Life Insurance Exam Overview
The life insurance license exam tests your knowledge of life insurance products, regulations, and ethical practices. Passing this exam is required to sell life insurance in your state.
Each state administers its own exam, but most follow similar content outlines based on guidelines from the National Association of Insurance Commissioners (NAIC).
Exam Format
| Component | Details |
|---|---|
| Number of Questions | 100-150 (varies by state) |
| Time Limit | 2-3 hours |
| Passing Score | 70-75% (varies by state) |
| Question Type | Multiple choice |
| Testing Vendor | Prometric or Pearson VUE |
| Cost | $50-$100 |
Key Topics Covered
1. Types of Life Insurance (25-30% of exam)
Understanding the different types of life insurance is crucial:
Term Life Insurance
- Pure death protection
- No cash value
- Level, decreasing, or increasing term
- Renewable and convertible options
Whole Life Insurance
- Permanent coverage
- Cash value accumulation
- Level premiums
- Guaranteed death benefit
Universal Life Insurance
- Flexible premiums
- Adjustable death benefit
- Cash value tied to interest rates
- Indexed Universal Life (IUL) options
Variable Life Insurance
- Cash value invested in subaccounts
- Securities license may be required
- Higher risk/reward potential
2. Policy Provisions (20-25% of exam)
Master these essential provisions:
| Provision | Description |
|---|---|
| Grace Period | 30-31 days to pay overdue premium |
| Incontestability | After 2 years, insurer can't void for misrepresentation |
| Suicide Clause | No benefit if suicide within 2 years |
| Misstatement of Age | Benefit adjusted to correct age |
| Free Look Period | 10-30 days to cancel for full refund |
| Reinstatement | Can restore lapsed policy within 3 years |
3. Policy Riders (15-20% of exam)
Common riders to know:
- Waiver of Premium - Waives premiums during disability
- Accelerated Death Benefit - Access benefit for terminal illness
- Guaranteed Insurability - Buy more coverage without medical exam
- Accidental Death Benefit - Double benefit for accidental death
- Child Term Rider - Coverage for children
- Long-Term Care Rider - Access death benefit for LTC needs
4. Underwriting and Risk Classification (10-15% of exam)
- Standard, preferred, and substandard ratings
- Risk factors: age, health, occupation, habits
- Medical Information Bureau (MIB)
- Attending Physician Statements (APS)
- Paramedical exams
5. Taxation of Life Insurance (10-15% of exam)
Key tax rules:
| Scenario | Tax Treatment |
|---|---|
| Death Benefit | Generally income tax-free |
| Cash Value Growth | Tax-deferred |
| Policy Loans | Not taxable (if policy stays in force) |
| Surrendered Policy | Gain over basis is taxable |
| Estate Taxes | May apply if policy in estate |
| Modified Endowment Contract | Less favorable taxation |
6. Ethics and Regulations (15-20% of exam)
Critical compliance topics:
- State insurance department authority
- Producer licensing requirements
- Unfair trade practices
- Replacement regulations
- Privacy laws (HIPAA, GLBA)
- Anti-money laundering (AML)
- Suitability requirements
Study Timeline
| Week | Focus Area | Hours |
|---|---|---|
| Week 1 | Types of life insurance | 10-12 |
| Week 2 | Policy provisions and riders | 10-12 |
| Week 3 | Underwriting and taxation | 8-10 |
| Week 4 | Regulations and ethics | 8-10 |
| Week 5 | Practice exams and review | 10-15 |
Total study time: 40-60 hours
Top Study Tips
1. Understand, Don't Just Memorize
The exam tests application of knowledge. Understand WHY provisions exist, not just what they are.
2. Focus on Numerical Details
Memorize key numbers:
- 30-31 day grace period
- 2-year incontestability period
- 2-year suicide clause
- 10-30 day free look period
- 3-year reinstatement period
3. Master Policy Comparisons
Know the differences between:
- Term vs. whole life
- Whole vs. universal life
- Universal vs. variable life
- VUL vs. IUL
4. Practice with Scenarios
Real exam questions present scenarios. Practice identifying:
- What type of policy fits the client
- Which provision applies
- What the tax consequence would be
Common Exam Mistakes
- Confusing similar terms - "Convertible" vs. "Renewable" term
- Missing scenario details - Read every word carefully
- Second-guessing answers - Your first instinct is often correct
- Poor time management - Don't spend too long on difficult questions
- Not reading all options - The best answer may be option D
2026 Exam Changes
For 2026, be aware of:
- Updated NAIC model regulations
- New annuity suitability standards
- Enhanced consumer disclosure requirements
- State-specific law updates
After Passing
Once you pass:
- Complete state application
- Submit fingerprints (if required)
- Pay licensing fee
- Complete any additional state requirements
- Affiliate with an insurance company
Most states require continuing education (CE) to maintain your license—typically 24 hours every 2 years.