Pearson VUE Life Insurance Practice Exam Latest
Update 2026 | Exam Prep | 100% Accurate Answers
1. Describe the implications of a departing employee choosing not to convert
their Group Life policy during the conversion period.
If a departing employee chooses not to convert their Group Life
policy, they will not have coverage after the conversion period ends,
but any death that occurs during the conversion period is still
covered.
The employee will retain coverage under the Group Life plan without
any changes.
The employee will automatically receive a refund of premiums paid.
The employee will be required to pay a penalty for not converting.
2. This clause is an insurance policy clause stipulating that an insured party can
receive full or partial benefits or a partial refund of premiums after a lapse
due to non-payment.
Nothing clause
Insuring clause
Mode of Premium
Nonforfeiture option
3. What is one of the responsibilities of a policyowner in a life insurance policy?
pay back interest on any outstanding policy loan
provide evidence of insurability
make collateral assignment to the insurer
, pay all past-due premiums
4. What is the primary characteristic of a Renewable Term policy regarding
renewal?
It is renewable at the option of the insured.
It is renewable at the option of the insured, with proof of insurability.
It is renewable at the option of the insurer.
It is renewable at the option of the insurer, with proof of insurability.
5. What type of life insurance policy is typically recommended for clients
seeking affordable coverage with substantial protection?
Limited-Pay Life
Term Life
Whole Life
Adjustable Life
6. If a policyholder has a life insurance policy that pays out $500,000 upon their
death, how much will the beneficiary receive after taxes if the proceeds are
considered nontaxable?
$450,000
$500,000
$550,000
$400,000
7. If P decides to change her beneficiary designation from revocable to
irrevocable, what implications would this have for her rights as a
policyowner?
P would have the same rights as before.
, P would lose the ability to change the beneficiary without consent.
P would gain additional rights to the policy.
P would need to pay additional premiums.
8. If an investor is seeking a retirement income that can potentially grow with
the market but also carries some risk, which type of annuity would be most
suitable?
Fixed annuity
Variable annuity
Joint and survivorship annuity
Deferred annuity
9. Which of the following is not third party ownership?
When an employer purchases key person on an employee.
When an employee is insured through her work.
When a husband purchases insurance on his wife.
When an insured purchases life insurance on themselves.
10. What is the term used to describe the process of categorizing policyholders
based on their risk level?
Risk classification
Premium assessment
Insurable interest
Underwriting
11. If an applicant submits a life insurance application and later pays the first
premium after receiving approval from the insurer, when does the coverage
officially start?
, When the producer accepts the application
When the insurer approves the application
Immediately upon payment of the first premium
After the medical examination is completed
12. What type of information is primarily assessed in an inspection report for life
insurance?
Personal characteristics
Credit rating
Job performance
Health profile
13. If an insured who misstated their age on a life insurance application dies
shortly after the policy is issued, how would the insurer likely calculate the
Death benefit?
The insurer would refuse to pay any Death benefit.
The insurer would calculate the Death benefit based on the
insured's actual age.
The insurer would pay the full stated Death benefit regardless of the
misstatement.
The insurer would deduct unpaid premiums from the stated Death
benefit.
14. What is the term for the options that determine how life insurance proceeds
are distributed to beneficiaries?
Modes of Payment
Settlement Options
Policy Provisions
Update 2026 | Exam Prep | 100% Accurate Answers
1. Describe the implications of a departing employee choosing not to convert
their Group Life policy during the conversion period.
If a departing employee chooses not to convert their Group Life
policy, they will not have coverage after the conversion period ends,
but any death that occurs during the conversion period is still
covered.
The employee will retain coverage under the Group Life plan without
any changes.
The employee will automatically receive a refund of premiums paid.
The employee will be required to pay a penalty for not converting.
2. This clause is an insurance policy clause stipulating that an insured party can
receive full or partial benefits or a partial refund of premiums after a lapse
due to non-payment.
Nothing clause
Insuring clause
Mode of Premium
Nonforfeiture option
3. What is one of the responsibilities of a policyowner in a life insurance policy?
pay back interest on any outstanding policy loan
provide evidence of insurability
make collateral assignment to the insurer
, pay all past-due premiums
4. What is the primary characteristic of a Renewable Term policy regarding
renewal?
It is renewable at the option of the insured.
It is renewable at the option of the insured, with proof of insurability.
It is renewable at the option of the insurer.
It is renewable at the option of the insurer, with proof of insurability.
5. What type of life insurance policy is typically recommended for clients
seeking affordable coverage with substantial protection?
Limited-Pay Life
Term Life
Whole Life
Adjustable Life
6. If a policyholder has a life insurance policy that pays out $500,000 upon their
death, how much will the beneficiary receive after taxes if the proceeds are
considered nontaxable?
$450,000
$500,000
$550,000
$400,000
7. If P decides to change her beneficiary designation from revocable to
irrevocable, what implications would this have for her rights as a
policyowner?
P would have the same rights as before.
, P would lose the ability to change the beneficiary without consent.
P would gain additional rights to the policy.
P would need to pay additional premiums.
8. If an investor is seeking a retirement income that can potentially grow with
the market but also carries some risk, which type of annuity would be most
suitable?
Fixed annuity
Variable annuity
Joint and survivorship annuity
Deferred annuity
9. Which of the following is not third party ownership?
When an employer purchases key person on an employee.
When an employee is insured through her work.
When a husband purchases insurance on his wife.
When an insured purchases life insurance on themselves.
10. What is the term used to describe the process of categorizing policyholders
based on their risk level?
Risk classification
Premium assessment
Insurable interest
Underwriting
11. If an applicant submits a life insurance application and later pays the first
premium after receiving approval from the insurer, when does the coverage
officially start?
, When the producer accepts the application
When the insurer approves the application
Immediately upon payment of the first premium
After the medical examination is completed
12. What type of information is primarily assessed in an inspection report for life
insurance?
Personal characteristics
Credit rating
Job performance
Health profile
13. If an insured who misstated their age on a life insurance application dies
shortly after the policy is issued, how would the insurer likely calculate the
Death benefit?
The insurer would refuse to pay any Death benefit.
The insurer would calculate the Death benefit based on the
insured's actual age.
The insurer would pay the full stated Death benefit regardless of the
misstatement.
The insurer would deduct unpaid premiums from the stated Death
benefit.
14. What is the term for the options that determine how life insurance proceeds
are distributed to beneficiaries?
Modes of Payment
Settlement Options
Policy Provisions
