Free practice test
Twelve life insurance exam questions. Right now, free.
These twelve questions are free and they are ours, written from the official state exam outlines, with instant scoring and the explanation behind every answer. We sell study materials and practice exams for the life insurance licensing exam in 49 states plus the District of Columbia. Your first 20 study questions are free, and the full License Pass is $149, yours until you pass. Most states pass at 70%. About 62% of first-time life exam takers pass nationally (NAIC, latest published data).
Question 1
An insurance company formed under the laws of the state in which it is doing business is called what in that state?
Question 2
When a producer takes an applicant's premium payment and gives a receipt, in legal terms the producer represents whom?
Question 3
An insurer that has received a certificate of authority to transact business in a state is known as what?
Question 4
A membership-based organization that provides life insurance to members and often has a lodge system and charitable purpose is called what?
Question 5
Under the independent agency system, who generally owns the rights to the policy records and renewals?
Question 6
Under the captive agency, or exclusive agency, marketing system, an agent typically does what?
Question 7
Which type of organization is an unincorporated group of members who agree to insure one another, managed by an attorney-in-fact?
Question 8
An insurance company formed in another country but selling policies in the United States is classified as what?
Question 9
An insurer organized in one US state and selling policies in a different US state is called what in the second state?
Question 10
Susan is comparing a mutual insurer and a stock insurer. Which statement correctly distinguishes them?
Question 11
What is the main characteristic of a stock insurance company?
Question 12
What is the primary function of a reinsurer?
Answer key and explanations
The same twelve questions with the correct letter and the reason behind it. Open one after you have committed to an answer.
Question 1An insurance company formed under the laws of the state in which it is doing business is called what in that state?
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Answer: A. Domestic insurer
A domestic insurer is chartered in the state where it operates. A foreign insurer is formed in another state within the US. An alien insurer is formed in another country. Admitted describes an insurer authorized to do business, which is a separate concept from where it was formed.
Question 2When a producer takes an applicant's premium payment and gives a receipt, in legal terms the producer represents whom?
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Answer: A. The insurer
A producer legally represents the insurer, so accepting premium is treated as the insurer receiving it. The producer does not represent the applicant, even though they help the applicant. There is no equal representation of both parties. The agency itself is not the principal in this relationship.
Question 3An insurer that has received a certificate of authority to transact business in a state is known as what?
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Answer: A. Admitted insurer
An admitted, or authorized, insurer holds a certificate of authority to do business in the state. A nonadmitted insurer lacks that authority. Alien refers to formation in another country, and domestic refers to formation in the same state, neither of which describes authorization status.
Question 4A membership-based organization that provides life insurance to members and often has a lodge system and charitable purpose is called what?
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Answer: B. Fraternal benefit society
A fraternal benefit society is a member organization, often with a lodge system and social or charitable mission, that provides insurance to members. A reciprocal is a member exchange without that social structure. A stock insurer is a for-profit company owned by stockholders. A risk retention group insures similar business liability risks.
Question 5Under the independent agency system, who generally owns the rights to the policy records and renewals?
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Answer: B. The independent agent
A hallmark of the independent agency system is that the agent owns the expirations and policy records and can place business with several insurers. In the captive system the insurer controls those records. The policyholder owns the policy but not the agency records. The state does not own private business records.
Question 6Under the captive agency, or exclusive agency, marketing system, an agent typically does what?
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Answer: B. Represents only one insurer or group
A captive or exclusive agent represents a single insurer or affiliated group. Representing many insurers describes an independent agent. Owning policy records and expirations is a feature of the independent agency system, not the captive system. Buying insurance for members describes a reciprocal's attorney-in-fact.
Question 7Which type of organization is an unincorporated group of members who agree to insure one another, managed by an attorney-in-fact?
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Answer: C. Reciprocal insurer
A reciprocal exchange is an unincorporated group whose members insure each other through an attorney-in-fact. A stock insurer is owned by stockholders and a mutual by policyholders, both incorporated. A fraternal benefit society is a membership organization with a social purpose, not a reciprocal.
Question 8An insurance company formed in another country but selling policies in the United States is classified as what?
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Answer: C. Alien insurer
An alien insurer is one formed outside the United States. Domestic means formed in the same state where it operates. Foreign means formed in a different US state. A reciprocal is a member-owned exchange, unrelated to where the insurer was formed.
Question 9An insurer organized in one US state and selling policies in a different US state is called what in the second state?
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Answer: B. Foreign insurer
A company formed in one state and operating in another US state is a foreign insurer in that other state. Domestic means formed in that same state. Alien means formed in another country. Nonadmitted refers to lacking authority to do business, which is not what this describes.
Question 10Susan is comparing a mutual insurer and a stock insurer. Which statement correctly distinguishes them?
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Answer: B. A mutual insurer may pay policy dividends while a stock insurer distributes profits to stockholders
A mutual insurer is owned by policyholders and may pay them policy dividends, while a stock insurer is owned by stockholders who receive profits. The first choice reverses the ownership. Both types can sell life insurance, so that choice is wrong. Both types can be admitted, so limiting admission to mutuals is also wrong.
Question 11What is the main characteristic of a stock insurance company?
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Answer: B. It is owned by its stockholders
A stock insurer is owned by its stockholders, who invest capital and expect a profit. Policyholder ownership describes a mutual insurer, not a stock insurer. The government does not own stock insurers. Fraternal ownership describes a fraternal benefit society, a different type of insurer.
Question 12What is the primary function of a reinsurer?
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Answer: B. Accepting risk transferred from other insurers
A reinsurer accepts a portion of risk transferred from a primary insurer, helping that insurer spread large exposures. Reinsurers do not sell to the public. Regulation is performed by state insurance departments, not reinsurers. Managing a reciprocal is the job of an attorney-in-fact.
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Common questions
Are these real life insurance exam questions?
No. No legitimate prep company uses real exam questions, they are protected by candidate agreements. These are original questions we wrote from each state's official exam outline, so the style, difficulty, and topics match.
How many questions are on the real exam?
It depends on the state. The exams we cover run from 50 scored questions to 125, most states add a handful of unscored pretest questions, and the clock runs from 75 minutes to 210. The state table has the exact numbers.
What score passes?
Thirty seven of the fifty exams we cover pass at 70, either 70 percent correct or a scaled 70. Alabama writes the same bar as a count, 87 correct of 125. California passes at 60 percent, Michigan at 72 percent, Mississippi at 65 percent, and Montana at a scaled 75. Seven states publish no number at all, and two publish a scaled score with no life specific mark.
Do I need an account to take this test?
No. These twelve questions are free and need no account. Inside the product your first 20 study questions are free too.
What does the full exam prep cost?
One License Pass, $149, yours until you pass. It covers the mastery map, the full question bank for your state, and full timed practice exams.
What RingReady is, and is not
RingReady sells study materials and practice exams for the life insurance licensing exam. We are not a state-approved prelicensing education provider, and practicing here does not by itself satisfy any state's education requirement.
If your state requires prelicensing education, you must complete it with an approved provider; your state insurance department publishes the approved list. What we do is make sure that when you sit down for the real exam, the questions feel familiar.
Walk in already knowing the exam.
Practice questions written to every section of your state's official outline, full timed practice exams matched to the real format, and a mastery map that shows what to study next. The first 20 study questions are free, and the full License Pass is $149, yours until you pass.
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