25 Free Alabama Life & Health Exam Practice Questions (2026)

25 min read|Updated 2026-10-22

How to Use This Alabama Life & Health Question Set

Alabama tests Life and Health together as a combined exam of 150 questions in 180 minutes for $75, administered not by a national testing vendor but by the University of Alabama's Continuing Education Lifelong Learning (CELL) program, under contract to the Alabama Department of Insurance (ALDOI). Passing takes 105 correct, a flat 70 percent, not a scaled score — Alabama simply counts right answers against the total. Since Act 2023-104 took effect on January 1, 2024, Alabama no longer requires a pre-licensing course before this exam for either the Life or the Health line of authority.

The content outline splits the combined exam into four parts: Part I, General Life and Health Insurance, 30 questions; Part II, Life Insurance, 55 questions; Part III, Health Insurance, 45 questions; and Part IV, Alabama Insurance Law, 20 questions.

These 25 questions come from LanePrep's Alabama Life & Health quiz bank and sample across Chapters 1-8 in roughly outline-weighted proportion: 2 from Chapter 1, 3 from Chapter 2, 3 from Chapter 3, 3 from Chapter 4, 3 from Chapter 5, 4 from Chapter 6, 4 from Chapter 7, and 3 from Chapter 8. Each question shows its chapter, so a miss tells you exactly which chapter to go back to.

If you fail an attempt, Alabama's reexamination wait is not a straight line: no wait after a first failure, a 90-day wait after a second, no additional wait on a third attempt once that 90 days has run, and a 180-day wait from a fourth failure onward. A failed combined exam carries its wait into both the standalone Life and standalone Health exams.

Work them before you read the answer. Every question has the explanation folded underneath it. Guessing first and reading second teaches more than reading first and agreeing.

Practice Questions 1-5: Insurance Fundamentals and the Application Process

Chapter 1 opens with hazard and risk vocabulary and the insurable interest a policyowner must hold. Chapter 2 then moves into the mechanics of the application itself: correcting an error on the form, the Statement of Continued Good Health required when the premium isn't paid up front, and what an insurer owes an applicant when a Medical Information Bureau report factors into a decline.

Question 1 (Chapter 1)

A homeowner installs a new, state-of-the-art fire alarm system and regularly checks its functionality. Despite these precautions, a fire starts due to an electrical short. In this scenario, what does the electrical short represent?

A) A physical hazard
B) A morale hazard
C) A peril
D) A loss exposure

Show answer & explanation

Answer: C

A peril is the actual cause of a loss. In this case, the electrical short directly caused the fire, which is the loss. A physical hazard (A) would be the faulty wiring itself, increasing the chance of the short. A morale hazard (B) relates to indifference or carelessness. A loss exposure (D) is the situation that presents the possibility of a loss, such as owning a house that could catch fire.

Question 2 (Chapter 1)

An individual decides to purchase a lottery ticket, understanding that there's a chance of winning a large sum of money, but also a high probability of losing the small amount spent. Concurrently, they also purchase a life insurance policy to protect their family from financial hardship in the event of their premature death. How would the lottery ticket and the life insurance policy risks be classified, respectively?

A) Lottery: Pure Risk; Life Insurance: Speculative Risk
B) Lottery: Speculative Risk; Life Insurance: Pure Risk
C) Lottery: Moral Hazard; Life Insurance: Morale Hazard
D) Lottery: Physical Hazard; Life Insurance: Pure Risk

Show answer & explanation

Answer: B

Speculative risk involves both the chance of loss and the chance of gain (like gambling or investing), and is not insurable. Pure risk involves only the chance of loss or no loss (like death or illness), with no opportunity for gain, and is the only type of risk that is insurable. Therefore, the lottery ticket represents a speculative risk, and the life insurance policy addresses a pure risk.

Question 3 (Chapter 2)

Sarah, an Alabama resident, is applying for a new life insurance policy. While completing Part One of the application, she realizes she accidentally wrote her birth year incorrectly. What is the correct procedure for correcting this error on the application?

A) The producer should erase the incorrect year and write in the correct one, then initial the change.
B) A new application form must be started from scratch to avoid any discrepancies.
C) The producer should make the correction and inform the underwriting department verbally during submission.
D) Sarah, the applicant, must initial the correction next to the changed birth year.

Show answer & explanation

Answer: D

Any changes made to an insurance application, especially by the applicant, must be initialed by the applicant. This confirms that the applicant is aware of and agrees to the correction, preventing future disputes. The producer should not make changes without the applicant's acknowledgment (D is correct). Erasing or starting a new application is generally unnecessary for minor corrections if initialed (A and B are incorrect). Verbal communication is insufficient for documenting changes on a legal document like an application (C is incorrect).

Question 4 (Chapter 2)

An Alabama producer is delivering a new life insurance policy to a client who did not pay the initial premium with the application. At delivery, the client is asked to sign a 'Statement of Continued Good Health.' What is the purpose of this statement?

A) To attest that the client's health has not materially changed since the application was submitted.
B) To confirm the client's satisfaction with the policy's terms and conditions.
C) To verify that the client has received the policy documents.
D) To authorize the insurer to automatically deduct future premiums from their bank account.

Show answer & explanation

Answer: A

The Statement of Continued Good Health is required when the initial premium was not paid with the application. It ensures that the applicant's health status, as represented in the application, has not deteriorated between the application date and the policy delivery date, thereby validating the insurer's underwriting decision.

Question 5 (Chapter 2)

An Alabama applicant's life insurance application is declined by the insurer, partly due to information obtained from a Medical Information Bureau (MIB) report. What is the insurer's obligation regarding the MIB report in this situation?

A) The insurer must inform the applicant that the MIB was consulted and provide the MIB's contact information.
B) The insurer must provide the applicant with a copy of the MIB report.
C) The insurer is not obligated to disclose that an MIB report was used if it was not the sole reason for decline.
D) The insurer must pay for the applicant to obtain their own MIB report.

Show answer & explanation

Answer: A

If an insurer takes adverse action (like declining an application) based in whole or in part on information from an MIB report, they must inform the applicant that the MIB was consulted and provide the MIB's contact information. This allows the applicant to contact the MIB directly to inquire about their file. The insurer does not provide a copy of the report (B) or pay for one (D), and the obligation exists even if it's not the sole reason for decline (C).

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Practice Questions 6-10: Life Policy Design and the Entire Contract

Chapter 3 covers the shapes a life policy can take, from decreasing term built around a shrinking mortgage balance to the charges deducted from a universal life policy's cash value and the extra license a producer needs to sell variable products. Chapter 4 then opens the provisions built into the policy itself: the entire contract clause and the incontestability period that limits how long an insurer can fight a claim.

Question 6 (Chapter 3)

A young couple in Montgomery, Alabama, recently purchased their first home and took out a 30-year mortgage. They want to ensure that if one of them passes away, the surviving spouse will not be burdened with the mortgage payments. Their budget is currently tight, and they anticipate their financial obligations will decrease over time. Which type of life insurance policy would best suit their immediate needs?

A) Level Term Life
B) Whole Life
C) Decreasing Term Life
D) Universal Life Option B

Show answer & explanation

Answer: C

Decreasing Term Life insurance is specifically designed to cover a debt that decreases over time, such as a mortgage. The death benefit gradually reduces, aligning with the decreasing mortgage balance, making it an affordable option for debt protection. Level Term would maintain a constant death benefit, which is more than needed as the mortgage shrinks. Whole Life and Universal Life are permanent policies with cash value, making them significantly more expensive and not primarily designed for temporary debt protection.

Question 7 (Chapter 3)

An Alabama producer is reviewing a Universal Life (UL) policy with a client. The client notices that various charges are deducted from the policy's cash value, including administrative fees and the mortality charge. What is the mortality charge in a UL policy commonly referred to as?

A) The surrender charge
B) The target premium
C) The policy loan interest
D) The cost of insurance (COI)

Show answer & explanation

Answer: D

In a Universal Life policy, the mortality charge, which covers the actual cost of the death benefit protection, is commonly referred to as the 'cost of insurance' (COI). This is one of the charges deducted from the cash value. The surrender charge is applied if the policy is surrendered. The target premium is a recommended premium amount to keep the policy in force. Policy loan interest is charged when a loan is taken against the cash value.

Question 8 (Chapter 3)

Ms. Johnson, an Alabama resident, is interested in purchasing a Variable Life insurance policy due to its potential for higher returns. Her producer informs her that to sell such a product, they must hold specific licenses. What are the two types of licenses an Alabama producer must possess to sell Variable Life insurance?

A) An Alabama Life & Health license and a Property & Casualty license
B) An Alabama Life license and a FINRA securities registration
C) An Alabama Life license and a Variable Annuity license
D) An Alabama Life & Health license and a Series 6 or 7 license

Show answer & explanation

Answer: B

Variable Life insurance policies are considered securities because their cash values are invested in a separate account that fluctuates with market performance. Therefore, a producer must hold both a state life insurance license (an Alabama Life license in this case) and a federal securities license, such as a FINRA Series 6 or Series 7 registration. Option D is partially correct but 'Life & Health' is too broad if only Variable Life is specified, and 'Series 6 or 7' is a specific type of FINRA registration, making 'FINRA securities registration' a more encompassing and correct answer in this context. Option C is incorrect as a Variable Annuity license is for annuities, not life insurance, and not a separate license from the FINRA registration. Option A is unrelated.

Question 9 (Chapter 4)

An Alabama policyowner, Sarah, notices a discrepancy between what her agent told her about the policy's growth and the actual written terms in the contract. Which provision ensures that only the written policy and the attached application are legally binding?

A) The Insuring Clause
B) The Consideration clause
C) The Owner's Rights provision
D) The Entire Contract provision

Show answer & explanation

Answer: D

The Entire Contract provision states that the policy and the attached application constitute the entire agreement. It prevents the insurer or agent from referencing outside documents or verbal promises to alter the contract's terms.

Question 10 (Chapter 4)

An Alabama life insurance policy has been in force for three years. The insured dies, and the insurer discovers a material misrepresentation on the application. Under the Incontestability provision, what is the insurer's right?

A) The insurer may deny the claim and void the policy due to the misrepresentation.
B) The insurer may reduce the death benefit proportionally to the premium that would have been charged.
C) The insurer must pay the claim because the policy has been in force for more than two years.
D) The insurer may contest the claim only if the misrepresentation was fraudulent.

Show answer & explanation

Answer: C

The Incontestability provision prevents the insurer from contesting the policy after it has been in force for a specified period (typically two years) during the insured's lifetime, except for nonpayment of premiums. After three years, the insurer must pay the claim regardless of material misrepresentations. Option A is incorrect because the contestability period has expired. Option B describes the Misstatement of Age/Sex provision, not Incontestability. Option D is incorrect because even fraudulent misrepresentations cannot be contested after the incontestability period in most jurisdictions.

Practice Questions 11-15: Riders, Annuities, Retirement Plans and Health Foundations

Chapter 4 closes with a cost-of-living rider's effect on premium. Chapter 5 covers annuities and retirement plans: who the annuitant actually is, the withholding rule on an indirect rollover, and the 403(b) built for public school and nonprofit employees. Chapter 6 opens the health section with the statistic that prices it: morbidity.

Question 11 (Chapter 4)

An Alabama policyowner has a whole life policy with a Cost of Living Rider (COLA). The rider increases the face amount annually based on the Consumer Price Index (CPI). What happens to the premium?

A) The premium remains level for the life of the policy.
B) The premium increases each year along with the face amount increase.
C) The premium decreases as the cash value grows.
D) The premium is paid only when the CPI increases.

Show answer & explanation

Answer: B

The correct answer is B. A Cost of Living Rider (COLA) increases the policy's face amount periodically (usually annually) based on an inflation index like the CPI. To fund this increased coverage, the premium also increases correspondingly. The insured typically does not need to provide evidence of insurability for these increases. Option A describes a standard whole life policy without COLA. Option C is incorrect; premiums don't decrease with cash value growth in whole life. Option D is nonsensical.

Question 12 (Chapter 5)

A business owner in Birmingham, Alabama, purchases an annuity to provide a retirement income for a long-time employee. The owner pays the premiums and retains the right to name the beneficiary, while the employee is the individual whose life expectancy determines the payout amount. In this scenario, the employee is considered the:

A) Owner
B) Payor
C) Beneficiary
D) Annuitant

Show answer & explanation

Answer: D

The annuitant is the person whose life expectancy is used to calculate the income payments. The owner (in this case, the business owner) holds the contractual rights, but the annuitant is the 'measuring life' for the annuity.

Question 13 (Chapter 5)

A worker in Dothan leaves his job and receives a check for his 401(k) balance, intending to deposit it into a Traditional IRA within 60 days. This is an 'indirect rollover.' What percentage of the account balance must the employer legally withhold for federal taxes?

A) 20%
B) 10%
C) 15%
D) 25%

Show answer & explanation

Answer: A

In an indirect rollover, where the funds are paid directly to the participant, the payor is required to withhold 20% for federal income taxes. To avoid this withholding, the participant should use a 'direct transfer' from trustee to trustee.

Question 14 (Chapter 5)

A janitor at a public university in Jacksonville, Alabama, is eligible for a retirement plan where contributions are made via salary reduction. This plan is most likely a:

A) 401(k)
B) 403(b)
C) Keogh Plan
D) HR-10 Plan

Show answer & explanation

Answer: B

A 403(b) plan, also known as a Tax-Sheltered Annuity (TSA), is specifically for employees of public schools, universities, and certain 501(c)(3) non-profit organizations.

Question 15 (Chapter 6)

An insurance actuary in Birmingham is reviewing statistical data to determine premium rates for a new health insurance product. The actuary is specifically looking at the frequency and severity of illnesses and accidents within a specific demographic. Which of the following terms describes this statistical data?

A) Mortality
B) Morbidity
C) Interest
D) Expense loading

Show answer & explanation

Answer: B

Morbidity refers to the incidence and severity of sickness or injury within a given group, which is the primary factor in health insurance pricing. Mortality (A) refers to the incidence of death and is used for life insurance. Interest (C) and Expense loading (D) are factors in pricing but do not describe the statistical incidence of illness/injury.

Practice Questions 16-20: Health Policy Exclusions, Claims Math and Coordination of Benefits

Chapter 6 continues through what a medical expense policy excludes, how a deductible, coinsurance and stop-loss actually interact on a claim, and the birthday rule that orders two parents' group plans for a covered child. Chapter 7 opens with the entire contract provision again, this time on a health policy, and the state-federal structure behind Medicaid.

Question 16 (Chapter 6)

Which of the following is a common exclusion in a medical expense policy?

A) Emergency room visits for accidents
B) Complications arising from pregnancy
C) Physical therapy following a stroke
D) Intentional self-inflicted injuries

Show answer & explanation

Answer: D

Standard exclusions in health insurance include intentional self-inflicted injuries, war, elective cosmetic surgery, and workers' compensation claims. A, B, and C are typically covered services.

Question 17 (Chapter 6)

A policyholder in Birmingham has a Major Medical policy with a $1,000 deductible, 80/20 coinsurance, and a $5,000 stop-loss (out-of-pocket maximum). If the insured incurs $31,000 in covered medical expenses, how much will the insurer pay?

A) $5,000
B) $25,000
C) $26,000
D) $30,000

Show answer & explanation

Answer: C

The insured pays the first $1,000 (deductible). Of the remaining $30,000, 20% is $6,000. However, the stop-loss limits the insured's total out-of-pocket to $5,000. Since the insured already paid $1,000, they only pay $4,000 of the coinsurance. Total insured pay = $5,000. Insurer pays $31,000 - $5,000 = $26,000.

Question 18 (Chapter 6)

A child in Hoover is covered by both parents' group health plans. The father was born on October 12, 1985, and the mother was born on March 14, 1987. Under the 'Birthday Rule,' which plan is primary?

A) The father's plan because he is older.
B) The mother's plan because her birthday occurs earlier in the calendar year.
C) The father's plan because his birthday occurs later in the year.
D) Whichever plan has the lower deductible.

Show answer & explanation

Answer: B

The Birthday Rule states that the parent whose birthday (month and day) falls earlier in the calendar year is primary. March comes before October.

Question 19 (Chapter 7)

An insurance producer in Birmingham tells a prospective client that a specific health policy will cover experimental weight-loss surgery, even though the written policy explicitly excludes it. The client signs the application and receives the policy. Which provision determines that the written policy takes precedence over the producer's verbal statement?

A) The Incontestability Clause
B) The Parol Evidence Rule
C) The Insuring Clause
D) The Entire Contract Provision

Show answer & explanation

Answer: D

Under the Entire Contract provision (standard in Alabama health policies), the policy, the application, and any attached riders constitute the entire agreement. A producer does not have the authority to change the policy or waive any of its provisions; only an executive officer of the insurer can do so.

Question 20 (Chapter 7)

Medicaid is a health care program designed for specific populations. Which statement best describes its funding and administration in Alabama?

A) It is a needs-based program jointly funded by the federal and state governments and administered by the state.
B) It is entirely funded by the federal government and administered by the Social Security Administration.
C) It is a private insurance program for the elderly.
D) It is funded solely by Alabama state income taxes.

Show answer & explanation

Answer: A

Medicaid is a federal-state partnership. It is a needs-based program for low-income individuals and families, funded by both levels of government but administered at the state level.

Practice Questions 21-25: Medicare, Group Health Rules and Alabama Licensing Law

Chapter 7 closes with what Medicare Part B actually covers and an insurer's right to request an autopsy. Chapter 8 then closes the outline with Alabama's own licensing law: the continuing education carryover rule eliminated in 2013, and the non-monotonic waiting periods that apply after a failed exam.

Question 21 (Chapter 7)

Medicare Part B (Medical Insurance) generally covers which of the following services?

A) Outpatient physical therapy
B) Inpatient hospital room and board
C) Routine dental exams and cleanings
D) Long-term custodial care in a nursing home

Show answer & explanation

Answer: A

Medicare Part B covers physician services, outpatient hospital care, physical therapy, and some home health care. It does not cover inpatient hospital stays (Part A), routine dental, or custodial care.

Question 22 (Chapter 7)

An insurer wants to perform an autopsy on a deceased insured to determine if the cause of death is covered under an Accidental Death and Dismemberment (AD&D) rider. Which statement is TRUE under the 'Physical Examination and Autopsy' provision?

A) The estate of the insured must pay for the autopsy.
B) The insurer must pay for the autopsy, and it must not be forbidden by law.
C) The insurer can only perform an autopsy if the beneficiary gives written consent.
D) Autopsies are strictly prohibited under Alabama health insurance law.

Show answer & explanation

Answer: B

This provision states the insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim and to make an autopsy in case of death where it is not forbidden by law.

Question 23 (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 24 (Chapter 8)

An Alabama producer fails the Life & Health exam on their first attempt on January 15. They fail again on their second attempt on January 20. When is the earliest they can schedule a third attempt?

A) January 21 (no waiting period after any failure).
B) July 19 (180 days after the second failure).
C) April 20 (90 days after the second failure).
D) January 20 of the following year (24-month reset).

Show answer & explanation

Answer: C

LDOI's Limitations on Repeat Examinations page specifies a non-monotonic waiting period structure: 1st failure = no waiting period; 2nd failure = 90-day wait; 3rd failure = no additional wait (once the 90 days from the 2nd failure have passed); 4th and subsequent failures = 180-day wait each. The producer failed twice (Jan 15 and Jan 20). After the 2nd failure (Jan 20), a 90-day wait applies. The earliest 3rd attempt is 90 days after Jan 20, which is April 20. A is incorrect because a 90-day wait applies after the 2nd failure. B is the 180-day wait that applies after the 4th failure, not the 2nd. D is the reset period, not the next attempt date.

Question 25 (Chapter 8)

An Alabama producer fails the standalone Life exam on February 1. They fail the combined Life & Health exam on February 15. They now wish to take the standalone Health exam. According to ALDOI's Limitations on Repeat Examinations, what waiting period applies before they can schedule the Health exam?

A) No waiting period; they can schedule immediately.
B) 180 days from the February 15 combined exam failure.
C) 90 days from the February 1 Life exam failure.
D) 90 days from the February 15 combined exam failure.

Show answer & explanation

Answer: D

Under ALDOI's repeat-exam rules: 1st failure = no wait; 2nd failure = 90-day wait. The combined Life & Health exam failure on February 15 is the second failure. Failing the combined exam imposes a 90-day wait that carries over to BOTH standalone Life and standalone Health exams. The 90-day period runs from the date of the second failure (February 15). A is incorrect because a 90-day wait applies after the second failure. B is incorrect because 180 days applies only after the fourth and subsequent failures. C is incorrect because the waiting period is triggered by the second failure (combined exam), not the first.

The Mistakes That Cost Marks

Confusing morale hazard, moral hazard and peril. A morale hazard is indifference or carelessness that raises the odds of a loss; a moral hazard is dishonesty or an intent to defraud; a peril is the cause of the loss itself. Three related terms, three different things, and this set tests all three against each other in the same question.

Treating the Entire Contract provision as a formality. It comes up twice in this set, once on a life policy and once on a health policy, because it's the rule that makes a producer's verbal promise non-binding. Don't let the Parol Evidence Rule distractor pull you off the right answer.

Assuming continuing education hours carry forward like a bank balance. Alabama eliminated CE carryover entirely effective January 1, 2013. Every two-year reporting period's 24 hours, including 3 hours of ethics, must be earned fresh inside that period.

Assuming a second failed exam attempt always means a 180-day wait. Alabama's retake clock is non-monotonic: no wait after the first failure, 90 days after the second, no additional wait on the third once that 90 days has run, and 180 days from the fourth failure onward. A failed combined exam also carries its wait into both standalone exams.

Mixing up morbidity and mortality. Morbidity is the frequency and severity of illness and injury, the statistic that prices health insurance. Mortality is the incidence of death, the statistic that prices life insurance. The exam pairs them as distractors for each other.

Your Next Step

How did you score?

20 or more correct: You're clearing most of the outline across all four parts. Work the two deeper sets next: the Life insurance exam set and the Health insurance exam set, then read how to pass the Alabama Life & Health exam on the first try for the full study plan.

12-19 correct: You're getting a good share of it, but these 25 questions stand in for a combined exam of 150 questions. Note the chapter of every question you missed and replay that chapter's audio lesson before moving to the deeper sets above.

Under 12 correct: You need the material, not more questions yet. Start with the free preview at /al/l-and-h/preview and work through the audio chapters in order before testing yourself again.

For the full cost picture beyond the exam fee, see how much an Alabama Life & Health license costs. The LanePrep Alabama Life & Health course preview is a click away whenever you're ready to go deeper.

Exam structure, fees and content outline weights from the University of Alabama Continuing Education Lifelong Learning (CELL) insurance-testing program and the Alabama Department of Insurance's Producer Examination Content Outline for Life and Health Examinations. Read October 2026.

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