In the United States, insurance professionals have to meet strict testing and licensing requirements. Since the fast-changing insurance industry has such a big impact on consumer finances and safety, federal and state administrators want to make sure that anyone who sells insurance, or who acts as an agent or advisor, has the knowledge and ethical standards to do their job right.
That’s where insurance exams come in. Insurance exams make sure that insurance professionals have the current knowledge needed to help customers make the right decisions about insurance.
There are over 3.2 million licensed insurance professionals in the United States, according to the National Association of Insurance Commissioners (NAICS). Before they could sell insurance, these professionals had to pass an exam to get licensed, and they had to meet all of the other state requirements.
Do I Need to Take the Exam?
If you want to sell insurance or act as an adjuster, advisor, or insurance agent, you will need to get licensed in your state. To obtain your license, you will need to take an insurance exam covering the type of insurance you will be selling. The different types of exams include:
· Property and Casualty Insurance
The exact type of exam you take and the licensing you apply for will depend on your career goals. For example, if you are the in the property and casualty insurance business, you have two options. You can seek a non-resident agent license or resident agent license in your state.
In many cases, a resident agent license in your state is adequate. However, if you want to handle insurance claims, you may need a non-resident agent license. As an adjuster, for example, you may be handling claims that cross state lines.
To take the exam needed to get a resident or non-resident property and casualty insurance license, you must:
- Be at least 18 years of age when you apply.
- Have six months or more of insurance-related job experience.
- Have completed a classroom course (at least 200 hours).
You must also meet other state requirements. Some states, for example, require you submit your fingerprints as part of the application process. Other states may have different requirements.
The cornerstone of the license application process is the exam. Once you pass the exam, you will be a licensed casualty and property insurance professional. Unless you are certified as a Certified Property and Casualty Underwriter (CPCU), and you have been working in the property and casualty insurance field for four years or more, you will not be exempt, and you will have to take the exam.
· Life and Health Insurance
The requirements for health and life insurance licenses vary by state. To pass the exam and get licensed, however, you will generally need:
- To take a class related to your insurance area (at least 36 hours).
- Be at least 18 years of age.
- Get at least a 70% on your insurance exam.
- Pay the required licensing and testing fees.
If you do not pass your exam on the first try, you can pay the necessary fees and try again.
Where You Live Can Affect Your Insurance Exam
States have their own insurance exams. While there are some similarities, state requirements and tests do vary. You can contact the Department of Banking and Insurance in your state to apply to take the insurance exam and get state-specific information about licensing requirements. The National Association of Insurance Commissioners (NAICS) also has a map to help you find out about licensing bodies and requirements in your state.
What You Can Expect From Your Insurance Exam
The exam for property and casualty insurance licensing professionals is computer-based. All of the questions you answer will be multiple-choice. There are two sections of the exam, each covering one insurance area. The first part of your exam will cover property insurance and will test your knowledge about:
- Insurance basics (general insurance information)
- Insurance rules and regulations
- Basic knowledge about property insurance
- Commercial package policies
- Insurance for business owners
- Related insurance types (for example, flood insurance and other insurance types)
The second part of the exam will test your knowledge of the following casualty insurance topics:
- Insurance rules and regulations
- General knowledge about insurance
- Basic knowledge about casualty insurance
- Homeowners’ insurance
- Car insurance
- Commercial package policies
- Insurance for business owners
- Related types of insurance
Life and health insurance professionals need to pass the life and health insurance exam to be licensed. The exam is also computer-based and includes direct questions, multiple choice questions, and “complete the sentence-style” questions. There are 150 questions in total, and you will have two and a half hours to complete the exam.
Immediately after you finish the test, you will know your results. As with the property and casualty exam, you will become a licensed life and health insurance professional if you score at least 70% on your exam and meet the other requirements of licensing.
This exam, too, is divided into two parts. One deals with life insurance, and the other deals with health insurance. The life insurance part of the exam will ask questions about:
- Your general knowledge of life insurance
- Life insurance policies
- Policy riders and options in life insurance coverage
- Tax issues involving life insurance
- Annuities and qualified life insurance plans
- Annuity policies
- Tax issues involved in annuity policies
The health insurance part of the exam will test your knowledge of:
- The basics of health insurance
- Dental, individual, and group policies
- Medical plans
- Disability income
- Individual insurance involving special needs
- Health Maintenance Organizations (HMOs)
- Tax issues that can arise with health insurance
One thing to keep in mind is that both the health and life insurance exam and the property and casualty insurance exam will include scored and non-scored questions. The scored questions count towards your grade and will determine whether you become licensed or not. The non-scored questions, which are sometimes known as trial questions, will not affect your grade. You will still need to answer these questions, though. They are used by your state when determining what questions will be used on future exams.
What’s confusing about non-scored questions is that they are not usually separate from the rest of your exam. You will not know which questions count towards your test results, and which won’t count. You may encounter a question on the exam that doesn’t seem to come from any areas covered by the exam. This is likely to be a non-scored question.
Don’t feel anxious about these types of questions. Answer each question as well as you can and move on. Don’t spend extra time on a question that doesn’t seem to fit in with the rest of the test — this might be a question that doesn’t even count towards your exam score.
How to Pass Your Life Insurance Exam or Other Insurance Exam
Are you looking for tips on how to pass the property and casualty insurance exam or other insurance exam? For your best chances of passing, you should:
- Start studying early. As soon as you realize you would like to enter the insurance industry and will need to pass the exam, start the studying process. The longer you have to start practicing life and health insurance exam questions and answers, the more likely you are to absorb enough information to score at least 70% on your exam. Keep in mind that you will need to learn several topics and areas for your exam.
- Seek accommodations if you need them. If you are disabled, you can seek accommodations under the Americans with Disabilities Act (ADA). In most states, you will need to submit the correct forms 30 days before your insurance test. If you need accommodations for ESL (English as a Second Language) learners, you will also need to submit your request well before the test. If you need any accommodation, it is important to seek it. The insurance exams assume an excellent grasp of English and are not automatically accessible to someone with different levels of ability.
- Know what will be on your exam. The Education Testing Service (ETS) administers the insurance exam for many states. Their website has many outlines of what is covered on state insurance exams. Print out the outline for your state and use this as a study guide to make sure you cover every area. The site even has practice exams to test yourself.
- Take a class. StateCE offers self-directed courses created by insurance industry professionals. These classes are designed to help you master the exam and get licensed. The course covers everything you need to know in order to successfully pass your exam, including life, health, property, casualty, homeowners, auto, annuities, and long-term care.
- Practice with exam questions. Use practice insurance or life insurance test questions offered by your class or practice questions you find online. If you get answers right or wrong, review your property or life and health insurance exam questions and answers. Try to figure out what went wrong. A significant part of your study time should focus on practice questions. It is the best way to prepare for what will happen on exam day. Courses such as the insurance license courses at StateCE will provide you with lots of questions and answers.
- Study at your best time. Are you an early bird or a night owl? Figure out when you are most alert and study then. You will probably find that it’s easier to focus.
- Actively study. By simply reading information, you won’t remember very much, especially if you’re reading about something fairly technical, such as tax issues surrounding annuities. Always try to immediately do something with the material as you study. As you read, take notes, summarize what you read, quiz yourself on what you’ve learned, or write what you’ve learned in your own words. Don’t read more than a page without doing something with the material. A great way to study for the insurance exam is to create study questions and answers from your materials. That way, you have practice questions you can study with later.
- Focus on what you don’t know. When you try practice questions, analyze your results. Are there some areas where you are not doing as well? For example, do most of your incorrect answers happen with general insurance questions or with questions related to homeowners insurance? If so, spend extra time on that section when you study.
- Bring practice and testing materials with you everywhere. Download practice property or life insurance test questions on your phone or carry index cards with you. Whenever you have a few minutes, use the extra time to study. You probably spend a lot of time waiting in lines or commuting. Transform this time into study time.
- Speak with other insurance professionals who have passed the exam. Insurance professionals can give you tips on how to pass the life insurance exam. It’s also often reassuring to speak to someone who has gone through the process successfully. If they can do it, so can you!
- Manage stress. Stress can make it hard to study and make procrastination more appealing. Find ways to handle stress. Talk to other students, take study breaks, and take good care of yourself.
- Recreate exam conditions. Insurance exams require you to stay focused, answering questions for two hours or more. Conduct mock exam times, answering practice exam questions for the same amount of time you will be tested. If you only study in short bursts, you may be daunted by having to focus for a longer period of time.
- Know what you can and cannot bring with you on exam day. Some states allow you to bring paper, while others will provide scrap paper. Some states, such as Indiana, require you to come to the exam with your pre-licensing education Certificate of Completion. Make sure you understand what you need to bring and have your materials ready.
- Prepare for test day. The day before your test, make sure you have your ID and anything else you will need for your exam. Plan to get a full, good night of sleep the day before. The extra rest will make it easier to focus. At this point, it’s unlikely that cramming will help. Eat a good breakfast before your exam so you have the fuel to get through the experience. Show up a little bit early — you don’t want to arrive harried and flustered because there was traffic.
- Read the questions carefully. When starting to answer the questions on your exam, read each of the property and life and health insurance exam questions and answers fully. Especially notice any qualifiers or double negatives. A question such as “All of these are examples of a principal except” means you are looking for an answer that is not a principal. It’s easy to overlook the extra word and assume you’re looking for an example of a principal.
- Use your exam time smartly. Try not to spend too much time working out the answer to a difficult question or going back and second-guessing questions you’ve completed. Once you get to the half-way point of the exam, consider working your way through the rest of the exam and answering all of the questions you know. Then go back and tackle the difficult ones.
For your best chance of passing the life and health or property and casualty insurance exams, take advantage of the classes that we uniquely developed to assist you. StateCE has specialist-developed courses that are designed to teach you the skills and information you need to pass the life and property and casualty insurance exams. Sign up for StateCE classes today!