← All guides

Types of Policies on the California Life & Health Insurance License (CA-LH): What's Tested and How to Study It

In short

Types of Policies is where the CA-LH exam covers life products: whole life, interest and market-sensitive contracts, term, annuities, and the combination plans built from them. Only Ever budgets 5 hours across 5 topics for it, out of 60 hours for the whole exam. Our guidance for the section is to spend that time telling apart products that look alike on paper.

The big ideas

Five product families sit in this section of the California Life & Health Insurance License exam. Our guidance is to spend your study time on the boundaries between them, memorizing which features belong to which product name.

Traditional Whole Life Products is the baseline the other four are measured against. Coverage is written to run for life, the premium is set at the outset and held level, and the contract builds a cash value as it goes. That cash value is why nonforfeiture options exist. They are the guarantees that let the policyowner reach the money when a policy is surrendered or allowed to lapse.

Survival data plotted from a U.S. life table: the share of a starting group still alive at each age. A whole life contract is written across the whole of this curve rather than a slice of it, which is what makes it the baseline the other families are described against.
Survival data plotted from a U.S. life table: the share of a starting group still alive at each age. A whole life contract is written across the whole of this curve rather than a slice of it, which is what makes it the baseline the other families are described against.

Interest, Market-Sensitive, and Adjustable Life is what happens when the pieces of that contract are pulled apart and made adjustable. Universal life is the plain case: the premium becomes flexible rather than fixed, and the cost of insurance, the expenses and the cash value are shown as separate moving parts. Variable life changes a different piece — where the cash value is invested, and therefore who carries the investment risk. Keep two axes apart in your head: how flexible the premium is, and where the cash value sits. A product can move on either, on both, or on neither.

A black box judged only by what goes in and what comes out, next to the same system opened up. That is the picture to hold for this topic: the traditional contract quotes you one premium, the adjustable products show the parts separately and let you move them.
A black box judged only by what goes in and what comes out, next to the same system opened up. That is the picture to hold for this topic: the traditional contract quotes you one premium, the adjustable products show the parts separately and let you move them.
Source: Blackbox3D-withGraphs by Original: Krauss Vector: Pduive23, CC BY-SA 4.0.

Term Life Insurance is the family with the fewest moving parts, and the one worth being exact about anyway. Term buys cover for a stated period. If the insured dies inside that period, the policy pays. If the period runs out first, the cover stops there, and no cash value has built underneath to forfeit. That last point is the hinge for this section. Permanent against temporary is the first sort you should be able to do on any product put in front of you.

Renting is the closest everyday analogy to term cover: you pay for the use of something across a fixed period and hold no equity in it when the period ends.
Renting is the closest everyday analogy to term cover: you pay for the use of something across a fixed period and hold no equity in it when the period ends.
Source: 2019.07.10 metro California-housing Blog-post related by TheSanFranRacer, CC BY-SA 4.0.

Annuities run the money in the other direction, and they are the topic where flashcards earn their keep. An annuity has two phases with different rules, and keeping them apart is most of the work in this topic. Money goes in and grows during the accumulation period. Money comes back out during the payout period, under whichever payout option was chosen. Learn the two phases as a pair, then hang the payout options off the second one.

A reservoir fills behind a dam, then releases a controlled flow downstream. An annuity has the same two phases, and they are the pair to memorize: money accumulates during the first, and is paid out during the second.
A reservoir fills behind a dam, then releases a controlled flow downstream. An annuity has the same two phases, and they are the pair to memorize: money accumulates during the first, and is paid out during the second.
Source: Hydroelectric dam by Tennessee Valley Authority; SVG version by Tomia, CC BY 2.5.

Combination Plans and Variations is the family assembled from the other four — contracts that mix term with permanent cover, or cover two lives under a single policy. Save it for last. Once you can name the parts, a combination plan reads easily.

A bank vault door: heavy, and assembled from parts that each do one job. Combination plans read the same way — take them apart into the families they were built from and the mechanism stops being mysterious.
A bank vault door: heavy, and assembled from parts that each do one job. Combination plans read the same way — take them apart into the families they were built from and the mechanism stops being mysterious.
Source: WinonaSavingsBankVault by Jonathunder, CC BY-SA 3.0.

How it shows up on the exam

Start with the shape of the paper. 150 multiple-choice questions, 180 minutes, which averages 72 seconds a question across the whole exam. California's pass mark is 60%, so 90 of the 150 have to be right and 60 can be wrong. Confirm that figure with the Department of Insurance in the state where you are testing — 60% is California's requirement, and many states set 70% instead.

Our breakdown of this exam has ten sections, and Types of Policies is one of the lighter ones: 5 hours across 5 topics, inside 60 hours for the whole exam. That works out at an hour a topic. General Insurance Regulation, where California's own codes live, takes 15 hours in the same plan — three times as long as this section.

Read the 5 hours as our recommendation for study time. We do not hold a per-section question count for this exam, so we print no figure for it, and the hour budget is not a stand-in for one. The CDI's official exam info and syllabus page is where to confirm anything official.

Study it in this order:

Sort every product into temporary cover or permanent cover →
learn whole life's features until they are automatic →
add the adjustable products one at a time, universal then variable →
put annuities on flashcards, accumulation against payout.

Combination plans come last, once the four pure families are solid.

Flashcards suit this material. What you are memorizing is a set of feature lists attached to names, and feature lists decay unless you test yourself on them.

You are done with the 5 hours when these two questions feel obvious. Hand yourself a feature list: can you say whether it describes ordinary whole life or flexible premium universal life? And where does the accumulation period end?

Common questions

How many questions are on the CA-LH exam, and how long do I get? 150 multiple-choice questions in 180 minutes, which averages out at 72 seconds each.

How many of those questions come from Types of Policies? We do not have a per-section question count for this exam, and we will not guess at one. Our 5-hour budget describes study time only.

What is the passing score? 60% in California, which is 90 of the 150 questions. Every state licensing agency sets its own requirement and many ask for 70%, so confirm yours with that state's Department of Insurance.

How much does the exam cost? Around 98intotal—theCDI′s98 in total — the CDI's 55 base fee, plus PSI's $43 convenience fee.

Where do I sit it? In person at a CDI or PSI test center, or from home through PSI Bridge remote proctoring.

How long should I study for this section? 5 hours, about an hour per topic, inside roughly 60 hours of preparation for the exam as a whole. Move hours toward whatever your practice results keep flagging.

Only Ever's study guides and practice questions for this exam are free, including the AI-generated sets other providers charge for. Try the free practice questions and score yourself one product family at a time.