Frequently Asked Questions About the Life Insurance License

By: Kaplan Financial Education
March 18, 2020
Life Insurance License questions on clipboard

To get your life insurance license, you must pass an exam and meet other requirements. The questions most frequently asked about life insurance licensing and the exam—such as license requirements, exam difficulty, passing score, pass rates, questions, and topics—are answered in this article. Read on to get information that can help you plan for a successful career as a life insurance agent.

How do I earn a life insurance license?

You need to be at least 18 years old to earn your life insurance license, and in some states, you’ll be earning a joint life and health insurance license. Here are the steps to follow:

  1. Complete any prelicensing education required by the state you want to become licensed in. The number of hours you’ll have to complete and the cost vary by state. Note: A few states do not require prelicensing education, so before you start the process for your state, check with the state’s insurance organization.
  2. Pass the state insurance licensing exam for life insurance or life and health insurance. An  insurance license exam preparation can help.
  3. Pass a background check. The process varies by state and, in some cases, includes fingerprinting.

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What is the difference between a life insurance license and a life and health insurance license?

A life insurance license permits you to sell annuities, term, and cash value (commonly called whole or universal) life insurance. A life and health insurance license enables you to sell these life insurance products, plus policies that provide protection for medical expenses, loss of income due to a disability, and the need for long-term care.

Some states, like Alabama and Florida, offer the options of earning a life insurance license, a health insurance license, and a life and health insurance license. Each of the three types require passing a separate exam. Others, like North Carolina, have separate licenses for life and health but not a combination, and each requires passing a separate exam. Still others, like Missouri, have a combined life and health insurance license only.

What jobs can I get with a life insurance license?

A life insurance license enables you to become a life insurance agent. Life insurance agents sell life insurance policies and annuities and work with clients and beneficiaries to process claims.

Life insurance agents do a lot of selling, so it’s important to be interested in marketing and have a knack for it. Excellent interpersonal and communication skills are also required because life insurance agents have to explain the ins and outs of all the products they sell in a way that is easy to understand. Life insurance agents can either be “captive” and work exclusively for one insurance company, or they can be “independent,” selling products from multiple companies.

How hard is the life insurance exam?

Each state has its own insurance exam, so the tests vary, making this question complicated to answer. However, the overarching topics covered on the exam, as well as the passing scores, are similar for all states. No matter where you take it, the test is not a walk in the park. But if you have a good understanding of the topics, you have a good chance of passing the life insurance exam.

What are the life insurance exam topics?

The life insurance exam tests you on specific topics, and these topics are weighted. These are the life insurance topics you are most likely to be tested on in most states:

  • Life insurance general knowledge
  • Life insurance policies
  • Policy riders and options in life insurance coverage
  • Life insurance tax issues
  • Annuities
  • Annuity policy tax issues

If you are taking a combined exam, there will be health insurance topics as well.

What are the requirements for taking the life insurance exam?

To take the life insurance exam, you must:

  1. Have a high school diploma or an equivalent.
  2. Know where you want to sell insurance and what the state requires. If it’s not the state where you currently reside, check to see if you are required to be a resident for a certain amount of time before taking the exam. The bodies of government that regulate insurance have different names, depending on the state, so a good way to find out is to go to the official website of the state and search for the insurance licensing rules.
  3. Meet the specific state exam requirements. In many states, you must complete a specified amount of prelicensing education hours. Visit the official website of the state insurance department or commission and search for the insurance licensing rules.
  4. Register for the exam, which includes paying a registration fee determined by each state.

When is the life insurance exam?

You can choose the date and time of your life insurance exam in most states. Scheduling options are usually on the respective state’s department of insurance website. To give yourself time to study, schedule your exam at least two weeks in advance.

Is the life insurance exam paper- or computer-based?

The life insurance exam is computer-based in all states.

How many questions are on the life insurance exam?

The life insurance exam consists of between 105–150 multiple-choice questions, depending on the state, and whether it is a separate exam or combined with health.

How much time does it take to study for the life insurance exam?

Most candidates study for the life insurance exam for about 35 to 40 hours.

How much does it cost to take the life insurance exam?

The cost to take the exam ranges from $43–$150, depending on your state. You can find the fee on your state’s insurance licensing website. Note that license application fees are separate.

What is the passing score for the life insurance exam?

The passing score is 70 percent in all states.

What is the passing rate for the life insurance exam?

According to a 2016 NAIC document, the passing rate is broad. The lowest passing rate was in Maryland at 40 percent, and the highest was in Wyoming at 87 percent. The majority of states recorded passing rates in the range of 60–67 percent.

How do I pass the life insurance exam?

Follow these steps to increase your chances of passing the exam:

  1. Learn your state’s requirements and get the exam outline. Check with the department of insurance in your state (or the state where you’ll be working) for the requirements and the outline and print it out.
  2. Have a study plan. Cramming for the life insurance exam is not recommended. Instead, have a realistic plan that spreads your study time over several weeks and is easy for you to stick to. An insurance certification study package can help you stay on track so you don't cram at the last minute.
  3. Follow the state exam outline, which has a list of the topics that will be covered and how they are weighted.
  4. Prepare and practice. Review courses and reading can help you prepare. However, you should also take practice exams. These will help you determine how well you have absorbed the material and what still needs your attention.
  5. Know the exam center process. Visit the test center before the exam—see how long it takes to get there and get a feel for the testing area. Find out what forms of identification are needed.
  6. Stay calm while taking the exam. Read each question carefully and thoroughly before answering it. Find the questions you know the answer to, and answer them first. If you find yourself stuck on any question, move on and come back to it later.

If I fail the life insurance exam, what is the wait time before I can retake it?

You will find out if you passed or failed the exam at the testing center. However, you cannot register to take it again at that time. Instead, you must wait 24 hours before you can register again. You can take the exam three times in one year. If you fail it all three times, you will have to complete prelicensing education again before you can take it for a fourth time the following year. This process may vary by state.

Ready to Earn Your Life Insurance License?

We hope this article answers your pressing questions about the life insurance exam and license. If you’re interested in taking the exam, we have life and health exam preparation packages.

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