17 Free Arizona Life & Health Practice Questions: Life, Accident and Health Insurance Basics (2026)
How to Use This Life, Accident and Health Insurance Basics Set
Life, Accident and Health Insurance Basics is the single largest block of the Arizona combined exam, at 17% of the outline. It is where life and health meet: how much insurance a person needs, what underwriters look at, how premiums are built, and how health policies define accident and sickness.
The 17 questions below include the needs-approach arithmetic, which you should work on paper, and several definition questions that appear in near-identical form, so notice how the exam rephrases the same idea.
Practice Questions 1-6: Needs Analysis, Free Look and Definitions
A needs-approach calculation, the free-look refund, the line between accidental injury and sickness, liquidity as a use of life insurance, and receipts at application.
Question 1 (Chapter 3)
A financial advisor is helping a client determine life insurance needs using the needs approach. The client has a $250,000 mortgage, wants $50,000 for final expenses, and aims to fund two children's college education at $40,000 each. The client currently has $30,000 in savings and $100,000 in existing life insurance. What is the additional life insurance needed using the needs approach?
- A) $210,000
- B) $250,000
- C) $290,000
- D) $330,000
Show answer & explanation
Answer: B
B is correct. Needs: mortgage $250,000 + final expenses $50,000 + college funding 2 x $40,000 = $380,000. Resources already in place: savings $30,000 + existing insurance $100,000 = $130,000. Additional coverage needed: $380,000 - $130,000 = $250,000. A understates the college need, C ignores the savings, and D ignores all existing resources.
Question 2 (Chapter 3)
An Arizona resident receives their delivered life insurance policy. During the free-look period, they decide to return the policy for a full refund. Which action must the insurer take upon receipt of the returned policy within the free-look period?
- A) Refund only the premiums paid, minus any policy fees charged.
- B) Refund all premiums paid, including any fees, without penalty.
- C) Charge a surrender fee based on the policy's cash value.
- D) Require the applicant to provide a statement of good health before processing the return.
Show answer & explanation
Answer: B
During the free-look period (typically 10-20 days in Arizona), the policyholder may return the policy for a full refund of all premiums paid, including any fees, with no penalties. No statement of good health is required, and surrender fees do not apply during this period.
Question 3 (Chapter 3)
Which statement accurately distinguishes accidental injury from sickness as defined in health insurance policies?
- A) Sickness includes only contagious diseases, while accidental injury covers all non-contagious medical conditions.
- B) Accidental injury must occur in the workplace to be covered, whereas sickness can occur anywhere.
- C) There is no meaningful difference; the terms are used interchangeably in health insurance contracts.
- D) Accidental injury results from external, violent, and unforeseeable events, while sickness refers to illness or disease originating from internal causes.
Show answer & explanation
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.
Question 4 (Chapter 3)
Which of the following scenarios best illustrates the concept of 'liquidity' as a personal use of life insurance?
- A) A parent purchases a life insurance policy to ensure their child's private school tuition is paid if the parent dies.
- B) A business owner buys life insurance on a key employee to cover the costs of hiring and training a replacement.
- C) A retiree selects a life settlement option to receive monthly income during retirement.
- D) A policyholder uses the cash value of their whole life policy to make a down payment on a home.
Show answer & explanation
Answer: D
Liquidity refers to the availability of cash to meet immediate financial needs, such as paying final expenses, debts, or estate taxes without forcing the sale of illiquid assets. Accessing the cash value of a life insurance policy provides liquid funds for purposes like a home down payment. Option A describes survivor protection (income replacement), Option B describes a business use (key person), and Option C describes a retirement income strategy, not liquidity for immediate needs.
Question 5 (Chapter 3)
An Arizona life insurance applicant completes the application and pays the first premium. The producer issues a conditional receipt stating coverage is effective if the applicant would have been approved based on the information provided. Which type of conditional receipt is this most likely to be?
- A) Binding receipt
- B) Implied conditional receipt
- C) No conditional receipt; coverage begins at application
- D) Express conditional receipt
Show answer & explanation
Answer: D
An express conditional receipt explicitly states the conditions under which coverage becomes effective, such as 'if the applicant would have been approved as a standard risk.' This matches the scenario. A binding receipt (A) provides immediate coverage upon premium payment regardless of underwriting outcome. An implied conditional receipt (B) arises from conduct (e.g., delivering the policy with premium) without explicit terms. Option C is incorrect because coverage does not automatically begin at application; a conditional receipt or policy delivery is required.
Question 6 (Chapter 3)
Which of the following best defines 'sickness' as a peril in the context of individual health insurance policies under Arizona regulations?
- A) A bodily injury caused by accidental means, such as a fall or motor vehicle collision.
- B) The inability to perform one or more activities of daily living due to cognitive impairment.
- C) A disease, illness, or pathological condition that manifests itself during the policy's coverage period.
- D) A condition resulting from war, suicide, or self-inflicted harm that is explicitly excluded from coverage.
Show answer & explanation
Answer: C
In health insurance, 'sickness' refers to a disease, illness, or pathological condition (e.g., diabetes, cancer, infection) that occurs while the policy is in force. Option A defines accidental injury, not sickness. Option B describes a trigger for long-term care benefits, not the peril of sickness itself. Option D references excluded perils; while some sicknesses may be excluded (e.g., self-inflicted), the definition of sickness is not limited to exclusions.
Get the 25-question sample set by email
Want a full-exam practice set to study offline? Drop your email — we'll send 25 questions across every content area, each with the answer and explanation.
No spam. Just the questions and one optional follow-up.
Practice Questions 7-12: Underwriting Sources and Uses of Life Insurance
Survivor protection, the MIB report, the inspection report, the cost of paying monthly, long-term care insurance and estate liquidity.
Question 7 (Chapter 3)
Which of the following scenarios best illustrates the concept of 'survivor protection' as a personal use of life insurance?
- A) Using life insurance proceeds to pay off a mortgage and estate taxes immediately after death.
- B) Using life insurance to fund a buy-sell agreement between business partners.
- C) Using life insurance to provide a key employee with deferred compensation via an executive bonus plan.
- D) Using life insurance proceeds to replace lost income so a surviving spouse can maintain the family's standard of living.
Show answer & explanation
Answer: D
Survivor protection involves using life insurance death benefits to replace the deceased's income, ensuring dependents can maintain their standard of living. Option A describes liquidity (paying debts/expenses), not survivor protection. Options B and C describe business uses of life insurance (buy-sell funding and executive bonus), not personal uses.
Question 8 (Chapter 3)
During company underwriting for a life insurance application in Arizona, the insurer reviews the Medical Information Bureau (MIB) report. What is the primary purpose of checking the MIB?
- A) To obtain the applicant's attending physician's diagnosis and treatment records.
- B) To verify the applicant's occupation and income for premium classification.
- C) To identify potential adverse medical information not disclosed on the application that was reported in prior insurance applications.
- D) To replace the requirement for a paramedical medical examination.
Show answer & explanation
Answer: C
The MIB is a database used by insurers to share coded medical and avocation information from previous insurance applications. Its primary purpose is to help detect non-disclosure or misrepresentation of medical history by showing what was reported in prior applications. Option A describes an attending physician's statement. Option B relates to inspection reports or applications. Option D is incorrect; the MIB does not replace medical exams but supplements underwriting information.
Question 9 (Chapter 3)
During the underwriting process for a life insurance application in Arizona, an insurer orders an inspection report. Which of the following pieces of information is typically included in this report?
- A) Verification of the applicant's employment, income, and lifestyle habits such as hazardous avocations
- B) The applicant's detailed medical history and attending physician's diagnosis
- C) Results of the applicant's blood and urine laboratory tests
- D) The applicant's prescription drug history
Show answer & explanation
Answer: A
A is correct. An inspection report, prepared by a third-party service, covers non-medical underwriting factors: employment and income verification, lifestyle habits including hazardous avocations such as skydiving or scuba diving, and general character and reputation. B comes from the attending physician statement, C from the paramedical exam and laboratory, and D from a prescription database check; none of these belongs to the inspection report.
Question 10 (Chapter 3)
An Arizona insurance producer is discussing premium payment options with a client. Which statement accurately describes the financial impact of choosing monthly premium payments over annual payments for the same life insurance policy?
- A) The total annual cost is lower due to reduced administrative fees for the insurer
- B) The total annual cost is higher because the insurer charges extra for the convenience of frequent billing
- C) The total annual cost remains the same regardless of payment frequency
- D) The total annual cost is lower because the insurer can invest the funds more frequently
Show answer & explanation
Answer: B
Insurers typically charge a higher total annual premium for more frequent payment modes (e.g., monthly) due to increased administrative costs, billing expenses, and the time value of money (the insurer receives premiums later in the year, reducing investment income). Annual payments usually offer a discount because the insurer receives the full premium upfront. Therefore, monthly payments result in a higher total annual cost compared to annual payments, making B correct. Options A, C, and D incorrectly state that costs are lower, unchanged, or lower due to investment advantages, which contradicts standard insurance pricing practices.
Question 11 (Chapter 3)
Which of the following best describes the purpose of long-term care (LTC) insurance in the context of health insurance perils and benefits?
- A) To replace lost income when an individual is unable to work due to a temporary disability
- B) To cover the costs of medical treatment for acute illnesses or injuries
- C) To provide financial assistance for extended care services needed due to chronic illness, disability, or cognitive impairment, such as nursing home or in-home care
- D) To pay a lump sum upon diagnosis of a critical illness like cancer or heart attack
Show answer & explanation
Answer: C
Long-term care insurance is designed to cover the costs of extended care services—such as nursing home care, assisted living, or in-home assistance—when an individual requires help with activities of daily living due to chronic illness, disability, or cognitive impairment. It does not replace lost income (A), which is the purpose of disability income insurance; cover acute medical treatment (B), which is the scope of medical expense or health insurance; or pay a lump sum for critical illness (D), which describes critical illness insurance.
Question 12 (Chapter 3)
An Arizona resident owns a life insurance policy and wants to ensure their estate has sufficient liquidity to pay estate taxes and final expenses without forcing the sale of illiquid assets like a family business or real estate. Which personal use of life insurance does this best illustrate?
- A) Liquidity for estate settlement and final expenses.
- B) Survivor protection through income replacement.
- C) Business continuation via key person insurance.
- D) Wealth accumulation through cash value growth.
Show answer & explanation
Answer: A
Liquidity in life insurance refers to the ability to provide immediate cash upon death to cover expenses such as estate taxes, debts, and funeral costs, preventing the forced sale of illiquid assets. This scenario directly addresses estate tax and final expense liquidity needs. Survivor protection (B) focuses on replacing lost income for dependents, not estate settlement. Key person insurance (C) is a business use, and wealth accumulation (D) relates to cash value during life, not death benefits for estate liquidity.
Practice Questions 13-17: Premium Factors, Delivery and Needs Methods
How mortality, interest and expense combine in a premium, the statement of good health at delivery, and the difference between the human life value and needs approaches.
Question 13 (Chapter 3)
An Arizona resident purchases a life insurance policy on their business partner, naming themselves as the beneficiary. The business partner dies unexpectedly. Which statement correctly describes the requirement for insurable interest in this scenario?
- A) Insurable interest must exist at the time of the claim for the death benefit to be payable.
- B) Insurable interest must exist at the time the policy is applied for and issued, but not necessarily at the time of loss.
- C) Insurable interest must be proven by showing the policy owner would suffer emotional distress upon the insured's death.
- D) Insurable interest is not required for business-owned life insurance policies in Arizona.
Show answer & explanation
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.
Question 14 (Chapter 3)
During the delivery of a life insurance policy in Arizona, the producer collects the initial premium and obtains a statement of good health from the applicant. What is the primary purpose of the statement of good health in this context?
- A) To confirm that no change in the applicant's insurability has occurred since the application was signed.
- B) To satisfy the free-look period requirement under Arizona law.
- C) To replace the need for a medical examination in the underwriting process.
- D) To authorize the insurer to access the applicant's Medical Information Bureau (MIB) report.
Show answer & explanation
Answer: A
The statement of good health is required when no conditional receipt is issued at the time of application. Its purpose is to verify that the applicant's health has not changed adversely between the application date and policy delivery, ensuring the original underwriting assessment remains valid. It does not satisfy free-look requirements (B), replace medical exams (C), or authorize MIB access (D).
Question 15 (Chapter 3)
Which of the following statements accurately describes a difference between 'accidental injury' and 'sickness' as defined in individual health insurance policies under Arizona regulations?
- A) Accidental injury requires hospitalization, while sickness does not.
- B) Accidental injury results from external, violent, and unexpected means, whereas sickness refers to illness or disease.
- C) Sickness benefits are paid only if the illness is work-related, while accidental injury benefits apply regardless of location.
- D) Accidental injury is covered only under disability income policies, while sickness is covered only under medical expense policies.
Show answer & explanation
Answer: B
Accidental injury is defined as bodily harm resulting from external, violent, and unexpected causes (e.g., a fall or car crash). Sickness refers to illness, disease, or pathological conditions. This distinction is standard in health insurance policies and is not dependent on hospitalization (A), work-relatedness (C), or limited to specific policy types (D).
Question 16 (Chapter 3)
Which of the following best describes how the 'human life value' approach determines the appropriate amount of life insurance for an individual?
- A) By summing specific financial needs such as mortgage payoff, college funding, and final expenses, then subtracting existing assets and life insurance.
- B) By calculating the present value of the individual's future earnings, minus taxes and personal expenses.
- C) By estimating the cost to replace the individual's services in the household, such as childcare and maintenance.
- D) By determining the amount needed to pay off all outstanding debts and provide a lump sum for investment income.
Show answer & explanation
Answer: B
The human life value approach calculates the present value of an individual's future earnings potential over their working life, subtracting taxes and personal expenses to determine the economic value of their life. Option A describes the needs approach, Option C describes a method more relevant to valuing non-economic services (sometimes used in needs approach but not primary), and Option D is incomplete and not a standard method.
Question 17 (Chapter 3)
Which of the following best describes how the mortality, interest, and expense factors collectively influence life insurance premiums in Arizona?
- A) All three factors increase premiums, with mortality being the most significant.
- B) Mortality increases premiums, interest decreases premiums, and expense increases premiums; the net premium balances these three components.
- C) Mortality and expense decrease premiums, while interest increases premiums to reflect investment gains.
- D) Only mortality affects premiums; interest and expense are absorbed by the insurer and do not impact pricing.
Show answer & explanation
Answer: B
B is correct because mortality cost (likelihood of death) raises the premium needed to cover claims, interest earned on reserves reduces the premium required, and expense loading (company costs) increases the premium; the net premium is the balance of these three. A is incorrect because interest reduces, not increases, the premium. C is incorrect because mortality and expense increase premiums, not decrease them. D is incorrect because all three factors directly influence premium calculation.
The Mistakes That Cost Marks
Dropping a resource in the needs approach. Add the needs, then subtract both the savings and the existing insurance. Question 1 offers a wrong answer for each omission.
Mixing up the personal uses. Liquidity is cash for immediate needs, survivor protection is income replacement, and key person insurance is a business use. Questions 4, 7 and 12 are close cousins.
Mixing up who supplies what in underwriting. The MIB report flags undisclosed history from earlier applications, the inspection report covers employment, income and lifestyle, and medical detail comes from the physician's statement and the exam (Questions 8 and 9).
Assuming monthly payment is cheaper. Paying more often generally costs more over the year (Question 10).
Reading premiums as a single factor. Mortality and expense push the premium up, and interest earnings pull it down (Questions 13 and 17).
Describing accident and sickness by where they happen. Accident is bodily harm from external, violent and unforeseen causes, and sickness is illness or disease. Location and hospitalization are irrelevant (Questions 3, 6 and 15).
Your Next Step
Practice by topic until you are comfortably above 70% on mixed questions, then move to the next block. Preview the Arizona Life & Health course to hear how the audio lessons cover this section, and use the Arizona Life & Health practice question hub to find the other topic sets.
Free: 25 Arizona L&H practice questions
Liked this article? Get 25 exam-style questions emailed to you — with full answer explanations, no credit card. Closest thing to studying offline.
No spam. Just the questions and one optional follow-up.
Study this topic with LanePrep
Listen to these audio chapters on your commute — no screen required.
Related Articles
How to Pass the Arizona Life & Health Exam on the First Try (2026)
9 min read
$209.69 All-In: Arizona Life & Health License Cost 2026
7 min read
25 Free Arizona Life, Accident & Health Exam Practice Questions (2026)
25 min read
Is the Arizona Life & Health Exam Hard? Pass Rates and Difficulty (2026)
5 min read
17 Free Arizona Life & Health Practice Questions: General Insurance Concepts (2026)
12 min read
17 Free Arizona Life & Health Practice Questions: Types of Life Insurance Policies (2026)
12 min read