Every state requires licensure for anyone who will be
selling, discussing, or advising customers on the purchase of Life and Health
Insurance. Licensing requirements vary from state to state with a formal
examination used to ensure a standard level of competence throughout the
insurance industry.
The licensing exam consists of two parts: general to life
and health insurance overall and state-specific regulations, policies, and
procedures.
Basic Requirements
Eligibility requirements to obtain licensing vary by state.
Generally, the following are the basic requirements:
- 18 or older
- Pass the state licensing exam
- Application and fees
Additional requirements may include:
- Fingerprints
- Clear criminal history report
- Continuing Education
- Proof of financial responsibility
Confirm requirements for your state with the insurance
licensing department.
Test Design
The exam has two sections: a general knowledge portion, and
a state-specific section that covers rules, guidelines, and regulations unique
to each state. The test is computer-delivered with a two-and-a-half hour time
limit.
The General Knowledge section contains 120 questions. The
following competencies make up the General Knowledge section:
- Types of policies
- Traditional whole life products
- Interest/market-sensitive/adjustable life
products
- Term life
- Annuities
- Combination plans and variations
- Policy riders, provisions, options, and
exclusions- Policy riders
- Policy provisions and options
- Policy Exclusions
- Completing the application, underwriting, and delivering
the policies- Completing the application
- Underwriting
- Delivering the policy
- Contract law
- Taxes, retirement, and other insurance concepts
- Third-party ownership
- Viatical settlements
- Life Settlements
- Group life insurance
- Retirement plans
- Life insurance needs analysis/suitability
- Social Security benefits
- Tax treatment of insurance premiums, proceeds,
and dividends
- Types of policies
- Disability income
- Accidental death and dismemberment
- Medical expense insurance
- Medicare supplement policies
- Group insurance
- Individual/Group Long Term Care (LTC)
- Policy provisions, clauses, and riders
- Mandatory and optional provisions
- Other provisions and clauses
- Riders
- Rights of renewability
- Social Insurance
- Medicare parts A, B, C, and D
- Medicaid
- Social Security benefits
- Other insurance concepts
- Total, partial, recurrent and residual
disability
- Owner’s rights
- Dependent children benefits
- Primary and contingent beneficiaries
- Premium payment delivery methods
- Non-duplication and coordination of benefits
- Occupational versus non-occupational
- Tax consequence of premiums and proceeds of
insurance contracts
- Managed care
- Worker’s Compensation
- Subrogation
- Total, partial, recurrent and residual
- Field underwriting procedures
- Completing the application
- Sources of insurability and Health Insurance Portability
and Accountability (HIPAA)
- Initial premium payment, receipt, and
consequences of the receipt
- Application and payment submission for
underwriting
- Delivery of policy
- Policy explanation
- Replacement
- Contract law
The state-specific section has 30 questions. The content of
this section varies from state to state, but topics are similar. Content for
the state-specific section of the exam may include the following categories:
- Statutes and rules governing life and health
insurance- Commissioner of Insurance
- Powers and duties
- Records examination
- Investigation/Notice of hearing
- Penalty assessment and enforcement
- Definitions used relating to life and health
insurance- Certificate of authority
- Transacting insurance
- Foreign, domestic, and alien
- Stock, mutual
- Licensing requirements
- Types
- Exemptions/exceptions
- Appointment
- Continuing education requirements
- License: denial, renewal, and expiration
- License: termination, revocation, and suspension
- Marketing practices
- Unfair or prohibited
- Agent duties and responsibilities for
transparency
- Commissioner of Insurance
- Statutes and rules for life insurance
- Marketing and solicitation
- Policy provisions
- Group life
- Credit life
- Non-forfeiture law
- Statutes and rules for accident and health
insurance- Policy provisions: required, optional
- Medicare supplement
- AIDS testing requirements
- Long-term care
- Small group health insurance
- Certificate of coverage
- Affordable Care Act (ACA)
- Statutes and rules for health maintenance
organizations (HMO)- Definitions
- Evidence of coverage
- Non-renewal/cancelation
- enrollment
Registration and cost
Each state has its own procedure to register for the Life
and Health Insurance exam. The majority of states have contracted with test
facilitators to accept registrations, schedule, and deliver the exam to its candidates.
Refer to your state’s licensing board for eligibility requirements and
registration method. Most states will utilize an online application and
registration format.
Testing fees range from $40.00 (Pennsylvania) to $170.00
(California). In many states, applying for your license and the testing fee are
separate. Veterans may have the opportunity to use their educational benefits
for the cost of the exam.
Test Day
Plan to arrive at your testing center at least 30 minutes
before your scheduled appointment. You will need one form of government-issued
identification, an additional form of identification such as a social security
card or credit card. Your identification needs to be valid and not expired.
Dependent on your state’s requirements, you may have to get your fingerprints
taken before or after the exam. No personal items are allowed in the testing
center.
Before beginning your exam, you may take a pre-test to
become familiar with the delivery method. Once you have completed the pre-test,
your time starts, and the exam begins. Breaks are not included in the
examination period.
Exam scoring and
results
The passing score for the Life and Health Insurance Licensing exam is set by each state. For studying and planning purposes, setting a goal of obtaining at least an 80% on your exam should ensure successful attainment. An example of a passing score is 70% for Texas. Check with your state’s licensing board for the score required to pass. Score reports are provided at the conclusion of your exam. Your report will indicate your pass or fail status, not the percentage correct or the number of questions answered correctly.
How Can I Prepare for the Life and Health Insurance Test?
That’s a great question. We’ve broken down the answer into three parts.
- Do yourself a favor and study. Do not walk in unprepared. We have recommended prep materials below, but that only helps if you actually try. Plus, studying is actually proven to be the best antidote to test anxiety.
- Take care of yourself. Make sure you’re eating well, exercising, and sleeping. All of these things are scientifically linked to brain performance. If you take care of your body, you’ll be helping your grades.
- Get a study guide or set of flashcards. Some people study better a certain way. Find your study strengths and make the most of them. We’ve tried to make it easy for you by tracking down the best study guide and flashcard set for your exam. Below you’ll see links to both!