Life Insurance License Exam Test Exam
Questions and Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A.
1. Which type of life insurance provides coverage for a specific
period and pays a death benefit only if the insured dies during
that term?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: A
Rationale:
Term life insurance provides temporary coverage, usually at lower
premiums, and pays only if the insured dies within the term.
2. Which type of life insurance accumulates cash value and
provides lifetime protection?
A. Whole life insurance
B. Term life insurance
C. Group life insurance
D. Credit life insurance
Correct Answer: A
Rationale:
Whole life combines death benefit with a cash value component that
grows over time.
3. In life insurance, the “insurable interest” requirement means:
,A. The policyowner must benefit financially or emotionally from the
continued life of the insured
B. Anyone can buy a policy on anyone
C. Only employers can buy policies on employees
D. Only banks can buy policies on borrowers
Correct Answer: A
Rationale:
Insurable interest ensures the policyowner would suffer a loss if the
insured dies.
4. Which of the following is an example of a renewable term
policy?
A. A policy that allows renewal at the end of the term without a
medical exam
B. A policy that automatically converts to whole life
C. A policy that pays dividends
D. A universal life policy
Correct Answer: A
Rationale:
Renewable term allows policy continuation regardless of health,
usually with higher premiums at renewal.
5. Which type of life insurance policy has flexible premiums and a
flexible death benefit?
A. Universal life insurance
B. Whole life insurance
C. Term life insurance
D. Endowment
Correct Answer: A
Rationale:
Universal life offers adjustable premiums and benefits to fit the
policyowner’s needs.
6. In NY, the primary regulator of insurance companies is:
,A. New York State Department of Financial Services (DFS)
B. Federal Reserve
C. SEC
D. IRS
Correct Answer: A
Rationale:
DFS regulates insurance operations, licensing, rates, and consumer
protection in NY.
7. What does the “contestability period” refer to in life insurance?
A. Time during which the insurer can deny a claim due to
misrepresentation
B. Time to pay premiums
C. Time to change beneficiaries
D. Time to cancel policy
Correct Answer: A
Rationale:
Typically the first two years; after that, claims are generally
incontestable except for fraud.
8. The primary purpose of a “beneficiary designation” is to:
A. Specify who receives the death benefit
B. Determine the policy premium
C. Determine underwriting requirements
D. Assign insurable interest
Correct Answer: A
Rationale:
Proper designation ensures death benefits are paid to intended
recipients.
9. Which life insurance policy allows investment in separate
accounts such as stocks or bonds?
A. Variable life insurance
B. Whole life insurance
, C. Term life insurance
D. Credit life insurance
Correct Answer: A
Rationale:
Policy value fluctuates based on performance of the underlying
investments.
10. A key difference between term and permanent life insurance
is:
A. Term has no cash value; permanent has cash value
B. Term is permanent; permanent expires
C. Term pays dividends; permanent does not
D. Term requires medical exam; permanent does not
Correct Answer: A
Rationale:
Permanent policies build cash value over time; term policies do not.
11. In NY, how often must a life insurance licensee complete
continuing education?
A. Every two years
B. Every year
C. Every three years
D. Every five years
Correct Answer: A
Rationale:
Licensees must complete DFS-approved CE to maintain licensure.
12. Which type of beneficiary receives the death benefit if the
primary beneficiary predeceases the insured?
A. Contingent beneficiary
B. Revocable beneficiary
C. Irrevocable beneficiary
D. Trust beneficiary
Questions and Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A.
1. Which type of life insurance provides coverage for a specific
period and pays a death benefit only if the insured dies during
that term?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: A
Rationale:
Term life insurance provides temporary coverage, usually at lower
premiums, and pays only if the insured dies within the term.
2. Which type of life insurance accumulates cash value and
provides lifetime protection?
A. Whole life insurance
B. Term life insurance
C. Group life insurance
D. Credit life insurance
Correct Answer: A
Rationale:
Whole life combines death benefit with a cash value component that
grows over time.
3. In life insurance, the “insurable interest” requirement means:
,A. The policyowner must benefit financially or emotionally from the
continued life of the insured
B. Anyone can buy a policy on anyone
C. Only employers can buy policies on employees
D. Only banks can buy policies on borrowers
Correct Answer: A
Rationale:
Insurable interest ensures the policyowner would suffer a loss if the
insured dies.
4. Which of the following is an example of a renewable term
policy?
A. A policy that allows renewal at the end of the term without a
medical exam
B. A policy that automatically converts to whole life
C. A policy that pays dividends
D. A universal life policy
Correct Answer: A
Rationale:
Renewable term allows policy continuation regardless of health,
usually with higher premiums at renewal.
5. Which type of life insurance policy has flexible premiums and a
flexible death benefit?
A. Universal life insurance
B. Whole life insurance
C. Term life insurance
D. Endowment
Correct Answer: A
Rationale:
Universal life offers adjustable premiums and benefits to fit the
policyowner’s needs.
6. In NY, the primary regulator of insurance companies is:
,A. New York State Department of Financial Services (DFS)
B. Federal Reserve
C. SEC
D. IRS
Correct Answer: A
Rationale:
DFS regulates insurance operations, licensing, rates, and consumer
protection in NY.
7. What does the “contestability period” refer to in life insurance?
A. Time during which the insurer can deny a claim due to
misrepresentation
B. Time to pay premiums
C. Time to change beneficiaries
D. Time to cancel policy
Correct Answer: A
Rationale:
Typically the first two years; after that, claims are generally
incontestable except for fraud.
8. The primary purpose of a “beneficiary designation” is to:
A. Specify who receives the death benefit
B. Determine the policy premium
C. Determine underwriting requirements
D. Assign insurable interest
Correct Answer: A
Rationale:
Proper designation ensures death benefits are paid to intended
recipients.
9. Which life insurance policy allows investment in separate
accounts such as stocks or bonds?
A. Variable life insurance
B. Whole life insurance
, C. Term life insurance
D. Credit life insurance
Correct Answer: A
Rationale:
Policy value fluctuates based on performance of the underlying
investments.
10. A key difference between term and permanent life insurance
is:
A. Term has no cash value; permanent has cash value
B. Term is permanent; permanent expires
C. Term pays dividends; permanent does not
D. Term requires medical exam; permanent does not
Correct Answer: A
Rationale:
Permanent policies build cash value over time; term policies do not.
11. In NY, how often must a life insurance licensee complete
continuing education?
A. Every two years
B. Every year
C. Every three years
D. Every five years
Correct Answer: A
Rationale:
Licensees must complete DFS-approved CE to maintain licensure.
12. Which type of beneficiary receives the death benefit if the
primary beneficiary predeceases the insured?
A. Contingent beneficiary
B. Revocable beneficiary
C. Irrevocable beneficiary
D. Trust beneficiary
