17 Free California Life & Health Practice Questions: Health Insurance Basics & Individual Policies (2026)

Question 1 (Chapter 6)

ABC Corp. wants to purchase a disability income policy for its top sales executive, John, to protect the company from financial loss if John becomes unable to work. Which of the following statements regarding insurable interest is true in this scenario?

• A) ABC Corp. does not have an insurable interest in John, as insurable interest only applies to family members.
• B) Insurable interest is not required for disability income policies.
• C) John must also purchase a policy on himself for ABC Corp. to have an insurable interest.
• D) ABC Corp. has an insurable interest in John because his disability would cause a financial loss to the company.

Question 2 (Chapter 6)

Maria's individual health insurance premium was due on May 1st. She forgot to pay it. Her policy states that it includes a 31-day grace period. If Maria submits her premium payment on May 25th, what is the status of her coverage?

• A) Her coverage lapsed on May 1st, and she must reapply.
• B) Her coverage is suspended until the payment is received and processed.
• C) She will be charged a late fee, and her coverage will be reinstated.
• D) Her coverage is still in force, and the payment will be accepted.

Question 3 (Chapter 6)

A California-licensed Life and Disability Insurance Analyst, Ms. Chen, provides advice to clients regarding their health insurance needs. Under what circumstances is Ms. Chen permitted to charge a fee for her services?

• A) Ms. Chen can charge a fee only if she also sells the client an insurance policy.
• B) Ms. Chen can charge a fee for her advice, but she must also offer to sell the client an insurance policy.
• C) Ms. Chen can charge a fee for her advice, provided she does not receive a commission for selling an insurance policy to that client for the same service.
• D) Ms. Chen is prohibited from charging any fees for her services, as her compensation must come solely from commissions.

Question 4 (Chapter 6)

Sarah has an individual disability income policy with a Waiver of Premium rider. She becomes totally disabled due to an illness. After meeting her policy's elimination period, what will happen regarding her premiums?

• A) Her premiums will be reduced by 50% for the duration of her disability.
• B) She will continue to pay premiums, but the policy will pay her an additional benefit to cover them.
• C) Her premiums will be waived for the duration of her disability, and she will still receive her disability benefits.
• D) The policy will lapse if she cannot pay premiums after the elimination period.

Question 5 (Chapter 6)

An applicant for a Health Savings Account (HSA) asks their agent about the tax implications of their contributions and withdrawals. What is the correct information regarding HSAs?

• A) Contributions are taxed, but withdrawals for qualified medical expenses are tax-free.
• B) Contributions are tax-deductible, and withdrawals for any purpose are tax-free.
• C) Contributions are made with after-tax dollars, and interest earned is fully taxable annually.
• D) Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.

Question 6 (Chapter 6)

An insured person is receiving benefits for a disability. The policy contains a 'Residual Disability' provision. What does this provision primarily protect?

• A) It provides a lump sum payment if the insured loses a limb.
• B) It covers medical expenses that remain after the primary health plan pays its share.
• C) It provides benefits for loss of income when the insured returns to work part-time but cannot earn their full pre-disability income.
• D) It automatically increases the benefit amount based on the Consumer Price Index.

Question 7 (Chapter 6)

What is the primary difference between a 'Probationary Period' and an 'Elimination Period' in a disability policy?

• A) The probationary period is the time the insured must be disabled; the elimination period is the time the insurer has to pay the claim.
• B) They are identical terms used interchangeably in California insurance contracts.
• C) The probationary period only applies to accidents; the elimination period only applies to sickness.
• D) The probationary period is the time after the policy is issued before sickness is covered; the elimination period is the time the insured must be disabled before benefits begin.

Question 8 (Chapter 6)

An applicant has a medical condition that makes them a 'substandard risk.' How might an insurer respond to this application?

• A) Automatically decline the application without review.
• B) Issue the policy at the standard rate but require a higher deductible.
• C) Issue the policy as a 'preferred' risk to encourage the applicant.
• D) Issue the policy with a premium surcharge, an impairment rider, or a reduction in benefits.

Question 9 (Chapter 6)

What is the 'Blackout Period' in the context of Social Security survivor benefits?

• A) The period between the death of the worker and the first check issued to the spouse.
• B) The time during which the worker is disabled but not yet eligible for retirement.
• C) The time when Medicare benefits are suspended due to a change in employment.
• D) The period when the surviving spouse is not eligible for benefits because the youngest child is over 16 but the spouse is under 60.

Question 10 (Chapter 6)

Under California Insurance Code, what is the maximum period of time an agent can be held responsible for an error in a disability insurance application if they fail to disclose a material fact they were aware of?

• A) 1 year
• B) 3 years
• C) There is no specific time limit; it remains a matter of professional liability
• D) 5 years

Question 11 (Chapter 6)

When an agent is acting as a 'field underwriter,' what is their primary duty during the application process?

• A) To approve the application based on the client's health history
• B) To accurately record the applicant's medical history and ensure all questions are answered truthfully
• C) To negotiate the premium rate with the home office
• D) To provide the client with a medical examination

Question 12 (Chapter 6)

A client is applying for a disability policy and the insurer requests an Attending Physician's Statement (APS). What is the purpose of this document?

• A) To provide specific medical details about a condition reported on the application
• B) To confirm the applicant's income
• C) To verify the applicant's employment status
• D) To serve as a substitute for the medical exam

Question 13 (Chapter 6)

An agent is discussing the 'probationary period' in a new health policy. What is the purpose of this period?

• A) It is the time the insured must wait after a loss before benefits are paid
• B) It is the time the insured must be covered before sickness-related claims are covered
• C) It is the period after the policy is issued during which the insurer can cancel for any reason
• D) It is the time required to renew the policy each year

Question 14 (Chapter 6)

A client is concerned about their 'any occupation' vs. 'own occupation' disability definition. Which statement is most accurate regarding 'any occupation'?

• A) It defines disability as the inability to perform the duties of any job for which the insured is reasonably suited by education, training, or experience
• B) It is easier to qualify for benefits under 'any occupation' than 'own occupation'
• C) It provides benefits if the insured cannot perform their specific current job
• D) It is the most expensive type of disability coverage to purchase

Question 15 (Chapter 6)

An applicant for a health policy is asked about their smoking habits. The applicant lies, stating they have never smoked. If the insurer discovers this after the policy is issued, which concept allows the insurer to contest the claim?

• A) Utmost good faith
• B) Law of large numbers
• C) Indemnity
• D) Adverse selection

Question 16 (Chapter 6)

A policyholder has a 'Guaranteed Renewable' health policy. Which of the following is true regarding this policy?

• A) The insurer can cancel the policy for any reason
• B) The insurer cannot cancel, but can increase premiums for the individual
• C) The insurer cannot cancel, but can increase premiums for a class of policyholders
• D) The insurer cannot cancel and cannot increase premiums for the individual

Question 17 (Chapter 6)

What is the primary purpose of the 'Coordination of Benefits' (COB) provision in health insurance?

• A) To allow the insured to collect from multiple policies for the same loss
• B) To determine which insurer pays first when the insured has two plans
• C) To cancel the secondary plan automatically once the primary plan has paid a claim
• D) To increase the premiums for group plans