How to Pass the Insurance Exam | TESTivity License Exam Prep

Study Material for the Insurance Licensing Exam. Everything You Need to Pass the State Pre-license Exam.
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If you Study Properly ~You Will Pass the Test

But no matter how smart you are, or how well prepared you are it is easy to make mistakes. The questions on the exam can be worded in a way that you answer incorrectly even though you KNOW the correct answer.
Don't leave any answer blank (every question counts and a blank response is an incorrect answer) and don't miss questions you know the answer to because you read the the question wrong. If you don't know the answer, there are ways to narrow it down to 50/50 or even to the correct answer using deductive reasoning, test taking skills and good ol' fashioned common sense.

Over several years we at TESTivity have collected the following test tips to help you pass the insurance license exam and...


We guarantee that mastery of the following insurance exam test tips will increase your score on the exam. Drop us a line with any questions, and Good Luck on the exam!

how to pass the insurance license exam


The human brain can rationalize almost anything, including reasons or situations where an incorrect answer could be correct. It is easy to find yourself saying "I need more information to answer this question!"...or "None of these answers are correct!"...or "I could make an argument that A and C are both correct!"

We actually called out one state's Department of Insurance on several "sample questions" they had on their website that were poorly written, problematic, or just plain unanswerable. Their reply was a page long but the general message was:

"Yeah, well plenty of people are passing the insurance prelicense exam...It is equally unfair. Deal with it."

In the end the best advice we have is to keep an open mind, don't panic and DON'T ARGUE WITH THE QUESTION you have to answer it as it is written. Pick the best available answer and move on.

Every example on this page came straight off the actual Life & Health or the Property & Casualty state insurance licensing exam.

Example #1

According to IRS rules, at what age must the owner of a qualified retirement plan begin taking required minimum distributions?

  1. 60
  2. 65
  3. 59 1/2
  4. 70 1/2

Well, If you had studied right you would know that Internal Revenue Code requires the owner of a qualified retirement plan to start RMDs (required minimum distributions) no later than April first of the year following the year they attain age 70 1/2, unless they are still working in which case the RMD can be postponed.

Hey, wait a minute...That is not one of the answers!

You are correct, sir. This is a poorly worded question, but it is representative of actual questions on the insurance licensing test. You have to go with answer "D"...While it is NOT technically correct, it is the best available answer. You may find several questions on the insurance licensing exam where you know more than the guy who wrote the question!


You know better than anybody else how you are wired and what works for you, if you are not sure of the answer you can "mark the question for review" and come back to it after you have finished the test. At TESTivity we believe this is a BAD strategy. When you are in the testing center you mentality should be:

If I don't know the answer now, I am not going to know it 45 minutes from now...why would I want to mark it for review and then come back and stare at it again?!?

Eliminate the responses you know are wrong, and then make your best guess. Don’t be afraid to guess, you can miss several questions and still pass the licensing exam! Go with your “gut instinct”, first thoughts are often correct. If one answer feels right or sounds right, just pick it and move on. Assuming you have studied properly there is a reason that particular answer feels right. You probably just saw it in the video, or mind map, or crossword; or heard it in the audio course...or saw in the online insurance license text book. It is floating around in your subconscious...go with it!

DO NOT review the full exam once you are finished. If you review the full exam you may get nervous or confused, start second guessing yourself and start changing answers. Statistically, you will more often change a correct answer to an incorrect answer if you go back and start changing them. We hear this all the time:

"I got a 68%...When I was finished I had 15 questions marked for review, I went back and changed my answer on several of them."

Well, golly. Betcha a dollar you had a passing score before you "reviewed" your answers!

There are however, situations where you may find another question later in the same licensing test that provides the answer to a question that you "guessed" on earlier. By all means, go back and change your answer!


Don't choose the first answer that seems correct--read all of the answers! There may very well be another available answer that is even MORE correct. Also, NEVER pick an answer that you have not heard of. The fine people who write the questions for the insurance exam will make up words that don't even exist and use them as available answers. If it was not covered in the TESTivity Virtual Learning Experience, it is NOT a correct answer on the insurance licensing exam.

Example #2

Who has the ability to absolutely assign a Variable Annuity to an investor through a viatical settlement?

  1. The annuitant
  2. The beneficiary
  3. The viatee
  4. The owner of the annuity

What makes this question tricky is that through your studies or through life experience you probably know that most annuities are annuitized over the life of the owner, making the owner the annuitant. To put it another way, the owner and the annuitant are usually the same person. So, if you were moving too fast, just skimming the available answers, at first glance "A" seems like a correct answer...But "D" is a MORE correct answer!

You could, for example own an annuity contract and annitize it over the life expectancy of your spouse, or your child, or your business partner. In any of these scenarios, you would own (and control) the contract, but you are NOT the annuitant.


Be on the look out for the words "except" "unless" "not" "if" and "until". Some testing centers print them in ALL CAPS, and they mean that you have to look for a response that is not correct. (None of the following are false EXCEPT --or-- Which of the following is NOT unlawful?)

Example #3

None of the following causes of loss are extended coverages in a Dwelling Form EXCEPT:

  1. Hostile fire
  2. Personal injury
  3. Hail
  4. Lightning

These EXCEPT questions are a very challenging format. What the above question is actually asking (and how we would pose the question in English) is “Which of the following causes of loss is an extended coverage?” In the TESTivity Virtual Learning Experience you will learn the correct answer is C. Wind, Hail, Aircraft, Riot, Vehicular, Volcanic, Electrical, and Smoke are your extended coverages in a Dwelling Form.

Even if you study right, and you know the correct answer it is easy to miss a question like this just because of the format. Try to "mentally rephrase" these questions, they are all over the exam!


Some of the double negative format questions can be useful because they give you three true statements that may help you answer other questions you will encounter later in the exam. Using the above example, let's assume you are not really solid on ALL of the extended coverages but you ABSOLUTELY know that Hail is one of them...Well, you now also know that Hostile fire, Personal injury and Lightning are absolutely NOT extended coverages.

Example #4

An insurance producer could lose their license for any of the following EXCEPT:

  1. Twisting
  2. Rebating
  3. Selling insurance with a non-resident license
  4. Conducting a controlled business

If you know that there is nothing at all wrong with selling insurance with a non-resident license, you now know that twisting, rebating, and conducting a controlled business are problematic. You may be able to use this information in another question later in the exam.


If two answers appear to be the opposite of one another, pick one of them! You just increased your odds to 50/50 on the question. Whatever the question is asking, if two answers contradict each other, one of them is correct. That is just how a multiple choice question works.

Example #5

If the wording of an insurance policy conflicts with state law which of the following is true?

  1. The policy is void
  2. The policy will be amended to minimum conformity with state statutes
  3. The insured is entitled to a Pro Rata refund of unearned premiums
  4. The policy will be amended to maximum conformity with state statutes

Answers "B" and "D" contradict each other, they are opposites...PICK ONE OF THEM. Even if you are flat out guessing on this question, you have increased your odds to 50%! If you are curious "B" is the correct answer. In english we would just say "State law will always trump the wording of an insurance policy."


If 2 answers mean the same thing, ELIMINATE them both! Again, you now have a 50/50 chance on the question.

Example #6

Damage resulting from ANY cause of loss would be covered unless specifically excluded in writing in any of the following policies EXCEPT:

  1. Special Form
  2. All-Risk Coverage Form
  3. Open Peril Policy
  4. Dwelling Policy Broad Form

The correct answer is "D". In the TESTivity Virtual Learning Experience you will learn that Special Form, All-Risk Coverage Form and Open Peril Policy all MEAN THE SAME THING! These synonymous answers MUST be eliminated. If I pick Answer A and you pick answer "B" or "C", how are you right and I am wrong -- or vice versa? If answer "A" is correct, so is answer "B" and so is answer "C" and there can only be 1 correct answer.


Quite often the format will allow you to approach the question as if it were four "true/false" questions. Take each available answer in turn and ask, "Is this true or false?" This technique is useful to eliminate incorrect answers.

Example #7

Cash values must be made available via policy loan on which of the following?

  1. Decreasing Term Life Insurance Policy
  2. Fixed Annuity
  3. 10 Year Level Premium Term Life Insurance Policy
  4. Variable Adjustable Life Insurance Policy

OK, let's tackle each answer as if it were a true/false question:

  • True or False... Cash values must be made available via policy loan on a Decreasing Term Life Insurance Policy
  • False. Term policies do not accumulate cash values and have no loan provisions.
  • True or False... Cash values must be made available via policy loan on a Fixed Annuity
  • False. There is no such thing as a policy loan from an annuity.
  • True or False... Cash values must be made available via policy loan on a 10 Year Level Premium Term Life Insurance Policy
  • False. Again, term policies do not accumulate cash values and have no loan provisions.
  • True or False... Cash values must be made available via policy loan on a Variable Adjustable Life Insurance Policy
  • True. ALL permanent policies accumulate cash value, cash value must be made available via policy loan. (You know it is a permanent policy because ALL Variable and ALL adjustable polices are permanent policies.) You will learn all about it in the TESTivity Virtual Learning Experience.


Unless you absolutely KNOW it is a correct answer, eliminate answers with definitive words such as:

  • Never
  • Will
  • Only
  • Must
  • Always

On a multiple choice test, definitive words are problematic as a correct answers. There is almost always an exception to the rule you are being asked about in the question! Stick with answers that are NOT definitive like:

  • With the permission of
  • Commonly
  • Usually
  • Typically
  • Generally

Going back to example #1, it is a generally true statement to say:

"The owner of a qualified retirement plan must begin taking required minimum distributions no later than April first of the year following the year they attain age 70 1/2."

Generally true...Yes. But the word MUST takes a generally true statement and makes it a piece garbage, remember if you are still working you are not required to take the RMD...To take it a step further, even if you weren't working you could refuse to take the RMD and just pay the penalty. Definitive words do not make good answers!


Keep in mind, these are guessing techniques...the best way to pass the exam is to know the correct answer, pick it and move on to the next question. If you do find yourself guessing try to employ 1 or more of these strategies rather than just "guess". There are so many formats of a multiple choice question that work with this one, we call it the Duck, Duck, Duck, GOOSE!

If 1 answer stand out as being notably different that the other 3, pick it. It is creepy how well this one works!

  • If you have 3 annuities and an insurance policy, pick the insurance policy.
  • If you have 3 liability policies and a property policy, pick the property policy.
  • If you have 3 term policies and a permanent policy, pick the permanent policy.
  • If you have 3 settlement options and a non-forfeiture option, pick the non-forfeiture option.
  • If you have 3 required policy provisions and an optional provision, pick the optional provision.
  • ...You get the point.

Example #8

Which of the following is an insurable peril?

  1. Storing oily rags near a furnace
  2. Storing matches within the reach of small children
  3. Storing gasoline in the basement
  4. House fire

This is a classic Duck, Duck, Duck, GOOSE! example. Let's assume you see this question on the P&C insurance exam, you did not study right and you have no idea what an "insurable peril" is; you are flat out guessing on this question. 3 of the answers are quite similar and 1 stands out as being different, pick the one that stands out as being different. Here were have 3 hazards and 1 peril (the house fire); so even if you have no idea what they are asking, you can still "guess" correctly simply by employing some basic deductive reasoning skills.


When you are sitting in the testing center staring at the screen you will be amazed by how much of the exam is "definitional". Quite often if you know what the word means, the underlying question is very entry level. But if you don't know what the word means you will be flat out guessing on an easy question!

Example #9

A rating on an insurance policy has what effect?

  1. Extended policy period
  2. Increased premium
  3. Streamlined underwriting
  4. Guaranteed issuance

Well, do you know what a rating is? If in the eyes of the underwriter there is something wrong with you (you're fat, you're old, you're diabetic, you like to hang glide, you are SCUBA certified, you have a DUI on your driving record etc.) they are going to rate your policy and charge you more for the insurance.

This is a simple definition question, a rating on a policy results in an increased premium. If you miss questions like this you deserve to fail the test, and the fact is there are TONS of questions like this on EVERY insurance licensing exam!

Do yourself a couple of favors, first enroll in the TESTivity Virtual Learning Experience so we can tell you everything you are going to see on the test. Second spend some time with our Glossary of Testable Insurance Terms, it is guaranteed to increase your score on the exam. Because we love you and want you to pass the insurance exam, we make it available to the world para gratis.

If you do not habla espanol that means "for gratis".

The TESTivity Virtual Learning Experience Includes EVERYTHING You Need to Pass the Insurance Licensing Exam.


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