Free AL-LH Practice Questions

Question 1

On April 3, an applicant submits a life insurance application with the full initial premium. A required medical exam is completed April 6. The conditional receipt states that coverage begins on the exam date if the applicant was insurable on that date for the amount and class applied for. The applicant dies in a covered accident on April 10, and underwriting later confirms that the April 6 conditions were met. How should the insurer respond?

Accepted Answer

Pay the death benefit because the receipt's conditions were satisfied

Answer

Deny the claim because the policy had not been personally delivered

Answer

Refund the premium because home-office approval occurred after the death

Answer

Pay only if the producer had separate authority to issue a binding receipt

Question 2

A surgeon bills $18,000 for a covered in-network procedure. The plan's allowed amount is $15,000, the patient has $1,000 of deductible remaining, and the plan pays 80% after the deductible. No copayment applies. Which calculation is accurate?

Accepted Answer

The plan pays $11,200; the patient pays $3,800; and $3,000 is written off

Answer

The plan pays $12,000; the patient pays $3,000; and nothing is written off

Answer

The plan pays $14,000; the patient pays only the remaining $1,000 deductible

Answer

The plan pays $11,200; the patient pays $6,800 because the provider may balance bill

Question 3

After 18 years, the owner of a whole life policy can no longer afford the premiums. The owner wants the coverage to remain in force for life, wants no further premiums due, and accepts a lower death benefit. Which election best preserves that objective?

Accepted Answer

Reduced paid-up insurance

Answer

Cash surrender

Answer

Extended term insurance at the original face amount

Answer

Automatic premium loan

Question 4

An Alabama producer holds a Life line of authority but is not appointed by Insurer X. On an occasional basis, a client asks the producer to obtain an Insurer X policy. What may the producer do?

Accepted Answer

Place the business through a producer who is duly appointed by Insurer X

Answer

Submit the application directly because the Life license also serves as an appointment

Answer

Decline all involvement because any participation without a direct appointment is prohibited

Answer

Bind Insurer X by accepting the premium and forwarding it on the same day

Question 5

An indexed universal life policy has a 0% interest-crediting floor. During a year when the linked index declines, the policy receives a 0% index credit while monthly mortality and expense charges continue. What should the policyowner understand?

Accepted Answer

The account value can decline because policy charges continue despite the 0% index credit

Answer

The account value is guaranteed to remain unchanged whenever the index declines

Answer

The insurer must suspend all monthly deductions until the linked index recovers

Answer

The owner holds index securities in a separate account and absorbs the market loss directly

Question 6

Following a covered accident, an insured gives timely written notice of claim. The insurer does not furnish claim forms within 15 days after receiving the notice. How can the claimant preserve the claim under Alabama's individual health policy provisions?

Accepted Answer

Submit written proof describing the occurrence, character, and extent of loss within the proof-of-loss period

Answer

Wait for the insurer's prescribed forms because no substitute proof can be accepted, even if the proof-of-loss deadline expires

Answer

Send a second notice and allow the insurer a new 15-day response period

Answer

File a legal action as soon as the original 15-day deadline expires

Question 7

An insurer supplies a producer with branded applications and premium receipts, lists the producer as its local representative, and repeatedly accepts premiums the producer collects. A customer reasonably believes the producer may accept an initial premium. What form of authority is most directly at issue?

Accepted Answer

Apparent authority

Answer

Implied authority

Answer

Express authority under the producer's agency contract

Answer

Estoppel

Question 8

A neurosurgeon loses fine motor control and can no longer perform surgery but can earn income teaching medicine. The policy defines total disability as inability to perform the substantial and material duties of the insured's own occupation and does not require the insured to be unemployed. How does the policy classify this disability?

Accepted Answer

Totally disabled under the own-occupation definition

Answer

Not disabled, because work in any gainful occupation defeats the claim

Answer

Partially disabled only, because the insured continues to earn income

Answer

Presumptively disabled without regard to the policy's occupational definition

Question 9

A 52-year-old owner contributed $70,000 of after-tax money to a nonqualified deferred annuity now worth $92,000. Before annuitization, the owner withdraws $15,000, and no exception to the early-distribution additional tax applies. What is the general federal income-tax result?

Accepted Answer

The entire withdrawal is taxable earnings and generally faces an additional 10% tax

Answer

The entire withdrawal is a nontaxable return of the owner's after-tax cost basis, with no additional tax

Answer

Half of the withdrawal is taxable earnings and half is return of basis

Answer

Only interest credited during the current calendar year is taxable

Question 10

At age 68, an individual remains actively employed by a company with 42 employees and is covered by that employer's current-employment group health plan as well as Medicare. For a Medicare-covered service, who pays first?

Accepted Answer

The employer group health plan, with Medicare secondary

Answer

Medicare, because the individual is older than 65

Answer

Both plans, each paying one-half of the approved charge

Answer

The group plan only if the employer has at least 100 employees

Free AL-LH Practice Questions

Domain 1: Part I - General - Life and Health Insurance

Question 1

Question 2

Domain 2: Part II - Life Insurance

Question 3

Question 4

Question 5

Domain 3: Part III - Health Insurance

Question 6

Question 7

Question 8

Question 9

Domain 4: Part IV - Alabama Insurance Law

Question 10

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