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

Question 1 (Chapter 1)

A 45-year-old purchases a $250,000 single-premium whole life policy with a single lump-sum payment of $35,000. The policy builds cash value immediately and is designed to be paid up after this one payment. Which statement accurately describes this policy?

• A) The policy is a limited-pay whole life policy requiring premiums for a specified number of years.
• B) The policy is a traditional ordinary whole life policy with level premiums payable for life.
• C) The policy is a single-premium whole life policy, fully paid after one payment and providing immediate death benefit and cash value.
• D) The policy is a modified endowment contract (MEC) because the single premium exceeds the 7-pay test limit.

Question 2 (Chapter 1)

A 50-year-old purchases a $300,000 indexed universal life (IUL) policy. The policy's cash value growth is linked to the performance of the S&P 500 index, with a 6% annual cap and a 0% floor. Which statement best describes how the cash value grows in this policy?

• A) The cash value grows exactly in line with the S&P 500 index returns, with no limits.
• B) The cash value grows at a fixed 6% interest rate regardless of index performance.
• C) The cash value only grows if the S&P 500 index increases by more than 6% in a year.
• D) The cash value grows based on the S&P 500 index returns, but is subject to a 6% maximum annual gain and a 0% minimum (floor) to protect against losses.

Question 3 (Chapter 1)

A 28-year-old buys a $150,000 annually renewable term (ART) life insurance policy. The premium is $200 in the first year. What happens to the premium in the second year, assuming the insured is still alive?

• A) The premium remains $200 because the death benefit is level.
• B) The premium decreases because the policy is becoming less risky.
• C) The premium increases because the cost of insurance rises with age.
• D) The premium is refunded if no claim is made.

Question 4 (Chapter 2)

A policyholder wants to increase coverage upon marriage without proving insurability. Which rider should they add?

• A) Waiver of Premium
• B) Payor Benefit
• C) Return of Premium
• D) Guaranteed Insurability

Question 5 (Chapter 2)

Which statement accurately describes the 'free look' provision in a life insurance policy?

• A) It allows the policyowner to change the beneficiary without consent within 10 days.
• B) It guarantees the policy will be incontestable after issuance.
• C) It waives the first premium payment if the policy is returned.
• D) It gives the policyowner a set period (e.g., 10 days) to return the policy for a full premium refund.

Question 6 (Chapter 2)

Michael, a 45-year-old, is purchasing a new life insurance policy and is concerned about potential future long-term care needs. He wants to integrate this coverage with his life insurance. Which rider would allow him to use a portion of his life insurance death benefit to pay for qualified long-term care expenses?

• A) Long-Term Care rider
• B) Accelerated Death Benefit rider
• C) Cost of Living rider
• D) Extended Term nonforfeiture option

Question 7 (Chapter 3)

In South Carolina, what must exist for a life insurance contract to be valid regarding the relationship between the policy owner and the insured?

• A) The policy owner must be a blood relative of the insured.
• B) The policy owner must have paid at least one premium before coverage begins.
• C) The insured must be employed by the policy owner if the policy is for business purposes.
• D) The policy owner must have an insurable interest in the insured at the time the policy is issued.

Question 8 (Chapter 3)

What makes a life insurance contract a Modified Endowment Contract (MEC) under federal tax law?

• A) The policy pays dividends that are used to purchase additional coverage.
• B) The policy is owned by a business and insures a key employee.
• C) The policy includes a long-term care rider that accelerates the death benefit.
• D) The policy fails the 7-pay test, causing excessive funding relative to the death benefit.

Question 9 (Chapter 3)

When discussing the delivery of a life insurance policy in South Carolina, a producer explains that the policy is a unilateral contract. What does this mean in the context of the insurance agreement?

• A) Only the insurer makes a legally enforceable promise to pay a benefit upon the insured's death.
• B) Both the insurer and the insured make legally enforceable promises to each other.
• C) The policy can be altered by either party at any time without mutual consent.
• D) The contract is only valid if both parties exchange something of equal value.

Question 10 (Chapter 3)

A South Carolina producer is completing a life insurance application for a client who is 70 years old and wants to ensure their estate has liquidity to pay estate taxes and other expenses upon their death. What type of business need does this life insurance primarily address?

• A) Estate preservation and liquidity
• B) Key person insurance
• C) Buy-sell agreement funding
• D) Executive bonus plan

Question 11 (Chapter 4)

Sarah owns a successful graphic design studio in Charleston. She suffers a severe injury that leaves her temporarily unable to work. During her recovery, her studio still incurs rent, utility bills, and employee salaries. Which type of disability income policy would specifically help Sarah cover these ongoing business expenses while she is unable to generate income?

• A) Individual Disability Income policy
• B) Business Disability Buyout policy
• C) Business Overhead Expense (BOE) policy
• D) Key Employee policy

Question 12 (Chapter 4)

Maria, a single mother in Sumter, is employed by a company that offers a health plan with a high deductible. To help her save for future medical expenses on a tax-advantaged basis, her employer also provides access to a savings account that she can contribute to, and funds from which can be used for qualified medical expenses. This setup describes which combination of health plans/accounts?

• A) Flexible Spending Account (FSA) with a PPO
• B) Health Reimbursement Account (HRA) with an HMO
• C) Basic Hospital policy with a Medical Savings Account (MSA)
• D) High Deductible Health Plan (HDHP) with a Health Savings Account (HSA)

Question 13 (Chapter 4)

A South Carolina employer wants to offer a benefit to employees that would help cover the costs of routine check-ups, cleanings, and fillings, as well as more extensive procedures like crowns or orthodontics. Which 'other' type of policy would be most appropriate for this benefit?

• A) Vision insurance
• B) Hospital Indemnity insurance
• C) Critical Illness insurance
• D) Dental insurance

Question 14 (Chapter 5)

A South Carolina resident is eligible for Medicare. Which part of Medicare covers inpatient hospital stays, skilled nursing facility care, and some home health care?

• A) Medicare Part A
• B) Medicare Part B
• C) Medicare Part C
• D) Medicare Part D

Question 15 (Chapter 5)

A South Carolina resident has an individual accident and sickness policy that is noncancelable. Which of the following statements is true?

• A) The policy is guaranteed renewable and the insurer cannot increase premiums or cancel it for any reason other than nonpayment of premiums.
• B) The insured can cancel the policy at any time, but the insurer cannot cancel it except for nonpayment of premiums.
• C) The insurer can increase premiums at any time if the insured's health deteriorates.
• D) The insured has the right to increase the benefit amount without evidence of insurability on a yearly basis.

Question 16 (Chapter 5)

A South Carolina resident purchases an individual accident and sickness policy that includes a guaranteed insurability rider. The insured wishes to exercise this rider to increase coverage without providing evidence of insurability. Which of the following is true?

• A) The insurer may require a medical exam if the increase is requested after age 40.
• B) The insured can increase coverage at specified intervals without proof of insurability.
• C) The rider allows increases only upon the birth or adoption of a child.
• D) The rider automatically increases coverage annually to keep pace with inflation.

Question 17 (Chapter 5)

A South Carolina resident is seeking assistance with medical expenses. They have very limited income and resources and meet the state's eligibility requirements for a specific government program. Which social insurance program is designed to provide health coverage for low-income individuals and families?

• A) Medicare Part A
• B) Social Security Disability Insurance (SSDI)
• C) Medicaid
• D) Medicare Part D

Question 18 (Chapter 6)

When explaining an accident and sickness policy to a client in South Carolina, which statement accurately describes the 'adhesion' characteristic of an insurance contract?

• A) Both the insurer and insured have equal power to negotiate the terms of the policy before it becomes effective.
• B) The contract is only binding if both parties exchange something of equal monetary value.
• C) The insurer can unilaterally cancel the policy at any time without refunding the premium.
• D) The insured must accept the policy as written by the insurer, with no ability to alter its terms.

Question 19 (Chapter 6)

A South Carolina producer is explaining coordination of benefits (COB) under a health insurance plan that follows the NAIC model. If a patient is covered under two group health plans—one as an employee and one as a dependent—which plan is typically considered primary?

• A) The plan where the patient is covered as an employee is primary.
• B) The plan where the patient is covered as a dependent is primary.
• C) The plan of the parent whose birthday falls earlier in the calendar year is primary.
• D) The plan with the later effective date is primary.

Question 20 (Chapter 6)

A South Carolina resident has an individual disability income policy with a 'own occupation' definition of total disability for the first 24 months, then 'any occupation' thereafter. The insured, a certified public accountant, suffers a hand injury that prevents typing but can still perform consulting work. After 30 months of disability, the insurer denies continued total disability benefits. Which statement is most accurate?

• A) The insurer may deny benefits if the insured can perform any occupation for which they are reasonably suited by education, training, and experience.
• B) The insurer must continue benefits because the insured cannot perform their own occupation as a CPA.
• C) The insurer must pay partial disability benefits instead, regardless of the policy's definition change.
• D) The denial is invalid because the definition of total disability cannot change after the policy is issued.

Question 21 (Chapter 7)

The SCDOI issues a Cease and Desist order to a producer for engaging in unfair claims settlement practices. What is the primary purpose of this order?

• A) To impose a fine of up to $30,000
• B) To require the producer to stop the violating activity immediately
• C) To suspend the producer's license pending a hearing
• D) To revoke the producer's license permanently

Question 22 (Chapter 7)

An insurance company is incorporated under the laws of South Carolina and has its home office in Columbia. It has obtained a Certificate of Authority from the SCDOI to transact insurance in the state. How would this company be classified from the perspective of South Carolina law?

• A) Domestic insurer
• B) Foreign insurer
• C) Alien insurer
• D) Nonadmitted insurer

Question 23 (Chapter 7)

An insurance producer in South Carolina has had their license suspended by the SCDOI for violating unfair trade practices. The suspension period has ended. What is the correct step for the producer to regain active licensure status?

• A) The license is automatically reinstated; no action is needed.
• B) The producer must retake the licensing examination to obtain a new license.
• C) The producer must apply for reinstatement and may need to meet conditions set by the SCDOI.
• D) The producer must wait an additional 6 months before requesting reinstatement.

Question 24 (Chapter 8)

A producer is discussing a life insurance policy replacement with a client who currently has an individual life policy. According to South Carolina Regulation 69-12.1, which of the following actions must the producer take regarding the existing insurer?

• A) Notify the existing insurer within 5 business days of the replacement application.
• B) Obtain written consent from the existing insurer before proceeding with the replacement.
• C) Provide the existing insurer with a copy of the Notice Regarding Replacement signed by the applicant.
• D) Have the replacing insurer notify the existing insurer that a replacement is in process.

Question 25 (Chapter 8)

A South Carolina resident purchases a Medicare supplement policy. Which of the following statements is true regarding guaranteed issue rights under South Carolina Regulation 69-46?

• A) Guaranteed issue applies only during the initial enrollment period when first eligible for Medicare Part B.
• B) Insurers may deny coverage based on pre-existing conditions during guaranteed issue periods.
• C) Guaranteed issue allows insurers to charge higher premiums based on health status.
• D) Guaranteed issue rights are triggered when the individual loses other health coverage that is creditable.