25 Free Arizona Life, Accident & Health Exam Practice Questions (2026)

Answer: A

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires that financial requirements (e.g., deductibles, copayments) and treatment limitations (e.g., visit limits) applied to MH/SUD benefits be no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits in the same benefit package. Option A correctly states the prohibition against more restrictive application. Options B, C, and D are incorrect: MHPAEA does not prohibit offering MH/SUD benefits, does not require coverage to be limited to inpatient services, and does not prohibit risk-based premium pricing (which is governed by other laws like the ACA).

Answer: A

The Genetic Information Nondiscrimination Act (GINA) specifically prohibits the use of genetic information in health insurance underwriting, including determining eligibility, setting premiums, or denying coverage. While the ACA and HIPAA have related provisions (e.g., ACA prohibits pre-existing condition exclusions, HIPAA includes privacy protections), GINA is the federal law that directly addresses genetic information discrimination in health insurance. The FCRA governs credit reporting and is unrelated to genetic information in this context.

Answer: B

Risk retention involves accepting the financial responsibility for a potential loss oneself, rather than transferring it to an insurer. By choosing not to buy comprehensive coverage and agreeing to pay for repairs directly, the resident is retaining the risk. Risk avoidance would mean not owning or driving the vehicle at all. Risk reduction involves taking steps to decrease the likelihood or severity of loss (e.g., installing an anti-theft device). Risk transfer is the core of insurance, where risk is shifted to another party via a premium.

Answer: C

A peril is the direct cause of a loss (e.g., fire, illness). A hazard is a condition that increases the likelihood or severity of a loss occurring from a peril (e.g., smoking increases the risk of fire or health loss, faulty wiring increases fire risk). They are not synonymous, and both concepts apply across all lines of insurance.

Answer: B

Insurable interest must exist at the inception of the policy (when applied for and issued) to prevent wagering. It does not need to exist at the time of loss. Emotional distress alone is insufficient; financial loss must be demonstrated. Business-owned life insurance requires insurable interest just like personal policies.

Answer: C

Key person insurance (also called key employee insurance) is purchased by a business on the life of an employee whose death would cause significant financial loss, such as a chief technology officer. The business owns and pays for the policy and receives the death benefit to offset costs like hiring/training a replacement or lost profits. Option A (buy-sell) requires policies on each owner's life to fund ownership transfer. Option B (executive bonus) involves the employer paying premiums on a policy owned by the executive, who reports the premiums as income. Option D is a premium-sharing arrangement not described here.

Answer: D

D is correct. The Medical Information Bureau (MIB) is the underwriting source that flags medical conditions and risk factors an applicant disclosed to other insurers but omitted on this application; insurers share coded information through it with the applicant's authorisation. Social media profiles, credit information and the motor vehicle record are not primary sources of medical history.

Answer: D

Accidental injury is defined as bodily harm resulting from external, violent, and unforeseeable events (e.g., falls, car accidents). Sickness refers to illness, disease, or pathological conditions originating internally (e.g., infections, chronic diseases). This distinction affects coverage for disability and medical benefits. Options A, B, and C misrepresent the definitions.

Answer: B

Joint life insurance (also called first-to-die) covers two or more individuals and pays the death benefit upon the death of the first insured. It is often used to replace income for a surviving spouse.

Answer: B

Survivorship life (second-to-die) insurance pays the death benefit only after both insureds have died. This makes it ideal for estate planning, as it provides funds to pay estate taxes that are typically due upon the second spouse's death, without needing to liquidate other assets.

Answer: D

The incontestability clause prevents the insurer from denying a claim based on misrepresentations in the application after the policy has been in force for two years, except if fraud is involved. Option A is incorrect because occupation misstatements are subject to incontestability after two years (except fraud). Option B is incorrect because fraud remains an exception to incontestability. Option C is incorrect because the incontestability period typically begins on the policy issue date or date the policy goes into force, not the application date.

Answer: D

Arizona law requires a minimum free look period of at least 10 days for life insurance policies. During this time, the policyowner may return the policy for a full refund of premiums paid. This is a standard provision outlined in the Arizona Insurance Code and confirmed in the PSI content outline for the Life, Accident and Health or Sickness Insurance Producer exam.

Answer: D

The paid-up additions dividend option uses dividends to purchase small amounts of paid-up life insurance, which increases both the death benefit and the cash value of the policy over time. Option A provides cash to the policyholder, which does not increase policy values. Option B uses dividends to buy one-year term insurance, which does not build cash value. Option C uses dividends to reduce out-of-pocket premium payments but does not increase the death benefit or cash value.

Answer: C

The extended term nonforfeiture option uses the cash value to purchase term insurance for the full face amount of the original policy for a limited period. The death benefit does not change, but coverage lasts only for the extended term. It does not pay a lump sum (that's cash surrender), reduce the death benefit to a paid-up amount (that's reduced paid-up), or require continued premium payments. Arizona recognizes this standard nonforfeiture option.

Answer: D

D is correct because equity indexed annuities are insurance products that provide a minimum guaranteed interest rate while offering potential returns based on the performance of a specified equity index, such as the S&P 500. A is incorrect because EIAs are not securities and are not registered with the SEC; they are regulated by state insurance departments. B is incorrect because the annuitant does not own the underlying stocks; returns are based on index performance. C is incorrect because EIAs are insurance products subject to state insurance regulation, not exempt from it.

Answer: A

A is correct. To open and fund an HSA an individual must be covered by a qualifying high-deductible health plan; an HRA is an employer-funded arrangement with no such plan requirement. B reverses the funding: HRAs are employer-funded, HSAs may be funded by the employee, the employer or both. C is wrong because unused HRA amounts generally stay with the employer while HSA funds are portable. D reverses ownership: the HSA belongs to the individual, the HRA is the employer's arrangement.

Answer: A

Generally, life insurance proceeds received by a beneficiary due to the death of the insured are excluded from gross income under IRC § 101(a). However, an exception exists if the policy was transferred for valuable consideration (e.g., sold or assigned for money or other consideration)—in such cases, the proceeds may be partially or fully taxable under the transfer-for-value rule. Therefore, option A is correct. Option B is incorrect because proceeds are not always taxable; they are generally tax-free. Option C is incorrect because there is an exception (the transfer-for-value rule). Option D is incorrect because ownership by the insured at death is not the sole determinant; the transfer-for-value rule can apply regardless of who owned the policy at death if it was transferred for consideration during the insured's life.

Answer: D

A probationary period in an individual accident and health policy is a timeframe after the policy's effective date during which coverage for sickness is not provided. If the insured becomes ill during this period, the insurer will deny the claim for sickness benefits. Accidental injuries are typically covered immediately, but sickness is subject to the probationary period. In this scenario, the insured became ill on the 10th day, which is within the 15-day probationary period, so the sickness claim would be denied. Option A is incorrect because sickness coverage is not effective during the probationary period. Option B is incorrect because the nature of the illness (accidental vs. sickness) determines coverage, and sickness is not covered during the probationary period. Option C is incorrect because a physical examination is not a prerequisite for paying a claim during the probationary period; the claim is denied based on the timing of the illness.

Answer: A

The 'entire contract' provision states that the policy, the application (if attached), and any riders or endorsements constitute the entire contract between the insurer and the insured. This prevents either party from claiming that external documents or oral agreements modify the policy. Options B, C, and D are incorrect: the application is part of the contract if attached, the insurer cannot unilaterally change terms, and the insured cannot alter terms by notice.

Answer: A

SSDI benefits have a 5-month waiting period from the onset of disability before payments begin. This is a federal rule applied in Arizona. Option B is incorrect as there is a waiting period. Option C is incorrect as the 2-year period relates to Medicare eligibility, not SSDI payments. Option D is incorrect as the waiting period is from the onset of disability, not the application date, and is 5 months, not 6.

Answer: D

Individuals with end-stage renal disease (ESRD) are eligible for both Medicare Part A and Part B immediately upon diagnosis, without the usual 24-month waiting period that applies to those eligible due to disability. There is no waiting period for ESRD-based eligibility. Option A incorrectly applies the 24-month disability waiting period. Option B invents incorrect waiting periods. Option C is incorrect because ESRD is a qualifying condition for Medicare eligibility regardless of age.

Answer: D

The ACA requires all non-grandfathered individual and small group plans to cover ten categories of essential health benefits, which include mental health and substance use disorder services. Options A, B, and C are not essential health benefits: routine foot care for healthy individuals is not covered, weight loss programs without a medical condition are not required, and cosmetic surgery for aesthetic purposes is explicitly excluded as an EHB.

Answer: D

The ACA requires that group health plans and health insurance issuers offering dependent coverage must make that coverage available for adult children until they reach age 26. This applies regardless of the child's marital status, whether they are living with the parent, attending school, or being financially dependent on the parent. Option A is incorrect as the age limit is 26, not 21. Option B is incorrect because student status and financial dependence are not requirements under the ACA. Option C is incorrect because the ACA's dependent coverage mandate is not optional for plans that offer dependent coverage; it is a federal requirement.

Answer: D

An individual who is eligible for both Medicare and Medicaid is referred to as 'dual eligible.' This status means they receive benefits from both programs, with Medicare typically paying first and Medicaid helping to cover Medicare premiums, deductibles, coinsurance, and services not covered by Medicare. While some dual eligibles may also qualify for specific Medicare Savings Programs like QMB (which helps pay Medicare premiums and cost-sharing), the overarching term for having both Medicare and Medicaid is 'dual eligible.' Option B refers to enrollment in Medicare Part C (Medicare Advantage), which is unrelated to Medicaid eligibility. Option C refers to a cash assistance program for aged, blind, and disabled individuals, which may confer Medicaid eligibility but is not the term for having both Medicare and Medicaid.

Answer: D

In a typical HMO model, members are required to select a primary care physician (PCP) who acts as a gatekeeper for specialist care. To see a specialist such as a dermatologist and have the visit covered at the highest benefit level (in-network, with applicable copays), the member must first obtain a referral from their PCP. While some HMOs may also require prior authorization for certain services, the fundamental requirement for specialist access is the PCP referral. Option A is incorrect because HMOs do not allow unrestricted direct access to specialists; they require referrals. Option B describes utilization management that may apply to specific services but is not the universal requirement for all specialist visits. Option C is not a standard HMO requirement; network access is based on provider contracts, not geographic distance rules like this.