Practice Questions are Essential when Preparing for an Exam
Studying for your state insurance exam is a skill that you can polish and perfect. This article is designed to help you improve your chances of passing the insurance exam and getting your license.
Your insurance exam will be timed, of course, and will be administered by a proctor. It will be multiple choice, consisting of between 75-200 questions, depending on your state. The length of your exam will depend on the state you are testing in and the license that you’re applying for.
There will not be an essay section to your insurance license exam, as it’s graded by computer and the results are generated immediately following the test.
As you begin the process of studying for your upcoming exam, as long as you can distinguish between correct and somewhat correct answers, you'll probably succeed. Keep in mind, you don't have to deliver any information verbatim—rather, you just need to remember and identify the right information.
One of the best ways to study for this exam is to study real-world insurance licensing exam sample questions.
Following are a few categories of the type of multiple choice question you can expect—plus some sample questions (followed by answers) you can sink your teeth into for practice. Then we’ll supply you with a few tips for when you definitely don’t know the answer.
With that said, here are some sample insurance exam practice questions.
The “Correct Answer” Type:
With these types of questions, the question is followed by four possible answers, only one of which will be the right one. Consider the following two questions.
Question: At ABC Insurance Co., agents are employed by the company. They’re paid a salary plus commissions that they earn. What type of insurance system is this?
A. Professional Agent
B. Direct Response
C. Captive Agent
The correct answer is C. In the captive agent system, the insurer's agents are employed by the insurance company. They can receive a commission, a salary, or both.
Question: The XYZ Insurance Group is incorporated in the state of New Jersey. It is also authorized to do business in Pennsylvania. XYZ is considered to be what kind of company in Pennsylvania?
The correct answer is C. In their home states, insurance companies are known as domestic companies. Foreign companies, in addition to doing business in their home states, also do business in other states and are considered “foreign” in those other states. A company is “alien” if it’s based in a country outside of the United States.
The “Which of the following is not” Question:
With these questions, there are three correct answers and one incorrect answer. Be mindful of how the question is phrased. Glossing over this type of question quickly can lead to a wrong answer.
Question: Which of the following is not one of the duties of an agent?
A. Making appropriate and helpful coverage recommendations to prospects
B. Writing the declaration page of the insurance policy
C. Ensuring that customers understand the insurance they are buying
D. Assisting customers with an insurance application.
The correct answer is B. Insurance agents have a duty to properly advise prospects and customers with regard to insurance transactions. However, they do not draft the declarations page—or any page, for that matter—of the insurance policies they are selling.
With any multiple choice question, you have to determine what the question is asking before you answer. In the above case, missing the “is not” in the question would be catastrophic. Carefully identify the action words that tell you what kind of response is expected.
The “All of the above” Question:
With this kind of tricky question, only one answer may be the correct one, or all of the top three might be right, in which case “All of the above” would be correct. However, know that these questions are designed to trip you up.
Question: When a large general contractor’s insurance is up for renewal, who is likely to provide input on the decision-making process?
a. Loss control representative
d. All of the above
The correct answer is D. Prior to renewal, the underwriter, her company loss control rep, and the producer all will have input on the insured’s decision-making process.
Take a look at how the question is formatted. Some questions are direct and to-the-point, however, other questions might provide a lengthy description before the actual question is introduced.
The “Complete this sentence” Question:
With this kind of question, the end is a statement rather than a question, and you will have to select the ending that correctly completes the phrase.
Question: Choose the ending phrase that would best complete the following sentence. A “last resort” insurance coverage source intended for individuals who cannot get insurance on their home in the standard market would be
A. FAIR plans.
B. Deductible plans.
C. Premium protection plans.
D. VIP plans.
The correct answer is A. The Fair Access to Insurance Requirement (FAIR) Plan is a resource that offers insurance to people struggling to find insurance coverage in the voluntary or standard market.
When you don’t know the answer:
Because it’s multiple choice, you’ll have the answers in front of you. This means that if you aren't sure about a question, you still have a chance of getting the answer correct.
According to research, the conventional wisdom of “just pick the middle answer if you don’t know” doesn't hold up against real-world data. In fact, it’s been shown that the answers "all of the above" or "none of the above" were correct over 50% of the time. Picking one of these answers, if available, gives you a better than 85% improvement beyond just randomly guessing. Those are good odds.
It’s also worth noting that the longest answer on multiple-choice tests was typically the right one. The people making the insurance tests must make absolutely sure that the correct answers are irrefutably right. This may often require a longer answer. If you can’t decide between answers, and one is longer than the others, the longer one is typically the correct one.
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