17 Free Iowa Life & Health Practice Questions: Iowa Life Insurance Law (2026)
How to Use This Iowa Life Insurance Law Set
Iowa law pertinent to life insurance only is the second half of the Life exam's Iowa section: 12 of the exam's 77 scored items. The other 15 Iowa items cover law common to all lines (the Commissioner's and the Division's powers, licensing, unfair and deceptive practices, the Iowa Insurance Fraud Act, producer responsibilities, the Guaranty Association and definitions) and are tested on the Life exam too. Pearson VUE's outline lists the life-only topics as policy replacement, disclosure and solicitation, group life insurance, individual life and annuities, and suitability.
These 17 questions come from LanePrep's Iowa L&H quiz bank and cite the rules they test. The outline does the same, printing a rule beside each subtopic: for example IAC 191-16.21 through 191-16.29 on replacement, Iowa Code chapter 509 on group life, IAC 191-28 on credit life and Iowa Code chapter 508E on viatical and life settlements.
Learn each rule as a pair: the rule and its number, whether days, hours or a percentage. The wrong answers are usually neighboring numbers or a real rule from a different product, so approximate memory is not enough here.
Practice Questions 1-6: Replacement, Group Conversion, Credit Life and Sales Statements
Who notifies whom when a policy is being replaced, what happens to group coverage when employment ends, what credit life is, what a producer may say about dividends, and the training and labeling rules for annuity sales and illustrations.
Question 1 (Chapter 5)
An Iowa producer completes an application for a life insurance policy that will replace an existing contract. Within how many business days must the replacing insurer notify the existing insurer of the proposed replacement?
- A) 5 business days
- B) 3 business days
- C) 10 business days
- D) 15 business days
Show answer & explanation
Answer: A
IAC 191-16.26(1)(b) requires the replacing insurer to notify any other existing insurer that may be affected by the proposed replacement within five business days of receiving a completed application indicating replacement, or of identifying the replacement if the application does not indicate it. The same paragraph requires it to mail a copy of the available illustration or policy summary for the proposed policy within five business days of a request from the existing insurer.
Question 2 (Chapter 5)
A worker is terminated from their job and loses their group life insurance coverage. Under Iowa Code 509.2, how many days does the individual have to convert their group coverage to an individual life policy without proving insurability?
- A) 10 days
- B) 30 days
- C) 60 days
- D) 31 days
Show answer & explanation
Answer: D
Iowa Code 509.2(8) requires a group life policy to give a person whose coverage ends because of termination of employment, or of membership in the eligible class, the right to have an individual policy issued without evidence of insurability, provided application is made and the first premium is paid within 31 days after the termination.
Question 3 (Chapter 5)
A bank in Waterloo offers life insurance to its borrowers to cover the balance of their loans in the event of death. This type of insurance is governed by IAC 191-28 and is known as:
- A) Industrial Life
- B) Key Person Insurance
- C) Variable Life
- D) Credit Life Insurance
Show answer & explanation
Answer: D
IAC 191-28 regulates Credit Life and Credit Accident and Health Insurance, which is insurance on the life of a debtor in connection with a specific loan or credit transaction.
Question 4 (Chapter 5)
An Iowa producer is selling a life insurance policy. The producer tells the client that the policy's dividends are guaranteed to be at least 5% every year. This statement is:
- A) Legal, as long as it is written in the illustration.
- B) An example of rebating.
- C) Required disclosure under IAC 191-14.
- D) A misrepresentation and a violation of Iowa's unfair trade practices.
Show answer & explanation
Answer: D
Dividends are never guaranteed. Stating that non-guaranteed elements like dividends are guaranteed is a misrepresentation under Iowa Code 507B.4 and IAC 191-15.
Question 5 (Chapter 5)
According to Iowa's Suitability in Annuity Transactions regulation, how many hours of one-time training must a producer complete before soliciting the sale of an annuity?
- A) 4 hours
- B) 1 hour
- C) 3 hours
- D) 8 hours
Show answer & explanation
Answer: A
IAC 191-15.76(2)(a) requires a producer who engages in the sale of annuity products to complete a one-time, four-credit training course approved by the commissioner and provided by an approved education provider, and producers may not engage in the sale of annuities until it is completed. The rule states the requirement as four CE credits, which exam materials usually express as the four-hour annuity course.
Question 6 (Chapter 5)
An Iowa insurer is issuing a life insurance policy illustration. The illustration must be labeled with which of the following terms to be compliant with IAC 191-14?
- A) 'Life Insurance Illustration'
- B) 'Guaranteed Results'
- C) 'Projected Earnings'
- D) 'Non-Binding Quote'
Show answer & explanation
Answer: A
IAC 191-14.6(1) requires an illustration used in the sale of a life insurance policy to be clearly labeled “life insurance illustration” and to contain the basic information the subrule lists (name of insurer, name and business address of the producer, the proposed insured, the rating classification, the policy name and form number, the initial death benefit, and the dividend option or application of nonguaranteed elements).
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Practice Questions 7-12: Annuity Suitability, Policy Loans, Settlements and Advertising
What goes into a consumer profile before an annuity is recommended, the cap on fixed policy loan interest, the ban on vanishing-premium language, the rescission right in a viatical settlement, whether group coverage can be assigned, and which words an advertisement may not use.
Question 7 (Chapter 5)
A producer is recommending an annuity to a consumer in Dubuque. To comply with IAC 191-15.75 (Suitability in Annuity Transactions), the producer must make a reasonable effort to obtain 'consumer profile information.' Which of the following is NOT required as part of this profile?
- A) Financial objectives
- B) Intended use of the annuity
- C) Liquidity needs
- D) Political affiliation
Show answer & explanation
Answer: D
IAC 191-15.75(1)(a)(2) requires a producer to make reasonable efforts to obtain consumer profile information before recommending an annuity, and IAC 191-15.74 defines it: age, annual income, financial situation and needs, financial experience, insurance needs, financial objectives, intended use of the annuity, financial time horizon, existing assets, liquidity needs, liquid net worth, risk tolerance, financial resources used to fund the annuity, and tax status. Political affiliation is not part of it.
Question 8 (Chapter 5)
An individual life insurance policyowner in Davenport wants to take out a policy loan. According to Iowa Code 511.36, what is the maximum fixed interest rate an insurer may charge on a policy loan?
- A) 5% per annum
- B) 10% per annum
- C) 8% per annum
- D) 12% per annum
Show answer & explanation
Answer: C
Iowa Code 511.36(1)(a) allows life insurance policies issued after July 1, 1984 to provide policy loan interest at a maximum fixed rate of not more than eight percent per annum; the alternative is an adjustable maximum rate under 511.36(1)(b) and (2).
Question 9 (Chapter 5)
A producer is selling a life insurance policy and provides an illustration. The illustration includes 'vanishing premiums.' According to IAC 191-14.6, this is:
- A) Prohibited if it implies the policy becomes paid up using non-guaranteed elements.
- B) Permitted if the policy is a term policy.
- C) Required for all whole life policies sold in Iowa.
- D) Only permitted for group life certificates.
Show answer & explanation
Answer: A
IAC 191-14.6(2) prohibits an illustration from using the term 'vanish' or 'vanishing premium' or a similar term that implies the policy becomes paid up, if the payment of premiums is actually made using non-guaranteed elements.
Question 10 (Chapter 5)
A terminally ill individual in Council Bluffs enters into a viatical settlement contract. According to Iowa Code 508E.10(3), the viator has the right to rescind the contract within how many days?
- A) 10 days after the contract is signed.
- B) 15 days from the receipt of proceeds or 30 days after the contract is executed, whichever is earlier.
- C) 30 days after the contract is signed, regardless of when proceeds are received.
- D) 60 days from the date of the medical diagnosis.
Show answer & explanation
Answer: B
Iowa Code 508E.10(3) gives the viator an absolute right to rescind a viatical settlement contract before the earlier of thirty days after the contract is executed by all parties or fifteen days after the settlement proceeds have been sent to the viator (the same right is disclosed to the viator under 508E.8(1)(f)). Rescission may be conditioned on notice and repayment of the proceeds and premiums paid within that period. Section 508E.9 is the disclosure-to-insurer section and does not contain the rescission rule.
Question 11 (Chapter 5)
An employee in Davenport wants to transfer all of their rights and incidents of ownership in their group life insurance policy to their spouse for estate planning purposes. Is this allowed under Iowa law?
- A) No, group life insurance rights are strictly non-assignable.
- B) Yes, but only if the employee is terminally ill.
- C) Yes, Iowa Code 509.15 permits the assignment of all or any part of the incidents of ownership in a group policy.
- D) Yes, but the assignment is only valid for 12 months.
Show answer & explanation
Answer: C
Iowa Code 509.15 expressly allows any person insured under a group life insurance policy to assign all or any part of the incidents of ownership under such policy, including the right to designate a beneficiary and the right to convert the insurance.
Question 12 (Chapter 5)
An Iowa producer is creating an advertisement for a new life insurance product. According to IAC 191-15.3(3), which of the following terms is PROHIBITED when describing the cash value or non-guaranteed elements of the policy?
- A) Cash Surrender Value
- B) Non-guaranteed dividends
- C) Profit sharing
- D) Death Benefit
Show answer & explanation
Answer: C
IAC 191-15.3(3) prohibits any advertisement for a life insurance or annuity policy from using terms such as 'investment,' 'investment plan,' 'founder's plan,' 'charter plan,' 'expansion plan,' 'profit,' 'profit sharing,' 'savings plan' or 'retirement plan,' or similar terms that could mislead a prospective insured into believing the insurer is offering something other than an insurance policy. 'Cash surrender value,' 'non-guaranteed dividends' and 'death benefit' are ordinary policy terms and are not on the prohibited list.
Practice Questions 13-17: Annual Reports, Group Participation, Defamation and the Annuity Free-Look
What the insurer must send each year when an illustration was used, what share of eligible employees a noncontributory group plan must cover, which unfair trade practice is defamation, and the minimum free-look when annuity disclosure documents arrive late.
Question 13 (Chapter 5)
A consumer in Bettendorf owns a life insurance policy for which an illustration was used at the time of sale. According to IAC 191-14.10, what must the insurer provide to the policyowner annually?
- A) A new signed illustration based on current interest rates.
- B) A report on the status of the policy, including the current death benefit and cash value.
- C) A copy of the insurer's annual tax return.
- D) A list of all producers who have earned commissions on the policy.
Show answer & explanation
Answer: B
IAC 191-14.10 requires insurers to provide an annual report on the status of the policy for any policy where an illustration was used, showing the current death benefit, cash value, and any loans.
Question 14 (Chapter 5)
A large manufacturing company in Sioux City establishes a non-contributory group life insurance plan where the employer pays 100% of the premium. According to Iowa Code 509.1, what percentage of eligible employees must be covered by the plan?
- A) 50%
- B) 100%
- C) 75%
- D) 90%
Show answer & explanation
Answer: B
Under Iowa Code 509.1(1)(b), if the premium is paid by the employer (non-contributory), the policy must insure all eligible employees, or all except any as to whom evidence of individual insurability is not satisfactory.
Question 15 (Chapter 5)
A policyowner in Waterloo has a life insurance policy that was sold using a compliant illustration. According to IAC 191-14.10, if the policy is in force, the insurer must provide an annual report that includes which of the following?
- A) A list of the insurer's board of directors
- B) The producer's total commission earned on the policy to date
- C) The current death benefit and the current cash surrender value
- D) A comparison of the policy's performance against the S&P 500
Show answer & explanation
Answer: C
IAC 191-14.10 requires the insurer to provide an annual report to the policyowner that includes the current death benefit, the current cash surrender value, and the current dividend (if applicable).
Question 16 (Chapter 5)
An Iowa producer is found to have made false and maliciously critical statements about the financial condition of a competing insurer in Mason City. This practice is specifically prohibited under Iowa's Unfair Trade Practices law as:
- A) Twisting
- B) Coercion
- C) Defamation
- D) Rebating
Show answer & explanation
Answer: C
Iowa Code 507B.4(3)(c) defines defamation as making, publishing, disseminating or circulating, directly or indirectly, any oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of any person, and that is calculated to injure that person. Twisting (a misrepresentation to induce a policy to be replaced or lapsed), coercion (507B.4(3)(d)) and rebating (507B.4(3)(i)) are different practices.
Question 17 (Chapter 5)
An Iowa producer sells an annuity to a consumer but fails to provide the required Disclosure Document and Buyer's Guide at the time of application. According to IAC 191-15.64(3), what is the minimum free-look period that must now be provided to the applicant?
- A) 10 days
- B) 15 days
- C) 30 days
- D) 45 days
Show answer & explanation
Answer: B
IAC 191-15.64(3) states that if the Buyer's Guide and disclosure document are not provided at or before the time of application, a free-look period of no less than 15 days shall be provided.
The Mistakes That Cost Marks
Mixing up the free-look lengths. Iowa has three: ten days for an ordinary life policy or annuity (IAC 191-15.9), thirty days where the sale is a replacement (IAC 191-16.26(1)(d)), and a minimum of fifteen days when an annuity's Buyer's Guide and disclosure document were not provided at or before application (IAC 191-15.64(3)). Question 17 is the third one.
Treating a non-guaranteed element as a promise. Dividends are never guaranteed, and describing them as guaranteed is a misrepresentation under Iowa's unfair trade practices rules. The vanishing-premium rule is the same idea in illustration form.
Blurring the unfair trade practices. Defamation, rebating, twisting, coercion and misrepresentation are distinct practices in Iowa's unfair trade practices law (Iowa Code chapter 507B). Match the conduct in the question to the definition, not to whichever word sounds worst.
Learning the annuity rules as one rule. The consumer profile, the training requirement, suitability and the late-disclosure free-look are separate requirements. Several wrong answers in this set are real requirements that belong to a different one.
Skipping the group life rules. Participation, conversion and assignment are tested on their own terms. Know what a noncontributory plan requires, what a departing employee may do and when, and what an insured may assign.
Forgetting what the insurer owes later. An annual report follows any sale made with an illustration. Know that it exists and what it reports.
Your Next Step
Try the free preview of LanePrep's Iowa Life & Health course, or work through all the free Iowa Life & Health practice questions. If you are sitting both exams, the companion set is Iowa accident and health insurance law.
Question counts and content weighting come from Pearson VUE's Iowa Insurance Content Outlines, effective January 1, 2026. Checked October 2026.
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