Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
What is considered a valid reason for small businesses to insure the
lives of its major shareholders?
To pay for final expenses
Reduce the company's tax liability
To provide an income for the surviving dependents
Fund a buy-sell agreement -
correct answer ✅Fund a buy-sell agreement
Which of these factors does NOT influence an applicant's need for
life insurance?
Future educational costs of the dependents
Number of dependents
Lifestyle of the applicant
Self-maintenance expenses -
correct answer ✅Self-maintenance expenses
Which statement regarding third-party ownership of a life insurance
policy is true?
It is illegal in most states
Policy cannot be assigned once issued
,Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
Beneficiary is required to be irrevocable
It is used extensively in estate-planning as well as business
circumstances -
correct answer ✅It is used extensively in estate-planning as well as
business circumstances
What type of life policy has a death benefit that adjusts periodically
and is written for a specific period of time?
Endowment
20-year paid up policy
Modified whole life
Decreasing term -
correct answer ✅Decreasing term
Which of these statements describe a Modified Endowment
Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a
policy and still have it recognized as a life insurance contract
Falls below the minimum amount of premium that can be paid into
a policy and still have it recognized as a life insurance contract
,Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
The 7-pay test is used to determine the minimum death benefit of
the policy
The 7-pay test is used to determine the maximum death benefit of
the policy -
correct answer ✅Exceeds the maximum amount of premium that
can be paid into a policy and still have it recognized as a life
insurance contract
What type of life insurance are credit policies issued as?
Universal
Variable
Whole
Term -
correct answer ✅Term
Which of these would be considered a Limited-Pay Life policy?
Renewable Term to Age 100
Straight Whole Life
10-year Renewable and Convertible Term
, Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
Life Paid-Up at Age 70 -
correct answer ✅Life Paid-Up at Age 70
Which of the following features of a group Term Life policy enables
an individual to leave the group and continue his or her insurance
without providing evidence of insurability?
Insuring Agreement
Incontestable Period
Owner's Rights clause
Conversion privilege -
correct answer ✅Conversion privilege
Which provision allows the policyowner to change a term life policy
to a permanent one without providing proof of good health?
Adjustable
Exchange
Modification
Conversion -
correct answer ✅Conversion
Policies Exam Questions & Answers
(Grade A+)
What is considered a valid reason for small businesses to insure the
lives of its major shareholders?
To pay for final expenses
Reduce the company's tax liability
To provide an income for the surviving dependents
Fund a buy-sell agreement -
correct answer ✅Fund a buy-sell agreement
Which of these factors does NOT influence an applicant's need for
life insurance?
Future educational costs of the dependents
Number of dependents
Lifestyle of the applicant
Self-maintenance expenses -
correct answer ✅Self-maintenance expenses
Which statement regarding third-party ownership of a life insurance
policy is true?
It is illegal in most states
Policy cannot be assigned once issued
,Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
Beneficiary is required to be irrevocable
It is used extensively in estate-planning as well as business
circumstances -
correct answer ✅It is used extensively in estate-planning as well as
business circumstances
What type of life policy has a death benefit that adjusts periodically
and is written for a specific period of time?
Endowment
20-year paid up policy
Modified whole life
Decreasing term -
correct answer ✅Decreasing term
Which of these statements describe a Modified Endowment
Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a
policy and still have it recognized as a life insurance contract
Falls below the minimum amount of premium that can be paid into
a policy and still have it recognized as a life insurance contract
,Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
The 7-pay test is used to determine the minimum death benefit of
the policy
The 7-pay test is used to determine the maximum death benefit of
the policy -
correct answer ✅Exceeds the maximum amount of premium that
can be paid into a policy and still have it recognized as a life
insurance contract
What type of life insurance are credit policies issued as?
Universal
Variable
Whole
Term -
correct answer ✅Term
Which of these would be considered a Limited-Pay Life policy?
Renewable Term to Age 100
Straight Whole Life
10-year Renewable and Convertible Term
, Pearson Vue - Types of Life Insurance
Policies Exam Questions & Answers
(Grade A+)
Life Paid-Up at Age 70 -
correct answer ✅Life Paid-Up at Age 70
Which of the following features of a group Term Life policy enables
an individual to leave the group and continue his or her insurance
without providing evidence of insurability?
Insuring Agreement
Incontestable Period
Owner's Rights clause
Conversion privilege -
correct answer ✅Conversion privilege
Which provision allows the policyowner to change a term life policy
to a permanent one without providing proof of good health?
Adjustable
Exchange
Modification
Conversion -
correct answer ✅Conversion
