PEARSON VUE LIFE & HEALTH INSURANCE EXAM
2026/2027 | Verified Questions & Correct Answers | State
Licensing Preparation | Pass Guaranteed - A+ Graded
[Section 1: Life Insurance Products & Policies (Q1-25)]
Q1. A 35-year-old client needs life insurance coverage for exactly 20 years to
protect their family until the mortgage is paid off. The MOST appropriate product
is:
A. Whole life insurance
B. 20-year level term life insurance
C. Single premium whole life insurance
D. Variable universal life insurance
Correct Answer: B
Rationale: 20-year level term provides a fixed premium and death benefit for exactly
20 years, matching the mortgage payoff timeline. Whole life (A) provides lifetime
coverage with cash value but higher premiums. Single premium whole life (C)
requires a large upfront payment. Variable universal life (D) has investment risk and
complexity unnecessary for this need. State Regulation: NAIC Model Life Insurance
Act. Exam Strategy: Match product to specific time-bound need.
Q2. Which life insurance product accumulates cash value on a tax-deferred basis
with a guaranteed minimum interest rate, but allows the policyowner to adjust
premiums and death benefits?
,A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: C
Rationale: Universal life (UL) offers flexible premiums, adjustable death benefits
(Option A level or Option B increasing), and tax-deferred cash value growth with a
guaranteed minimum interest rate. Whole life (A) has fixed premiums. Term (B) has
no cash value. Variable life (D) has no guaranteed minimum cash value. State
Regulation: NAIC Universal Life Insurance Model Regulation. Exam Strategy: Identify
flexible premium + guaranteed minimum = UL.
Q3. A policyowner selects Universal Life Option B (increasing death benefit). The
death benefit equals:
A. Level face amount only
B. Face amount plus cash value
C. Cash value only
D. Face amount minus outstanding loans
Correct Answer: B
Rationale: UL Option B provides an increasing death benefit equal to the face
amount plus the cash value. Option A provides a level death benefit (face amount
only, net of loans). Option B costs more because the death benefit increases as cash
value grows. State Regulation: NAIC Universal Life Insurance Model Regulation.
Exam Strategy: Option B = Benefit increases (B for "Bigger").
Q4. A client purchases a variable life insurance policy. Which statement is
CORRECT?
,A. The cash value is guaranteed by the insurer
B. The policyowner bears the investment risk in separate account sub-accounts
C. The agent does not need any securities license
D. The death benefit remains fixed regardless of investment performance
Correct Answer: B
Rationale: Variable life places investment risk on the policyowner through separate
account sub-accounts (equities, bonds, money market). Cash value is NOT
guaranteed (A). The agent MUST have a securities license (Series 6 or 7) and FINRA
registration (C is incorrect). The death benefit varies with investment performance (D
is incorrect). State Regulation: SEC/NAIC Variable Life Insurance Model Regulation;
FINRA rules. Exam Strategy: Variable = investment risk on policyowner.
Q5. A married couple wants estate tax liquidity to pay taxes at the second death.
The MOST appropriate product is:
A. Joint life (first-to-die)
B. Survivorship life (second-to-die)
C. Individual term life on each spouse
D. Modified life insurance
Correct Answer: B
Rationale: Survivorship life (second-to-die) pays the death benefit at the second
death, when estate taxes are due, and costs less than two individual policies. First-to-
die (A) pays at the first death. Individual term (C) expires and doesn't address estate
planning. Modified life (D) has premium changes unrelated to estate needs. State
Regulation: NAIC Model Life Insurance Act. Exam Strategy: Second-to-die = estate
tax liquidity at second death.
Q6. Which rider allows a terminally ill policyowner to receive a portion of the
death benefit while still living?
, A. Accidental death benefit rider
B. Waiver of premium rider
C. Accelerated death benefit rider
D. Guaranteed insurability rider
Correct Answer: C
Rationale: The accelerated death benefit rider allows access to a portion (typically
50-90%) of the death benefit if diagnosed with a terminal illness (usually 24 months
or less to live). Accidental death (A) pays extra for accidental death. Waiver of
premium (B) waives premiums during disability. Guaranteed insurability (D) allows
future purchases without evidence of insurability. State Regulation: NAIC
Accelerated Benefits Model Regulation. Exam Strategy: "Accelerated" = early access
while living.
Q7. A policyowner with a participating whole life policy receives a dividend.
Which dividend option does NOT increase the policy's death benefit?
A. Paid-up additions
B. One-year term insurance
C. Accumulate at interest
D. Reduce premium
Correct Answer: D
Rationale: Reducing premium (D) lowers out-of-pocket cost but does not increase
death benefit. Paid-up additions (A) and one-year term (B) both increase death
benefit. Accumulate at interest (C) increases cash value, which indirectly may increase
death benefit depending on policy type. State Regulation: NAIC Model Life
Insurance Act. Exam Strategy: "Reduce premium" = cost reduction only, no benefit
increase.
2026/2027 | Verified Questions & Correct Answers | State
Licensing Preparation | Pass Guaranteed - A+ Graded
[Section 1: Life Insurance Products & Policies (Q1-25)]
Q1. A 35-year-old client needs life insurance coverage for exactly 20 years to
protect their family until the mortgage is paid off. The MOST appropriate product
is:
A. Whole life insurance
B. 20-year level term life insurance
C. Single premium whole life insurance
D. Variable universal life insurance
Correct Answer: B
Rationale: 20-year level term provides a fixed premium and death benefit for exactly
20 years, matching the mortgage payoff timeline. Whole life (A) provides lifetime
coverage with cash value but higher premiums. Single premium whole life (C)
requires a large upfront payment. Variable universal life (D) has investment risk and
complexity unnecessary for this need. State Regulation: NAIC Model Life Insurance
Act. Exam Strategy: Match product to specific time-bound need.
Q2. Which life insurance product accumulates cash value on a tax-deferred basis
with a guaranteed minimum interest rate, but allows the policyowner to adjust
premiums and death benefits?
,A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: C
Rationale: Universal life (UL) offers flexible premiums, adjustable death benefits
(Option A level or Option B increasing), and tax-deferred cash value growth with a
guaranteed minimum interest rate. Whole life (A) has fixed premiums. Term (B) has
no cash value. Variable life (D) has no guaranteed minimum cash value. State
Regulation: NAIC Universal Life Insurance Model Regulation. Exam Strategy: Identify
flexible premium + guaranteed minimum = UL.
Q3. A policyowner selects Universal Life Option B (increasing death benefit). The
death benefit equals:
A. Level face amount only
B. Face amount plus cash value
C. Cash value only
D. Face amount minus outstanding loans
Correct Answer: B
Rationale: UL Option B provides an increasing death benefit equal to the face
amount plus the cash value. Option A provides a level death benefit (face amount
only, net of loans). Option B costs more because the death benefit increases as cash
value grows. State Regulation: NAIC Universal Life Insurance Model Regulation.
Exam Strategy: Option B = Benefit increases (B for "Bigger").
Q4. A client purchases a variable life insurance policy. Which statement is
CORRECT?
,A. The cash value is guaranteed by the insurer
B. The policyowner bears the investment risk in separate account sub-accounts
C. The agent does not need any securities license
D. The death benefit remains fixed regardless of investment performance
Correct Answer: B
Rationale: Variable life places investment risk on the policyowner through separate
account sub-accounts (equities, bonds, money market). Cash value is NOT
guaranteed (A). The agent MUST have a securities license (Series 6 or 7) and FINRA
registration (C is incorrect). The death benefit varies with investment performance (D
is incorrect). State Regulation: SEC/NAIC Variable Life Insurance Model Regulation;
FINRA rules. Exam Strategy: Variable = investment risk on policyowner.
Q5. A married couple wants estate tax liquidity to pay taxes at the second death.
The MOST appropriate product is:
A. Joint life (first-to-die)
B. Survivorship life (second-to-die)
C. Individual term life on each spouse
D. Modified life insurance
Correct Answer: B
Rationale: Survivorship life (second-to-die) pays the death benefit at the second
death, when estate taxes are due, and costs less than two individual policies. First-to-
die (A) pays at the first death. Individual term (C) expires and doesn't address estate
planning. Modified life (D) has premium changes unrelated to estate needs. State
Regulation: NAIC Model Life Insurance Act. Exam Strategy: Second-to-die = estate
tax liquidity at second death.
Q6. Which rider allows a terminally ill policyowner to receive a portion of the
death benefit while still living?
, A. Accidental death benefit rider
B. Waiver of premium rider
C. Accelerated death benefit rider
D. Guaranteed insurability rider
Correct Answer: C
Rationale: The accelerated death benefit rider allows access to a portion (typically
50-90%) of the death benefit if diagnosed with a terminal illness (usually 24 months
or less to live). Accidental death (A) pays extra for accidental death. Waiver of
premium (B) waives premiums during disability. Guaranteed insurability (D) allows
future purchases without evidence of insurability. State Regulation: NAIC
Accelerated Benefits Model Regulation. Exam Strategy: "Accelerated" = early access
while living.
Q7. A policyowner with a participating whole life policy receives a dividend.
Which dividend option does NOT increase the policy's death benefit?
A. Paid-up additions
B. One-year term insurance
C. Accumulate at interest
D. Reduce premium
Correct Answer: D
Rationale: Reducing premium (D) lowers out-of-pocket cost but does not increase
death benefit. Paid-up additions (A) and one-year term (B) both increase death
benefit. Accumulate at interest (C) increases cash value, which indirectly may increase
death benefit depending on policy type. State Regulation: NAIC Model Life
Insurance Act. Exam Strategy: "Reduce premium" = cost reduction only, no benefit
increase.
