Pearson VUE Life & Health
Insurance Exam — 2026/2027
Edition | Verified Questions &
Correct Answers | State
Licensing Preparation
This Pearson VUE Life & Health Insurance Exam consists
of multiple-choice questions testing knowledge on policy types
(e.g., whole life, term), provisions, underwriting, and state-
specific regulations. Exams cover topics like cash value
growth, group life conversion, annuities, and tax treatments.
Passing requires understanding key regulations.
Key Exam Areas & Question Types
Life Insurance Policies: Focus on distinguishing between
term and whole life (level premiums, cash value), annuities,
and rider options (e.g., family income rider).
Health Insurance Policies: Covers disability income,
medical expense plans, and Medicare supplements.
Underwriting & Risk: Questions often ask about risk
classification (preferred, standard, substandard, declined).
Regulations: Questions on state-specific statutes, including
those related to licensing and prohibited practices, make up
roughly 25% of some state exams.
Provisions & Rights: Focus on policy ownership, beneficiary
designations (revocable vs. irrevocable), and grace periods.
Exam Structure and Content
Format: Multiple-choice questions.
, Structure: split between General Knowledge and State-
Specific Laws.
Question Focus: Scenarios testing application of regulations
and policy types.
Q1. A contract whose basic function is the systematic liquidation of accumulated
assets through periodic payments is called an annuity. [True/False]
A) True
B) False
Answer: True
Explanation: An annuity is designed to convert a sum of accumulated assets into a stream of
periodic payments (income) for a specified time or for life. This ‘systematic liquidation’ function
distinguishes annuities from other contracts like endowments (which pay a lump sum at a fixed
date) or indemnity/investment contracts, making annuity the proper term for that purpose.
Q2. Which contract's basic function is the systematic liquidation of accumulated
assets through periodic payments? [Multiple Choice]
A) Indemnity contract
B) Investment contract
C) Endowment
D) Annuity
Answer: Annuity
Explanation: An annuity's basic function is to convert an accumulated sum into a series of
periodic payments — effectively liquidating the asset over time to provide income. An
endowment pays a lump sum at the end of a specified period rather than systematic periodic
payments. An indemnity contract reimburses for loss or expense rather than providing scheduled
income from accumulated funds. An investment contract focuses on accumulation and return on
invested funds but does not by definition provide periodic liquidation payments as its primary
purpose.
Q3. Which of the following is NOT generally required to reinstate a lapsed life
insurance policy? [Multiple Choice]
, A) Provide evidence of insurability
B) Make collateral assignment to the insurer
C) Pay back interest on any outstanding policy loan
D) Pay all past-due premiums
Answer: Make collateral assignment to the insurer
Explanation: Reinstating a lapsed life policy typically requires proof of insurability, payment of all
past-due premiums, and payment of interest on any outstanding policy loan — actions that
demonstrate the insured's continued eligibility and restore the policy's value. Making a collateral
assignment (transferring ownership rights to secure a debt) is unrelated to the standard
reinstatement requirements and is not required for reinstatement. The other options listed are
standard reinstatement steps: evidence of insurability shows the insured's health status is
acceptable; repaying loan interest restores net cash value; paying past-due premiums brings the
policy current.
Q4. P wants to name her husband as the beneficiary of her life policy but retain
all ownership rights. Which beneficiary designation lets her keep full ownership
control? [Multiple Choice]
A) Irrevocable beneficiary
B) Revocable beneficiary
C) Secondary beneficiary
D) Contingent beneficiary
Answer: Revocable beneficiary
Explanation: A revocable beneficiary designation allows the policyowner to name someone to
receive the death benefit while retaining full ownership rights — including the ability to change
the beneficiary, borrow against the policy, or surrender the policy. An irrevocable beneficiary, by
contrast, restricts the owner's ability to change the beneficiary or exercise certain ownership
rights without the beneficiary's consent. A secondary (contingent) beneficiary is simply the
person who would receive proceeds if the primary beneficiary predeceases the insured; that
designation does not by itself preserve or remove ownership rights. "Contingent" is not the
correct term for preserving owner control.
Q5. When does the Free Look provision in a life insurance policy begin? [Multiple
Choice]
A) Effective date of coverage
B) Policy delivery date
Insurance Exam — 2026/2027
Edition | Verified Questions &
Correct Answers | State
Licensing Preparation
This Pearson VUE Life & Health Insurance Exam consists
of multiple-choice questions testing knowledge on policy types
(e.g., whole life, term), provisions, underwriting, and state-
specific regulations. Exams cover topics like cash value
growth, group life conversion, annuities, and tax treatments.
Passing requires understanding key regulations.
Key Exam Areas & Question Types
Life Insurance Policies: Focus on distinguishing between
term and whole life (level premiums, cash value), annuities,
and rider options (e.g., family income rider).
Health Insurance Policies: Covers disability income,
medical expense plans, and Medicare supplements.
Underwriting & Risk: Questions often ask about risk
classification (preferred, standard, substandard, declined).
Regulations: Questions on state-specific statutes, including
those related to licensing and prohibited practices, make up
roughly 25% of some state exams.
Provisions & Rights: Focus on policy ownership, beneficiary
designations (revocable vs. irrevocable), and grace periods.
Exam Structure and Content
Format: Multiple-choice questions.
, Structure: split between General Knowledge and State-
Specific Laws.
Question Focus: Scenarios testing application of regulations
and policy types.
Q1. A contract whose basic function is the systematic liquidation of accumulated
assets through periodic payments is called an annuity. [True/False]
A) True
B) False
Answer: True
Explanation: An annuity is designed to convert a sum of accumulated assets into a stream of
periodic payments (income) for a specified time or for life. This ‘systematic liquidation’ function
distinguishes annuities from other contracts like endowments (which pay a lump sum at a fixed
date) or indemnity/investment contracts, making annuity the proper term for that purpose.
Q2. Which contract's basic function is the systematic liquidation of accumulated
assets through periodic payments? [Multiple Choice]
A) Indemnity contract
B) Investment contract
C) Endowment
D) Annuity
Answer: Annuity
Explanation: An annuity's basic function is to convert an accumulated sum into a series of
periodic payments — effectively liquidating the asset over time to provide income. An
endowment pays a lump sum at the end of a specified period rather than systematic periodic
payments. An indemnity contract reimburses for loss or expense rather than providing scheduled
income from accumulated funds. An investment contract focuses on accumulation and return on
invested funds but does not by definition provide periodic liquidation payments as its primary
purpose.
Q3. Which of the following is NOT generally required to reinstate a lapsed life
insurance policy? [Multiple Choice]
, A) Provide evidence of insurability
B) Make collateral assignment to the insurer
C) Pay back interest on any outstanding policy loan
D) Pay all past-due premiums
Answer: Make collateral assignment to the insurer
Explanation: Reinstating a lapsed life policy typically requires proof of insurability, payment of all
past-due premiums, and payment of interest on any outstanding policy loan — actions that
demonstrate the insured's continued eligibility and restore the policy's value. Making a collateral
assignment (transferring ownership rights to secure a debt) is unrelated to the standard
reinstatement requirements and is not required for reinstatement. The other options listed are
standard reinstatement steps: evidence of insurability shows the insured's health status is
acceptable; repaying loan interest restores net cash value; paying past-due premiums brings the
policy current.
Q4. P wants to name her husband as the beneficiary of her life policy but retain
all ownership rights. Which beneficiary designation lets her keep full ownership
control? [Multiple Choice]
A) Irrevocable beneficiary
B) Revocable beneficiary
C) Secondary beneficiary
D) Contingent beneficiary
Answer: Revocable beneficiary
Explanation: A revocable beneficiary designation allows the policyowner to name someone to
receive the death benefit while retaining full ownership rights — including the ability to change
the beneficiary, borrow against the policy, or surrender the policy. An irrevocable beneficiary, by
contrast, restricts the owner's ability to change the beneficiary or exercise certain ownership
rights without the beneficiary's consent. A secondary (contingent) beneficiary is simply the
person who would receive proceeds if the primary beneficiary predeceases the insured; that
designation does not by itself preserve or remove ownership rights. "Contingent" is not the
correct term for preserving owner control.
Q5. When does the Free Look provision in a life insurance policy begin? [Multiple
Choice]
A) Effective date of coverage
B) Policy delivery date
