Free practice test
Free California Life & Health Insurance License Practice Test
50 questions from across the whole exam, weighted like the official California outline. Every question shows its answer and explanation. No sign-up.
Question 1 of 50
Which set lists the four basic elements of a valid insurance contract?
Reveal answer
Correct answer: Agreement, consideration, competent parties, and legal purpose
Validity requires agreement, consideration, competent parties, and a legal purpose.
From the free practice set Elements and special characteristics of an insurance contract
Question 2 of 50
Two annuities promise the same monthly dollar amount. One pays for ten years; the other pays while the annuitant lives. What must a comparison account for?
Reveal answer
Correct answer: Equal monthly amounts do not establish equal payment duration.
Identical payment amounts can accompany different duration promises; lifetime income addresses survival beyond a fixed term.
From the free practice set Annuity definitions, parties, and uses
Question 3 of 50
An investor buys stock that may rise or fall in value. Which classification fits that investment exposure?
Reveal answer
Correct answer: Speculative risk
The opportunity for gain as well as loss makes the investment exposure speculative.
From the free practice set Insurance, risk, and peril
Question 4 of 50
An industry information exchange entry conflicts with an applicant's medical answer. What should the underwriting process do next?
Reveal answer
Correct answer: Investigate and verify the discrepancy with appropriate evidence.
Exchange information is an investigative lead, not a substitute for verifying the applicant's facts.
From the free practice set Individual life underwriting, pricing, and claims
Question 5 of 50
A 50-year-old receives $9,000 from a nonqualified annuity; $4,000 is included in gross income. No exception to the premature-distribution rule applies. What is the additional federal tax?
Reveal answer
Correct answer: $400
Section 72(q)(1) applies ten percent to the $4,000 included in income, producing $400 of additional tax.
From the free practice set Tax treatment of life insurance and annuities, including modified endowment contracts
Question 6 of 50
Which statement accurately describes disability income benefits under California section 1626?
Reveal answer
Correct answer: They may be included within both life and accident and health or sickness license scopes
Both subdivisions describing life and accident and health or sickness licenses say they may include disability income benefits.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 7 of 50
A trainee reads California section 446 and concludes that no future warranty can ever matter. What is the best evaluation?
Reveal answer
Correct answer: Incorrect, because the section addresses specified events occurring before performance is due, not every omission.
California section 446 identifies particular pre-performance circumstances and does not declare all future warranties ineffective.
From the free practice set Elements and special characteristics of an insurance contract
Question 8 of 50
For the California clerical exemption discussed in section 1635(i)(1), which statement about a regularly salaried agency employee is accurate?
Reveal answer
Correct answer: The stated duty limits and the no-commission condition must also be satisfied
The exemption requires qualifying clerical duties and no direct or indirect commission; salary alone does not settle eligibility.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 9 of 50
A producer says, 'Insurance is personal, so assigning life insurance rights is always impossible.' What is the best correction?
Reveal answer
Correct answer: Personal concerns the insured risk; assignment rules depend on the policy type and rights involved.
The producer has turned a description of the insured risk into an incorrect absolute assignment prohibition.
From the free practice set Elements and special characteristics of an insurance contract
Question 10 of 50
A juvenile policy insures a daughter, and her father is the covered payor under a payor benefit rider. The father becomes qualifyingly disabled; the daughter remains healthy. Which conclusion is best?
Reveal answer
Correct answer: The rider can waive premiums for the specified period based on the father's qualifying disability.
Payor benefit looks to the covered payor's qualifying event; it does not require the insured child to be disabled.
From the free practice set Life policy riders
Question 11 of 50
Which client statement most clearly signals that a previously completed life insurance plan needs review now?
Reveal answer
Correct answer: My divorce has changed whom I intend the policy to support
A divorce changing support intentions is a material life event requiring a fresh review of needs and designations.
From the free practice set Life insurance basics and the personal insurance planning process
Question 12 of 50
A trainee says a California life license has the same agent, broker, and solicitor classification described for property and casualty licenses. Which correction best follows the lesson?
Reveal answer
Correct answer: The property and casualty broker-agent framework should not be imported into the distinct life-agent license type
Sections 1625 and 1626 distinguish the property/casualty broker-agent framework from life and accident and health or sickness agent license types.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 13 of 50
Which statement best distinguishes an insurance solicitor from a broker in the standard role descriptions?
Reveal answer
Correct answer: A solicitor works for an agent or broker to solicit insurance; a broker generally arranges coverage for a customer
The solicitor's working relationship with an agent or broker differs from the broker's customer-side arranging role.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 14 of 50
A California senior owns a newly delivered individual life policy naming her adult daughter as beneficiary. Who does section 10127.10(a) identify as the person who may return the policy during the free look?
Reveal answer
Correct answer: The policy owner
The statute describes receipt and return by the owner. Being the beneficiary does not by itself transfer the owner's cancellation right.
From the free practice set Free-look cancellation rights by applicant age
Question 15 of 50
Under California's accelerated death benefit article, which statement correctly characterizes a benefit governed by that article?
Reveal answer
Correct answer: It is a life insurance benefit and may not be marketed as long-term care insurance.
California prohibits marketing these accelerated death benefits as long-term care insurance and requires disclosures distinguishing them from other products.
From the free practice set Life policy riders
Question 16 of 50
An insurer offers basic group life without individual health evidence, but asks for health evidence for a large supplemental amount. Which assessment is best?
Reveal answer
Correct answer: Limited underwriting for basic coverage can coexist with evidence requirements for additional amounts.
Group coverage can limit individual underwriting for basic benefits while requiring evidence for higher amounts.
From the free practice set Participating, individual, and group life policies
Question 17 of 50
A manager says a property broker-agent license permits solicitor work, so the holder can keep broker authority while also becoming a solicitor. What is the best evaluation under California law?
Reveal answer
Correct answer: Incorrect, because the separate restriction on concurrent roles still applies
Section 1625 includes the roles, but section 1640 prohibits concurrent solicitor and agent or broker authority.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 18 of 50
A California employee's job title remains 'clerical assistant,' but she begins soliciting insurance from the public. She is paid a salary without commissions. Why does the clerical exemption in section 1635(i)(1) no longer fit these facts?
Reveal answer
Correct answer: Her actual duties now include solicitation
The clerical exemption requires duties that exclude solicitation, negotiation, and effecting insurance from the public; salary alone is insufficient.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 19 of 50
A producer says that using a dividend for paid-up additions eliminates all future premiums on the original policy. What correction is needed?
Reveal answer
Correct answer: The additions are paid up; the original policy retains its own premium requirements.
Paid-up applies to the insurance purchased by the dividend, not to the original policy's remaining premium obligations.
From the free practice set Participating, individual, and group life policies
Question 20 of 50
A fire policy covers a loss but has a stated payment limit below the amount of damage. What does this illustrate?
Reveal answer
Correct answer: Coverage can transfer financial consequences while leaving amounts beyond the limit with the insured.
Policy limits restrict the financial protection; covered status does not guarantee payment of the full loss.
From the free practice set Insurance, risk, and peril
Question 21 of 50
A storm has not yet occurred, but an owner may face repair costs if the building is damaged. Which statement best describes the owner's present position?
Reveal answer
Correct answer: The owner faces uncertainty about a possible future loss.
Potential future damage creates uncertainty concerning loss before a damaging event occurs.
From the free practice set Insurance, risk, and peril
Question 22 of 50
Which pair of concepts should be evaluated separately when identifying a producer's place in an insurance transaction?
Reveal answer
Correct answer: The distribution arrangement and the party the producer represents
The channel describes how customers are reached; representation identifies the producer's role in the transaction.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 23 of 50
Two legally capable parties agree and exchange value, but the agreement's purpose is unlawful. Which conclusion follows from the four-element framework?
Reveal answer
Correct answer: The agreement still lacks the required element of legal purpose.
Each formation element matters independently; agreement, consideration, and capacity do not cure an unlawful purpose.
From the free practice set Elements and special characteristics of an insurance contract
Question 24 of 50
What is the primary financial purpose of life insurance?
Reveal answer
Correct answer: Provide funds to address the financial consequences of the insured's death
Life insurance addresses the financial loss resulting from death through a death benefit.
From the free practice set Life insurance basics and the personal insurance planning process
Question 25 of 50
One employee converts group life to an individual policy; another uses an offered portability feature to continue group coverage. What difference follows from these choices?
Reveal answer
Correct answer: Conversion creates an individual contract, while portability continues a group arrangement.
Conversion and portability differ in the arrangement providing coverage: individual policy versus continued group coverage.
From the free practice set Participating, individual, and group life policies
Question 26 of 50
A worker seeks insurance addressing disablement caused by sickness. Which California statutory class includes that exposure under section 106(a)?
Reveal answer
Correct answer: Disability insurance
California section 106(a) includes insurance appertaining to disablements from sickness within disability insurance.
From the free practice set Insurance, risk, and peril
Question 27 of 50
In California, an owner would suffer directly if a contemplated fire damaged the owner's building. Which concept does this illustrate under Insurance Code section 281?
Reveal answer
Correct answer: Insurable interest in property
California section 281 recognizes an interest or relation to property under which a contemplated peril might directly harm the insured.
From the free practice set Insurance, risk, and peril
Question 28 of 50
An insurer promises a specified benefit after a covered event, and the policyholder pays for that protection. What is the policyholder's payment called?
Reveal answer
Correct answer: The premium
The premium is the payment made for insurance protection.
From the free practice set Insurance, risk, and peril
Question 29 of 50
A homeowner says that an earthquake must be covered by a particular policy solely because California section 102(a) lists earthquake within the fire insurance class. What is the best assessment?
Reveal answer
Correct answer: The statutory classification alone does not establish that policy's earthquake coverage.
Section 102(a) lists earthquake within the class, but statutory classification is distinct from a particular policy's coverage.
From the free practice set Insurance, risk, and peril
Question 30 of 50
Which statement accurately connects insurance and pure risk?
Reveal answer
Correct answer: Insurance generally addresses pure risks, but coverage still depends on the contract.
Pure risks are generally the subject of insurance, but the classification does not create automatic coverage.
From the free practice set Insurance, risk, and peril
Question 31 of 50
Two otherwise comparable life quotes differ because one uses a less favorable mortality class and the other adds a monthly payment charge. Which analysis is best?
Reveal answer
Correct answer: One difference reflects underwriting risk; the other reflects payment frequency.
A mortality class affects risk pricing; a monthly charge reflects the premium payment arrangement.
From the free practice set Individual life underwriting, pricing, and claims
Question 32 of 50
Who normally holds the master policy in an employer group life arrangement?
Reveal answer
Correct answer: The sponsoring employer
The employer sponsors the group arrangement and holds the master policy; employees receive certificates describing coverage.
From the free practice set Participating, individual, and group life policies
Question 33 of 50
A California employee is 10 days into the standard conversion period under section 10209 and wants to exercise the right while living. Which action completes the required application-and-payment steps?
Reveal answer
Correct answer: Apply to the insurer and pay the applicable individual policy premium within the period.
The employee exercises conversion by applying to the insurer within 31 days and paying the applicable premium; evidence of insurability is not required.
From the free practice set Participating, individual, and group life policies
Question 34 of 50
A California senior's variable annuity was returned on day 25 without mutual-fund direction. The insurer was notified that day. An employee says the refund is due on day 30 after original receipt. What is wrong with that reasoning?
Reveal answer
Correct answer: The 30-day refund deadline runs from cancellation notification, not original receipt
The employee conflates the owner's receipt-based return period with the insurer's separate 30-day refund deadline after cancellation notification.
From the free practice set Free-look cancellation rights by applicant age
Question 35 of 50
An employee enrolling late in a group plan is asked for evidence of insurability. Which lesson concept explains that request?
Reveal answer
Correct answer: Late enrollment can require individual health evidence within a group plan.
Group coverage may require evidence of insurability for late enrollment even when normal basic enrollment uses limited individual underwriting.
From the free practice set Participating, individual, and group life policies
Question 36 of 50
A fire causes $12,000 of covered damage. The policy has a $10,000 applicable limit and no deductible or other adjustment. How much of the damage exceeds that limit?
Reveal answer
Correct answer: $2,000
The $12,000 loss exceeds the $10,000 limit by $2,000.
From the free practice set Insurance, risk, and peril
Question 37 of 50
A client wants to build annuity value now and begin retirement income many years later. Which description best matches that timing?
Reveal answer
Correct answer: Deferred annuity
A deferred annuity postpones income, allowing an accumulation period before retirement payments.
From the free practice set Annuity definitions, parties, and uses
Question 38 of 50
A producer projects annual support a client would provide to dependents, adjusts earnings for amounts not available to them, and discounts the future contributions. Which method is being used?
Reveal answer
Correct answer: Human life value approach
Adjusted future contributions discounted to present value identify the human life value approach.
From the free practice set Life insurance basics and the personal insurance planning process
Question 39 of 50
A beneficiary receives $200,000 of ordinary life insurance death proceeds plus $4,000 of interest earned while the insurer held those proceeds. What amount is generally subject to federal income tax?
Reveal answer
Correct answer: $4,000
The ordinary death proceeds are generally excluded, but interest earned on retained proceeds is taxable.
From the free practice set Tax treatment of life insurance and annuities, including modified endowment contracts
Question 40 of 50
What does loss mean in the basic risk-peril-loss framework?
Reveal answer
Correct answer: The resulting injury, damage, or economic deprivation
Loss is the harm that results, as distinct from its cause or a condition contributing to it.
From the free practice set Insurance, risk, and peril
Question 41 of 50
Luis leaves declared dividends with his insurer to earn interest rather than buy insurance. Which option has he selected?
Reveal answer
Correct answer: Accumulation at interest
Accumulation at interest leaves dividends with the insurer in an interest-earning accumulation.
From the free practice set Participating, individual, and group life policies
Question 42 of 50
An insured argues that adhesion requires payment despite a clear exclusion that applies to the loss. What is the best evaluation?
Reveal answer
Correct answer: The argument fails because adhesion does not erase a clear exclusion.
The ambiguity principle associated with adhesion does not eliminate an exclusion that is clear and applicable.
From the free practice set Elements and special characteristics of an insurance contract
Question 43 of 50
An organization holds a California property broker-agent license. Its manager says that being named on the license lets a natural person exercise the organization's powers without regard to other applicable law. What is the best correction?
Reveal answer
Correct answer: Named persons exercise the organization's powers subject to the chapter and other applicable law
Section 1627 permits named persons to exercise organizational powers in accordance with the chapter and other applicable law, not free of them.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 44 of 50
For an ordinary nonreplacement individual life policy purchased in California by someone under 60, which range describes the generally required stated return period?
Reveal answer
Correct answer: At least 10 and no more than 30 days
The ordinary younger-purchaser individual life rule provides a stated period of 10 to 30 days; it does not give every purchaser 30 days.
From the free practice set Free-look cancellation rights by applicant age
Question 45 of 50
An insurer supplies a standard policy, and a later covered loss produces benefits much greater than the premium. Which pair correctly matches the two facts?
Reveal answer
Correct answer: Standard wording: adhesion; unequal contingent exchange: aleatory
Insurer-drafted standard wording illustrates adhesion, while potentially unequal values contingent on loss illustrate aleatory exchange.
From the free practice set Elements and special characteristics of an insurance contract
Question 46 of 50
An insurer changes from local agency sales to direct website applications. A trainee concludes that the new channel itself eliminates producer licensing requirements. Which response best applies the lesson?
Reveal answer
Correct answer: Incorrect; changing the distribution channel does not itself replace required licensing
A distribution arrangement describes a sales channel, not an exemption from otherwise applicable licensing requirements.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
Question 47 of 50
A policy has an accidental death rider and an accelerated benefit rider. The insured is alive with an illness expressly satisfying the accelerated rider's qualifying-event definition. Which benefit addresses this situation?
Reveal answer
Correct answer: The accelerated benefit rider, because its stated living-benefit trigger is met
The insured meets the stated acceleration trigger while alive; there is no covered accidental death to trigger the accidental rider.
From the free practice set Life policy riders
Question 48 of 50
Which statement best describes utmost good faith in an insurance contract?
Reveal answer
Correct answer: Both parties must deal honestly in disclosure and contractual performance.
Utmost good faith calls for honest dealing by both parties, not just the applicant.
From the free practice set Elements and special characteristics of an insurance contract
Question 49 of 50
What is a peril?
Reveal answer
Correct answer: The cause of a loss
A peril is the cause of loss, such as fire or lightning.
From the free practice set Insurance, risk, and peril
Question 50 of 50
An analyst applies California section 1649.5 to an insurer-owned property agency. Which fact is essential to its rule assigning agent capacity in the described transaction?
Reveal answer
Correct answer: The agency transacts with and on behalf of its owning or controlling insurer
The specific capacity rule addresses transactions with and on behalf of the owning or controlling insurer.
From the free practice set Distribution systems and producer roles: agent, broker, and solicitor
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How this test is built
Questions are drawn from the 389 free practice questions for California, one free practice set per exam module. Each module gets questions in proportion to its share of the exam. The test only changes when the course content is updated.