Free California Life & Health Insurance Practice Exam 2026

California life and health insurance exam sample questions and answers

6 of the 150 practice questions, one from each topic, with the answer explained.

1. 1. Which annuity transaction is exempt from California's annuity suitability law?

   • A.An indexed annuity sale
   • B.Direct response, no advice
   • C.A sale to a 66-year-old
   • D.A replacement annuity sale

   Answer: B. California's annuity best-interest rules (Ins. Code 10509.9200 and following, for sales on or after January 1, 2025) do not apply to direct response solicitations with no recommendation based on consumer information, or to contracts funding ERISA, employer 401(k) and 403(b), government and similar plans (Ins. Code 10509.9202). Replacements and indexed annuities are covered, and the producer must reasonably believe the consumer gets a tangible net benefit (Ins. Code 10509.9204).

2. 2. No premium was paid with an application. The policy is issued on May 1 and delivered on May 10, when the producer collects the premium. Coverage begins:

   • A.On the application date
   • B.On the medical exam date
   • C.May 1
   • D.May 10

   Answer: D. With no premium at application, coverage starts only when the policy is delivered, the first premium is paid and a statement of good health is signed, which all happened on May 10. Issuing the policy on May 1 does not start coverage because the insurer had not yet received the premium.

3. 3. A worker becomes totally disabled and qualifies for Social Security disability benefits. Benefits generally begin after a waiting period of:

   • A.Five full months
   • B.Six full months
   • C.Twelve full months
   • D.Ninety days

   Answer: A. Social Security disability has a 5-month waiting period. The 12-month figure is the separate requirement that the disability be expected to last at least 12 months or result in death.

4. 4. Kim pays her individual disability income premiums with after-tax dollars, and her employer pays her group medical premiums. Which of her benefits are taxable income?

   • A.Only the medical expense benefits
   • B.Both the disability and the medical benefits
   • C.Neither type of benefit
   • D.Only the disability income benefits

   Answer: C. Disability benefits are tax-free when the insured paid the premiums with after-tax dollars, and medical expense benefits are tax-free even when the employer paid the premium. Disability benefits would be taxable only if the employer had paid that premium, while tax-qualified LTC benefits are generally tax-free within limits.

5. 5. Ray was convicted of a felony involving dishonesty years ago and now wants a job at an insurance company. Under federal law (18 USC 1033), he must first:

   • A.Disclose the conviction to every customer he serves
   • B.Wait ten years after completing his sentence
   • C.Obtain written consent from the state regulator
   • D.Obtain a pardon from the U.S. Department of Justice

   Answer: C. Under 18 USC 1033, part of the Violent Crime Control and Law Enforcement Act of 1994, a person convicted of a felony involving dishonesty or breach of trust may not work in the business of insurance without written consent from the state insurance regulator. No waiting period automatically removes the bar, and the same law makes knowingly false statements to regulators a federal crime.

6. 6. A 28-year-old wants the right to buy more coverage at set ages and at marriage or a child's birth without proving insurability. He needs a:

   • A.Guaranteed insurability rider
   • B.Spouse term rider
   • C.Cost of living adjustment rider
   • D.Return of premium rider

   Answer: A. The guaranteed insurability option lets the insured buy set amounts at specified ages or events with no evidence of insurability. A cost of living rider only adjusts coverage for inflation.