Iowa Health Insurance Practice Exam Free - 2026

• A. All 40 (100 percent)
• B. At least 75 percent of the then eligible employees, which is 30
• C. At least 50 percent, which is 20
• D. At least 65 percent, which is 26

Correct answer: B. At least 75 percent of the then eligible employees, which is 30

Explanation: Section 509.1(1)(b) provides that a group accident and health policy on which part of the premium comes from employee contributions may be placed in force only if at least seventy-five percent of the then eligible employees (excluding those whose evidence of insurability is unsatisfactory) elect to make the required contributions; 75 percent of 40 is 30. A noncontributory policy must insure all eligible employees, so 100 percent applies only there. Fifty percent is not an Iowa threshold, and 65 percent applies only to teachers' and lawyers' association groups. See Iowa Code § 509.1.

• A. Nothing beyond the claim amount
• B. Interest at 5 percent per annum
• C. Interest at 10 percent per annum on the late clean claim
• D. A flat $100 penalty payable to the provider

Correct answer: C. Interest at 10 percent per annum on the late clean claim

Explanation: Iowa Code section 507B.4A(2)(d) requires that payment of a clean claim include interest at the rate of ten percent per annum when the insurer, or an entity processing claims for it, fails to timely pay. Section 507B.4(3)(p) makes failure to pay that interest an unfair trade practice, and 507B.7(1)(c) lets the commissioner order the interest. The rule does not apply to liability, workers' compensation, auto or homeowners medical payments, disability income, or long-term care insurance. Five percent and a flat fee are not the statutory remedy. See Iowa Code § 507B.4A.

• A. Not more than $1,000 per act with an aggregate cap of $10,000, regardless of knowledge
• B. Criminal fines only; no administrative penalty is available
• C. Not more than $500 per act with no aggregate cap
• D. Not more than $5,000 per act, not to exceed $50,000 in any one six-month period, and the license may also be suspended or revoked

Correct answer: D. Not more than $5,000 per act, not to exceed $50,000 in any one six-month period, and the license may also be suspended or revoked

Explanation: Section 507B.7(1)(a) sets the civil penalty at not more than $1,000 per act with a $10,000 aggregate, unless the person knew or reasonably should have known of the violation, in which case it is not more than $5,000 per act, not to exceed $50,000 in any one six-month period. Section 507B.7(1)(b) also allows suspension or revocation of the license of a person who knew or should have known. Because this producer had knowledge, the higher tier applies; the $1,000/$10,000 tier is for unknowing violations, and $500 is not in the statute. See Iowa Code § 507B.7.

• A. Report the action to the Iowa commissioner within 30 days of its final disposition, including a copy of the order
• B. Nothing, because the action occurred in another state
• C. Report the action at the next Iowa license renewal
• D. Report only if the Nebraska license was suspended or revoked

Correct answer: A. Report the action to the Iowa commissioner within 30 days of its final disposition, including a copy of the order

Explanation: Section 522B.16(1) requires a producer to report to the commissioner any administrative action taken against the producer in another jurisdiction, or by another governmental agency in Iowa, within thirty days of the final disposition, with a copy of the order, consent, and other relevant documents. Subsection 2 separately requires reporting a criminal prosecution within 30 days of the initial pretrial hearing. The duty applies to any administrative action, not only suspensions, and waiting until renewal or ignoring out-of-state actions violates the statute (see also 191 IAC 10.20(4)(b)). See Iowa Code § 522B.16.

• A. Only one of the two parties makes a legally enforceable promise under the contract
• B. The dollar amounts exchanged by the two parties are likely to be unequal, depending on chance
• C. Certain duties of the parties arise only if specified events, such as a covered loss, actually occur
• D. The terms are drafted by one party and offered on a take-it-or-leave-it basis

Correct answer: B. The dollar amounts exchanged by the two parties are likely to be unequal, depending on chance

Explanation: Aleatory refers to the unequal exchange of value: an insured may pay a few premiums and collect a large benefit, or pay for decades and collect nothing. A one-sided enforceable promise describes a unilateral contract, and a take-it-or-leave-it form drafted by the insurer describes adhesion. Duties triggered by specified events describe the conditional nature of the contract.

• A. By averaging the two competing interpretations
• B. In favor of the insurer, since it accepted the risk
• C. In favor of the insured, since the insurer drafted the language
• D. Strictly according to the producer's sales illustration

Correct answer: C. In favor of the insured, since the insurer drafted the language

Explanation: Adhesion means the applicant had no chance to negotiate wording, so the drafting party bears the cost of its own imprecision and ambiguity is resolved against the insurer. Favoring the insurer would reward sloppy drafting. Sales illustrations are not contract terms under the entire contract provision, and courts do not split the difference between readings.

• A. The policy cannot take effect until the applicant's insurable interest in the insured has been proven in a court proceeding
• B. The insured must keep paying premiums for the full policy term, or the insurer may sue for breach of contract to collect
• C. Both parties exchange promises of equal value at the moment of issue, so each is bound to perform in return for the other
• D. Only the insurer makes a legally enforceable promise, while the insured may stop paying premiums and simply let coverage end

Correct answer: D. Only the insurer makes a legally enforceable promise, while the insured may stop paying premiums and simply let coverage end

Explanation: Unilateral means the promise runs one way: the insurer is bound to pay covered claims, but the insured is never legally compelled to continue paying and may lapse the policy without being sued. Equal value at issue would contradict the aleatory nature of the contract. Insurable interest is a separate requirement and is evaluated at application, not proven in court as a condition of effectiveness.

• A. Representations, which must be substantially true to the best of the applicant's knowledge and belief
• B. Warranties, which must be literally and exactly true, or the policy is void from the date of issue
• C. Nonbinding statements of opinion that carry no underwriting consequence and cannot support rescission
• D. Conditions precedent that suspend all coverage until each statement has been independently verified by the insurer

Correct answer: A. Representations, which must be substantially true to the best of the applicant's knowledge and belief

Explanation: Statements by an applicant are representations, judged by whether they are substantially true and material, which is why an innocent error rarely voids coverage. Warranties demand literal exactness and are generally reserved for commercial contracts, not personal health applications. The statements are far from consequence-free, since a material misrepresentation can support rescission during the contestable period.

• A. Rebating of a premium inducement
• B. Concealment of a material fact
• C. Twisting to induce a replacement
• D. Estoppel based on prior conduct

Correct answer: B. Concealment of a material fact

Explanation: Concealment is the silent withholding of a material fact the applicant knew and should have disclosed, and it can support rescission even without a specific question when the fact is clearly material to the risk. Twisting is inducing a policy replacement through misrepresentation, and rebating is giving something of value outside the contract to induce a sale. Estoppel prevents a party from asserting a right it has already given up, which is unrelated to the applicant's silence.

• A. Indemnity, which limits the insured's recovery to actual loss and so prevents the insurer from profiting from a technical lapse
• B. Subrogation, which transfers the insured's rights against a responsible third party to the insurer after a claim is paid
• C. Estoppel, which bars the insurer from asserting a right its own conduct led the insured to believe was waived
• D. Coinsurance, which splits covered costs between the insurer and the insured according to a fixed percentage formula

Correct answer: C. Estoppel, which bars the insurer from asserting a right its own conduct led the insured to believe was waived

Explanation: Waiver is the voluntary giving up of a known right, and estoppel is the legal consequence that stops the insurer from later reclaiming that right after the insured relied on the pattern of acceptance. Subrogation concerns recovery from a responsible third party, and indemnity limits an insured to actual loss so no profit results. Coinsurance is a cost-sharing formula and has nothing to do with premium timing.

• A. Only at the time a claim is filed, when the insurer verifies that the claimant would actually suffer a loss
• B. At no point, because insurable interest is a requirement of property and casualty insurance rather than health insurance
• C. Continuously from application through claim, so the policy automatically terminates the moment the relationship ends
• D. At the time of application, when the applicant must have a legitimate interest in the insured's continued well-being

Correct answer: D. At the time of application, when the applicant must have a legitimate interest in the insured's continued well-being

Explanation: For personal insurance, insurable interest is tested at inception, so an applicant must show a genuine stake such as insuring themselves, a spouse, or a dependent, which prevents wagering on a stranger's health. Requiring it only at claim time would defeat that anti-wagering purpose. Personal insurance does not require continuous insurable interest the way property insurance does, and the concept is certainly not limited to property coverage.

• A. Requiring evidence of insurability and applying preexisting condition limits or waiting periods
• B. Charging a single community-rated premium regardless of health, so applicants have no reason to conceal conditions
• C. Paying producers a higher first-year commission on larger cases, so they bring in healthier applicants
• D. Extending the free look period from 10 days to 30 days, giving the insurer more time to review the risk

Correct answer: A. Requiring evidence of insurability and applying preexisting condition limits or waiting periods

Explanation: Adverse selection is the tendency of higher-risk people to seek coverage more aggressively, so insurers respond with evidence of insurability, risk classification, and waiting periods that keep pricing aligned with risk. Charging everyone the same regardless of health would invite exactly that imbalance. Commission structures affect distribution economics, and a longer free look protects consumers but does nothing to screen risk. Note that ACA-compliant individual major medical is guaranteed issue and may not use medical underwriting or preexisting condition exclusions, so these practices now apply mainly to excepted benefits.