
- B) Defamation
- C) Misrepresentation
- D) Rebating
Show answer & explanation
Answer: B
Defamation in insurance includes making false statements about the financial condition of an insurer with the intent to injure that insurer or to induce a person to buy from another insurer. The producer knowingly made a false statement about a competitor's financial stability to induce a sale, which is classic defamation. A (twisting) involves inducing a policyholder to lapse or surrender an existing policy to buy a new one. C (misrepresentation) is broader but defamation is the specific practice targeting false statements about an insurer's financial condition. D (rebating) involves offering an inducement not specified in the policy.
Question 6 (Chapter 8)
An Alabama producer is replacing a client's existing annuity with a new annuity. The producer provides the required replacement notice to the applicant but fails to submit a copy of the notice to the replacing insurer. Has the producer complied with Regulation 482-1-133?
- A) Yes, the producer's only duty is to give the notice to the applicant.
- B) No, the producer must submit the notice to the existing insurer, not the replacing insurer.
- C) Yes, as long as the replacing insurer receives the application, the notice requirement is satisfied.
- D) No, the producer must also submit a copy of the replacement notice to the replacing insurer.
Show answer & explanation
Answer: D
Regulation 482-1-133 imposes duties on both the producer and the replacing insurer. The producer must provide the replacement notice to the applicant and also submit a copy of that notice to the replacing insurer. The replacing insurer then has its own duties, including maintaining copies and notifying the existing insurer. A is incorrect because the producer has a dual delivery obligation. B is incorrect because the notice goes to the replacing insurer, not the existing insurer (the replacing insurer notifies the existing insurer). C is incorrect because receipt of the application does not substitute for the notice filing requirement.
Get the 25-question sample set by email
Want a full-exam practice set to study offline? Drop your email — we'll send 25 questions across every content area, each with the answer and explanation.
No spam. Just the questions and one optional follow-up.
Practice Questions 7-12: Repeat Exams, Appointments, Discipline, Replacement and Advertising
Waiting periods after failed exams, the appointment filing fee, the Commissioner's authority over suspensions and hearings, replacement notices, a first renewal and advertising that mentions the guaranty association.
Question 7 (Chapter 8)
An Alabama producer fails the standalone Life exam on March 1. They then fail the combined Life & Health exam on March 15. They want to take the standalone Health exam next. What waiting period applies?
- A) 90-day wait from the Life & Health failure (March 15).
- B) No waiting period; they can take the Health exam immediately.
- C) 180-day wait from the Life & Health failure.
- D) 90-day wait from the Life failure (March 1).
Show answer & explanation
Answer: A
LDOI's repeat exam rules state that failing the combined Life & Health exam carries the waiting period over to BOTH the standalone Life and standalone Health exams. The producer's most recent failure is the combined exam on March 15 (2nd failure overall). After a 2nd failure, a 90-day wait applies. That wait carries over to the Health exam. The earliest Health attempt is 90 days after March 15. B is incorrect because the combined exam failure imposes a wait on both standalone exams. C is incorrect because 180 days applies after the 4th failure. D is incorrect because the waiting period is triggered by the most recent failure (the combined exam), not the earlier Life failure.
Question 8 (Chapter 8)
An insurer wants to appoint an Alabama producer. What fee must the insurer pay to the Alabama Department of Insurance for filing the notice of appointment?
- A) $40
- B) $25
- C) $50
- D) $80
Show answer & explanation
Answer: A
The ALDOI Fees page and Producer Requirements page list the filing fee for a notice of appointment as $40. A ($25) is the annual appointment renewal fee. C ($50) is the late renewal fee. D ($80) is the initial producer license fee.
Question 9 (Chapter 8)
An Alabama producer's license was suspended by the Commissioner after an investigation found the producer misrepresented policy benefits to a client. The producer requests a hearing. Which statement accurately describes the Commissioner's authority under the Alabama Insurance Code?
- A) The Commissioner must obtain a court order before suspending a license and cannot impose fines without judicial approval.
- B) The Commissioner can only impose fines up to $1,000 per violation and must refer license revocation cases to the Attorney General.
- C) The Commissioner has the authority to conduct hearings, impose penalties including fines and license suspension or revocation, and issue cease and desist orders.
- D) The Commissioner's hearing authority is limited to rate and form approval disputes; disciplinary actions against producers are handled by an administrative law judge appointed by the Governor.
Show answer & explanation
Answer: C
Correct answer is C. The Commissioner of Insurance has broad regulatory authority under Title 27, including the power to conduct investigations, hold hearings, impose penalties (fines, suspension, revocation), and issue cease and desist orders. Option A is incorrect because the Commissioner has direct administrative authority to suspend licenses without a prior court order. Option B is incorrect because the Commissioner's penalty authority is not capped at $1,000 and does not require referral to the Attorney General for revocation. Option D is incorrect because the Commissioner directly handles producer disciplinary hearings, not an ALJ appointed by the Governor.
Question 10 (Chapter 8)
An Alabama producer is replacing a client's existing whole life policy with a new universal life policy from a different insurer. The producer delivers the required replacement notice to the applicant and obtains the applicant's signature. However, the producer fails to leave a copy of the notice with the applicant and does not submit a copy to the replacing insurer. Under Regulation 482-1-133, has the producer fully complied?
- A) Yes, obtaining the applicant's signature on the notice is the only mandatory step.
- B) No, but only because the producer must submit the notice to the existing insurer, not the replacing insurer.
- C) Yes, because Regulation 482-1-133 only applies to annuity replacements, not life insurance replacements.
- D) No, the producer must also leave a copy of the notice with the applicant and submit a copy to the replacing insurer.
Show answer & explanation
Answer: D
Correct answer is D. Regulation 482-1-133 requires the producer to: (1) present the replacement notice to the applicant, (2) obtain the applicant's signature, (3) leave a copy of the notice with the applicant, and (4) submit a copy to the replacing insurer. All steps are mandatory. Option A is incorrect because signature alone is insufficient. Option B is incorrect because the notice goes to the replacing insurer, not the existing insurer. Option C is incorrect because the regulation applies to both life insurance and annuity replacements.
Question 11 (Chapter 8)
An Alabama producer who was first licensed on November 1, 2023, holds a Life and Health license. Their birth month is June. They are approaching their first renewal deadline of June 30, 2024 (approximately 8 months after initial licensure). Under Regulation 482-1-110, what is their CE obligation for this first renewal?
- A) They are exempt from the CE requirement for this first renewal because they have been licensed less than 12 months at the time of renewal.
- B) They must complete the full 24 hours of CE, including 3 hours of ethics, before the June 30, 2024 renewal deadline.
- C) They must complete 12 hours of CE (including 2 hours of ethics) under the reduced requirement for office-bound producers.
- D) They must complete 24 hours of CE but may carry over any excess hours to the next biennial period.
Show answer & explanation
Answer: A
Regulation 482-1-110-.03(3)(d) and -.05(4) provide that a newly licensed producer is exempt from the CE requirement at their first renewal if they have been licensed less than 12 months at that renewal. Since this producer was licensed November 1, 2023 and renews June 30, 2024 (about 8 months), they qualify for the exemption. B is incorrect because the exemption applies. C is incorrect because the reduced 12-hour requirement applies only to producers who work exclusively in the office of their employing producer/insurer and hold no nonresident licenses — not to all new licensees. D is incorrect because Alabama does not allow carryover of excess CE hours between biennial periods (this was eliminated effective January 1, 2013).
Question 12 (Chapter 8)
An Alabama producer advertises a life insurance policy using the phrase 'Guaranteed by the Alabama Life and Disability Insurance Guaranty Association' in bold print. The advertisement does not mention any coverage limits. Is this advertisement compliant with Alabama law?
- A) No, Alabama law prohibits using the existence of the guaranty association in advertising or as an inducement to purchase insurance.
- B) Yes, because the guaranty association does provide a safety net for policyholders.
- C) Yes, as long as the producer also discloses the coverage limits in the same advertisement.
- D) No, but only because the advertisement fails to mention that the guaranty association only covers annuities, not life insurance.
Show answer & explanation
Answer: A
Alabama law (Title 27, Chapter 44) explicitly prohibits using the existence of the Alabama Life and Disability Insurance Guaranty Association (ALDIGA) in advertising, solicitation, or as an inducement to purchase insurance. This prohibition is absolute and does not depend on disclosure of limits. B is incorrect because the protection exists but cannot be advertised. C is incorrect because even with limit disclosures, the use in advertising is prohibited. D is incorrect because ALDIGA covers both life insurance and disability income (including annuities), and the prohibition applies regardless of coverage scope.
Practice Questions 13-17: Internal Replacement, Comparisons, Premium Handling and Adding a Line
Internal replacement of an annuity, comparisons with other insurers, mixing client premiums with operating funds, adding the Health line to a Life license and the reduced continuing education rule for office-bound producers.
Question 13 (Chapter 8)
An Alabama producer is replacing a client's existing annuity with a new annuity from the same insurer (an internal replacement). The producer provides the applicant with the required replacement notice (Form A) and obtains the applicant's signature. The producer leaves a copy with the applicant and submits a copy to the replacing insurer. The applicant receives the new annuity contract on June 1. On June 25, the applicant decides to return the contract. Under Regulation 482-1-133, what is the applicant's right?
- A) The applicant may return the contract within 30 days of delivery for an unconditional full refund of all premiums and considerations paid, including policy fees.
- B) The applicant may return the contract within 10 days of delivery for a refund of premiums only, excluding policy fees.
- C) The applicant has no right to return the contract because it is an internal replacement with the same insurer.
- D) The applicant may return the contract within 30 days but only receives a refund of premiums minus a surrender charge.
Show answer & explanation
Answer: A
Regulation 482-1-133 applies to all replacements of life insurance and annuities, including internal replacements with the same insurer. The regulation explicitly gives the policy/contract owner 'the right to return the policy or contract within thirty (30) days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges.' This 30-day unconditional full refund right is the replacement free-look, distinct from any ordinary free-look period. B describes a shorter period with exclusions, which is incorrect. C is incorrect because internal replacements are covered. D is incorrect because the refund is unconditional and includes all fees, with no surrender charge deduction.
Question 14 (Chapter 8)
An Alabama producer tells a prospective client: 'The insurance company I represent has a much better claims-paying record than XYZ Insurance, which has been delaying payments to policyholders for months.' The producer knows that XYZ Insurance has actually been paying claims promptly and has no record of delays. Which unfair trade practice has the producer committed?
- A) Defamation
- B) Twisting
- C) False advertising
- D) Rebating
Show answer & explanation
Answer: A
Defamation in insurance occurs when a producer makes a false statement about the financial condition or business practices of another insurer with the intent to injure that insurer or induce a purchase. The producer knowingly made a false statement about XYZ Insurance's claims-paying practices to persuade the client to buy from their insurer. B (Twisting) involves inducing a policyholder to lapse/forfeit/surrender an existing policy to buy a new one — not present here. C (False advertising) typically refers to misleading advertisements to the public, not oral misrepresentations to an individual. D (Rebating) involves offering something of value not specified in the policy as an inducement.
Question 15 (Chapter 8)
An Alabama producer is appointed by an insurer to sell health insurance. The producer collects premiums from several clients and deposits them into the agency's operating account, which is used to pay office expenses. The producer argues that since the agency is the insurer's appointed agent, the funds are effectively the insurer's. Has the producer violated Alabama law?
- A) No, because the agency is the insurer's appointed agent, so the operating account is effectively the insurer's account.
- B) Only if the insurer files a complaint about the commingling.
- C) Yes, producers must hold premiums in a fiduciary capacity and cannot commingle them with agency operating funds.
- D) No, as long as the premiums are forwarded to the insurer within 45 days.
Show answer & explanation
Answer: C
Alabama law requires producers to hold premium funds in a fiduciary capacity. Commingling premiums with the agency's operating funds (used for expenses) violates this fiduciary duty, regardless of the agency's appointment status. The funds must be kept separate and remitted to the insurer. A is incorrect because the agency's operating account is not the insurer's account. B is incorrect because the violation is statutory, not dependent on a complaint. D is incorrect because no 45-day grace period legitimizes commingling.
Question 16 (Chapter 8)
An Alabama resident producer holds a Life license and wants to add the Health line of authority. They passed the Life exam 10 months ago and their examination certificate is still valid. Under Act 2023-104 and current Alabama law, what is required to add the Health line?
- A) The producer must pass the Health exam; no pre-licensing course is required.
- B) The producer must complete a 20-hour pre-licensing course for Health and pass the Health exam.
- C) The producer can add Health by filing a change request through NIPR and paying the appointment fee; no exam is required.
- D) The producer must retake the combined Life & Health exam to add the Health line.
Show answer & explanation
Answer: A
Act 2023-104 repealed Alabama's pre-licensing course requirement effective January 1, 2024. To add a line of authority, a producer must pass the examination for that line (or the combined exam) and submit a new NIPR application with the required fees. No pre-licensing course is required. B is incorrect because pre-licensing courses are no longer required. C is incorrect because an exam is required for a new line of authority. D is incorrect because the producer can take the standalone Health exam; they are not forced to retake the combined exam.
Question 17 (Chapter 8)
An Alabama resident producer works exclusively in the office of their employing insurance agency in Mobile and holds no nonresident licenses. They are approaching their biennial renewal and have completed 12 hours of CE (including 2 hours of ethics) in the current reporting period. Under Regulation 482-1-110, can they renew their license?
- A) Yes, because office-bound producers only need 12 hours total with 2 ethics hours.
- B) No, they need 24 hours total with 3 ethics hours regardless of work location.
- C) Yes, but only if they complete an additional 1 hour of ethics before renewal.
- D) No, the reduced CE requirement only applies to producers licensed before 2013.
Show answer & explanation
Answer: A
Regulation 482-1-110-.05(5) provides a reduced CE requirement for producers who work only in the office of their employing producer/insurer and hold no nonresident licenses: 12 classroom hours per biennium, of which 2 hours must be ethics. The producer has met this requirement exactly. B is incorrect because the reduced requirement is a current provision, not a historical one. C is incorrect because only 2 ethics hours are required, not 3. D is incorrect because the reduced requirement is not limited to pre-2013 licensees; the pre-2013 exemptions are a separate, frozen list.
The Mistakes That Cost Marks
Patterns from the questions above that cost candidates marks on exam day:
- Assuming continuing education carries over. It does not. The requirement is 24 classroom hours per biennial period, 3 of them in ethics, and excess hours are lost.
- Missing the first-renewal exemption. A newly licensed producer is exempt from continuing education at the first renewal only, if licensed less than 12 months at that renewal.
- Missing the office-bound rule. A producer who works only in the office of an employing producer or insurer, with no nonresident license, may complete 12 hours with 2 in ethics instead.
- Using the guaranty association as a selling point. The outline names the association and the prohibition on using it in sales.
- Mixing up the repeat-exam waits. No wait after the first failure, 90 days after the second, none of its own after the third, 180 days from the fourth. A combined failure carries over to both single-line exams.
- Forgetting the replacement notice. Replacement of life insurance and annuities is governed by Insurance Regulation Chapter 482-1-133, which includes a 30-day unconditional refund right.
Your Next Step
If these questions exposed a gap, listen to the matching lesson in the Alabama Life & Health course preview, then come back and rework the questions you missed. For more topics, see all of our free Alabama Life & Health practice questions.
Free: 25 Alabama L&H practice questions
Liked this article? Get 25 exam-style questions emailed to you — with full answer explanations, no credit card. Closest thing to studying offline.
No spam. Just the questions and one optional follow-up.
Study this topic with LanePrep
Listen to these audio chapters on your commute — no screen required.
Related Articles
How to Pass the Alabama Life and Health Insurance Exam on the First Try (2026)
9 min read
$155 + Fingerprints: Alabama Life & Health License Cost 2026
6 min read
25 Free Alabama Life & Health Exam Practice Questions (2026)
25 min read
Is the Alabama Life & Health Exam Hard? Pass Rates and Difficulty (2026)
4 min read
17 Free Alabama Life & Health Practice Questions: Underwriting and the Application (2026)
16 min read
17 Free Alabama Life & Health Practice Questions: Life Policy Provisions, Options and Riders (2026)
13 min read
17 Free Alabama Life & Health Practice Questions: Individual Health Policy Provisions, Group Health, Medicare, Medicaid and Limited Policies (2026)
12 min read