LIFE & HEALTH INSURANCE EXAM (PSI) 2026/2027 | COMPLETE REAL
QUESTIONS + DETAILED ANSWERS - LATEST VERSION - TOP RATED
1. What is the primary purpose of life insurance?
A. To provide income for the insurer
B. To replace lost income and provide financial protection to beneficiaries
upon the insured's death
C. To fund retirement savings exclusively
D. To pay for medical expenses
ANSWER : B
2. Which type of life insurance provides coverage for a specified period only?
A. Whole life
B. Universal life
C. Term life
D. Variable life
ANSWER : C
3. What does the term 'premium' refer to in an insurance policy?
A. The death benefit paid to the beneficiary
B. The cash value accumulated in the policy
C. The periodic payment made by the policyholder to maintain coverage
D. The commission paid to the agent
ANSWER : C
4. Who is the 'insured' in a life insurance policy?
A. The person who receives the death benefit
B. The person whose life is covered under the policy
C. The insurance company
, D. The agent who sold the policy
ANSWER : B
5. What is a beneficiary?
A. The person who pays the premium
B. The insurance company
C. The person or entity designated to receive the death benefit
D. The agent who services the policy
ANSWER : C
6. What is 'cash value' in a permanent life insurance policy?
A. The face amount of the policy
B. The savings component that accumulates over time on a tax-deferred
basis
C. The premium amount due each year
D. The commission earned by the agent
ANSWER : B
7. Which type of policy combines term insurance with a savings component?
A. Variable annuity
B. Universal life insurance
C. Medicare supplement
D. Disability income policy
ANSWER : B
8. What is a 'grace period' in a life insurance policy?
A. The period after the insured's death during which claims can be filed
B. A specified period after a premium due date during which coverage
remains in force without payment
C. The contestability period
D. The free-look period
ANSWER : B
,9. What is the 'free-look period' in an insurance policy?
A. A period in which no premiums are due
B. A specified number of days after policy delivery in which the
policyholder may return the policy for a full refund
C. The period during which the insurer cannot cancel the policy
D. The time the insurer has to pay a claim
ANSWER : B
10. What is the 'contestable period' in a life insurance policy?
A. The period after a claim is denied
B. The time period, usually 2 years, during which the insurer can contest
the validity of a policy based on misrepresentation
C. The free-look period
D. The grace period
ANSWER : B
11. What is 'whole life insurance'?
A. Life insurance that covers only accidental death
B. Permanent insurance providing lifetime coverage with a guaranteed
cash value
C. Insurance covering only illness-related death
D. Term insurance renewed annually
ANSWER : B
12. What does 'face amount' mean in a life insurance policy?
A. The cash value of the policy
B. The amount of premium due
C. The death benefit amount stated on the policy
D. The loan value of the policy
ANSWER : C
13. What is 'insurable interest'?
A. The interest earned on cash value
, B. A financial or emotional stake one person has in the life of another
C. The policy's interest rate
D. The dividend interest on participating policies
ANSWER : B
14. When must insurable interest exist in a life insurance policy?
A. At the time of claim
B. At the time of the insured's death
C. At the inception (issuance) of the policy
D. At every premium payment
ANSWER : C
15. What is an 'irrevocable beneficiary'?
A. A beneficiary who can be changed at any time
B. A beneficiary designation that cannot be changed without the
beneficiary's consent
C. A minor beneficiary
D. The estate of the insured
ANSWER : B
16. Which settlement option pays the death benefit to the beneficiary in fixed
monthly installments until the proceeds run out?
A. Life income option
B. Fixed amount option
C. Lump sum option
D. Interest only option
ANSWER : B
17. What is 'waiver of premium' rider?
A. Waives the death benefit upon disability
B. Allows the insured to waive future premium payments if the insured
becomes totally disabled
C. Eliminates the contestable period
QUESTIONS + DETAILED ANSWERS - LATEST VERSION - TOP RATED
1. What is the primary purpose of life insurance?
A. To provide income for the insurer
B. To replace lost income and provide financial protection to beneficiaries
upon the insured's death
C. To fund retirement savings exclusively
D. To pay for medical expenses
ANSWER : B
2. Which type of life insurance provides coverage for a specified period only?
A. Whole life
B. Universal life
C. Term life
D. Variable life
ANSWER : C
3. What does the term 'premium' refer to in an insurance policy?
A. The death benefit paid to the beneficiary
B. The cash value accumulated in the policy
C. The periodic payment made by the policyholder to maintain coverage
D. The commission paid to the agent
ANSWER : C
4. Who is the 'insured' in a life insurance policy?
A. The person who receives the death benefit
B. The person whose life is covered under the policy
C. The insurance company
, D. The agent who sold the policy
ANSWER : B
5. What is a beneficiary?
A. The person who pays the premium
B. The insurance company
C. The person or entity designated to receive the death benefit
D. The agent who services the policy
ANSWER : C
6. What is 'cash value' in a permanent life insurance policy?
A. The face amount of the policy
B. The savings component that accumulates over time on a tax-deferred
basis
C. The premium amount due each year
D. The commission earned by the agent
ANSWER : B
7. Which type of policy combines term insurance with a savings component?
A. Variable annuity
B. Universal life insurance
C. Medicare supplement
D. Disability income policy
ANSWER : B
8. What is a 'grace period' in a life insurance policy?
A. The period after the insured's death during which claims can be filed
B. A specified period after a premium due date during which coverage
remains in force without payment
C. The contestability period
D. The free-look period
ANSWER : B
,9. What is the 'free-look period' in an insurance policy?
A. A period in which no premiums are due
B. A specified number of days after policy delivery in which the
policyholder may return the policy for a full refund
C. The period during which the insurer cannot cancel the policy
D. The time the insurer has to pay a claim
ANSWER : B
10. What is the 'contestable period' in a life insurance policy?
A. The period after a claim is denied
B. The time period, usually 2 years, during which the insurer can contest
the validity of a policy based on misrepresentation
C. The free-look period
D. The grace period
ANSWER : B
11. What is 'whole life insurance'?
A. Life insurance that covers only accidental death
B. Permanent insurance providing lifetime coverage with a guaranteed
cash value
C. Insurance covering only illness-related death
D. Term insurance renewed annually
ANSWER : B
12. What does 'face amount' mean in a life insurance policy?
A. The cash value of the policy
B. The amount of premium due
C. The death benefit amount stated on the policy
D. The loan value of the policy
ANSWER : C
13. What is 'insurable interest'?
A. The interest earned on cash value
, B. A financial or emotional stake one person has in the life of another
C. The policy's interest rate
D. The dividend interest on participating policies
ANSWER : B
14. When must insurable interest exist in a life insurance policy?
A. At the time of claim
B. At the time of the insured's death
C. At the inception (issuance) of the policy
D. At every premium payment
ANSWER : C
15. What is an 'irrevocable beneficiary'?
A. A beneficiary who can be changed at any time
B. A beneficiary designation that cannot be changed without the
beneficiary's consent
C. A minor beneficiary
D. The estate of the insured
ANSWER : B
16. Which settlement option pays the death benefit to the beneficiary in fixed
monthly installments until the proceeds run out?
A. Life income option
B. Fixed amount option
C. Lump sum option
D. Interest only option
ANSWER : B
17. What is 'waiver of premium' rider?
A. Waives the death benefit upon disability
B. Allows the insured to waive future premium payments if the insured
becomes totally disabled
C. Eliminates the contestable period
