LIFE & HEALTH INSURANCE EXAM (PSI) 2026/2027 | COMPLETE
EXAM QUESTIONS AND CORRECT ANSWERS LATEST
VERSION (PASS GUARANTEE)
Q1: What is life insurance?
ANSWER Life insurance is a contract between an insurer and a
policyholder where the insurer promises to pay a designated
beneficiary a sum of money upon the death of the insured person.
Q2: What are the two main types of life insurance?
ANSWER Term life insurance and permanent life insurance.
Q3: What is term life insurance?
ANSWER Term life insurance provides coverage for a specific
period (term) and pays a death benefit only if the insured dies during
that term.
Q4: What is whole life insurance?
ANSWER Whole life insurance is permanent insurance that
provides lifetime coverage with a guaranteed death benefit and fixed
premiums, plus a cash value component.
Q5: What is universal life insurance?
ANSWER Universal life insurance is flexible permanent insurance
with adjustable premiums and death benefits, combined with a cash
value account that earns interest.
,Q6: What is variable life insurance?
ANSWER Variable life insurance allows policyholders to invest the
cash value in various investment options (sub-accounts), with the
death benefit and cash value fluctuating based on investment
performance.
Q7: What is variable universal life insurance?
ANSWER Variable universal life (VUL) combines the flexibility of
universal life with the investment options of variable life, offering
adjustable premiums and investment choices.
Q8: What is the cash surrender value?
ANSWER The cash surrender value is the amount a policyholder
receives when voluntarily terminating a permanent life insurance
policy before its maturity or the insured event.
Q9: What is a death benefit?
ANSWER The death benefit is the amount paid to beneficiaries
upon the death of the insured.
Q10: What is a beneficiary?
ANSWER A beneficiary is the person or entity designated to receive
the death benefit upon the insured’s death.
Q11: What is a contingent beneficiary?
ANSWER A contingent beneficiary is the secondary recipient who
receives the death benefit if the primary beneficiary is deceased or
unable to receive it.
Q12: What is an irrevocable beneficiary?
ANSWER An irrevocable beneficiary is one whose designation
cannot be changed without their consent.
,Q13: What is a revocable beneficiary?
ANSWER A revocable beneficiary can be changed by the
policyholder at any time without consent.
Q14: What is the grace period in life insurance?
ANSWER The grace period is a set time (typically 30 or 31 days)
after a premium due date during which the policy remains in force
even if the premium is unpaid.
Q15: What is a policy loan?
ANSWER A policy loan is a loan taken by the policyholder against
the cash surrender value of a permanent life insurance policy.
Q16: What is the incontestability clause?
ANSWER The incontestability clause prevents the insurer from
voiding the policy due to misstatements in the application after the
policy has been in force for a specified period (typically 1–2 years).
Q17: What is the suicide clause?
ANSWER The suicide clause states that if the insured dies by
suicide within a specified period (usually 1–2 years) after policy
issuance, the insurer will only refund premiums paid, not the death
benefit.
Q18: What is the misstatement of age clause?
ANSWER The misstatement of age clause allows the insurer to
adjust the death benefit to the amount the premium paid would have
purchased at the correct age.
Q19: What is an accelerated death benefit rider?
ANSWER An accelerated death benefit rider allows terminally ill
policyholders to receive a portion of the death benefit while still living.
, Q20: What is a waiver of premium rider?
ANSWER A waiver of premium rider waives premium payments if
the insured becomes totally disabled, keeping the policy in force.
Q21: What is a guaranteed insurability rider?
ANSWER A guaranteed insurability rider allows the policyholder to
purchase additional coverage at specified future dates without
evidence of insurability.
Q22: What is a term conversion rider?
ANSWER A term conversion rider allows a term life policy to be
converted to a permanent policy without evidence of insurability.
Q23: What is a cost of living rider?
ANSWER A cost of living rider automatically increases the death
benefit to keep pace with inflation.
Q24: What is an accidental death benefit rider?
ANSWER An accidental death benefit rider (double indemnity) pays
an additional death benefit if death results from an accident.
Q25: What is a children’s term rider?
ANSWER A children’s term rider provides term life insurance
coverage on the policyholder’s children.
Q26: What is the difference between level term and decreasing term
insurance?
ANSWER Level term maintains the same death benefit throughout
the term; decreasing term has a death benefit that reduces over time,
often used for mortgage protection.
EXAM QUESTIONS AND CORRECT ANSWERS LATEST
VERSION (PASS GUARANTEE)
Q1: What is life insurance?
ANSWER Life insurance is a contract between an insurer and a
policyholder where the insurer promises to pay a designated
beneficiary a sum of money upon the death of the insured person.
Q2: What are the two main types of life insurance?
ANSWER Term life insurance and permanent life insurance.
Q3: What is term life insurance?
ANSWER Term life insurance provides coverage for a specific
period (term) and pays a death benefit only if the insured dies during
that term.
Q4: What is whole life insurance?
ANSWER Whole life insurance is permanent insurance that
provides lifetime coverage with a guaranteed death benefit and fixed
premiums, plus a cash value component.
Q5: What is universal life insurance?
ANSWER Universal life insurance is flexible permanent insurance
with adjustable premiums and death benefits, combined with a cash
value account that earns interest.
,Q6: What is variable life insurance?
ANSWER Variable life insurance allows policyholders to invest the
cash value in various investment options (sub-accounts), with the
death benefit and cash value fluctuating based on investment
performance.
Q7: What is variable universal life insurance?
ANSWER Variable universal life (VUL) combines the flexibility of
universal life with the investment options of variable life, offering
adjustable premiums and investment choices.
Q8: What is the cash surrender value?
ANSWER The cash surrender value is the amount a policyholder
receives when voluntarily terminating a permanent life insurance
policy before its maturity or the insured event.
Q9: What is a death benefit?
ANSWER The death benefit is the amount paid to beneficiaries
upon the death of the insured.
Q10: What is a beneficiary?
ANSWER A beneficiary is the person or entity designated to receive
the death benefit upon the insured’s death.
Q11: What is a contingent beneficiary?
ANSWER A contingent beneficiary is the secondary recipient who
receives the death benefit if the primary beneficiary is deceased or
unable to receive it.
Q12: What is an irrevocable beneficiary?
ANSWER An irrevocable beneficiary is one whose designation
cannot be changed without their consent.
,Q13: What is a revocable beneficiary?
ANSWER A revocable beneficiary can be changed by the
policyholder at any time without consent.
Q14: What is the grace period in life insurance?
ANSWER The grace period is a set time (typically 30 or 31 days)
after a premium due date during which the policy remains in force
even if the premium is unpaid.
Q15: What is a policy loan?
ANSWER A policy loan is a loan taken by the policyholder against
the cash surrender value of a permanent life insurance policy.
Q16: What is the incontestability clause?
ANSWER The incontestability clause prevents the insurer from
voiding the policy due to misstatements in the application after the
policy has been in force for a specified period (typically 1–2 years).
Q17: What is the suicide clause?
ANSWER The suicide clause states that if the insured dies by
suicide within a specified period (usually 1–2 years) after policy
issuance, the insurer will only refund premiums paid, not the death
benefit.
Q18: What is the misstatement of age clause?
ANSWER The misstatement of age clause allows the insurer to
adjust the death benefit to the amount the premium paid would have
purchased at the correct age.
Q19: What is an accelerated death benefit rider?
ANSWER An accelerated death benefit rider allows terminally ill
policyholders to receive a portion of the death benefit while still living.
, Q20: What is a waiver of premium rider?
ANSWER A waiver of premium rider waives premium payments if
the insured becomes totally disabled, keeping the policy in force.
Q21: What is a guaranteed insurability rider?
ANSWER A guaranteed insurability rider allows the policyholder to
purchase additional coverage at specified future dates without
evidence of insurability.
Q22: What is a term conversion rider?
ANSWER A term conversion rider allows a term life policy to be
converted to a permanent policy without evidence of insurability.
Q23: What is a cost of living rider?
ANSWER A cost of living rider automatically increases the death
benefit to keep pace with inflation.
Q24: What is an accidental death benefit rider?
ANSWER An accidental death benefit rider (double indemnity) pays
an additional death benefit if death results from an accident.
Q25: What is a children’s term rider?
ANSWER A children’s term rider provides term life insurance
coverage on the policyholder’s children.
Q26: What is the difference between level term and decreasing term
insurance?
ANSWER Level term maintains the same death benefit throughout
the term; decreasing term has a death benefit that reduces over time,
often used for mortgage protection.
