PEARSON VUE LIFE INSURANCE EXAM VERSION 1,2 AND 3 NEWEST
2026 ACTUAL EXAM COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS generate questions and answers with Rationales
1. A producer takes an application without collecting the initial premium.
Upon delivery of the policy, the producer must collect the premium and
which of the following?
A. A copy of the MIB report.
B. The applicant’s signed statement of continued good health.
C. A conditional receipt.
D. A copy of the agent’s report.
Answer: B
Rationale: If the premium is not paid with the application, the policy is not in
force until it is delivered and the premium is paid. Because time has passed, the
insurer requires a statement confirming the applicant’s health hasn’t changed.
2. Which of the following is the primary purpose of the Medical
Information Bureau (MIB)?
A. To provide low-cost health insurance to high-risk individuals.
B. To maintain medical records for all U.S. citizens.
, C. To prevent insurance fraud and misrepresentation.
D. To determine the premium rates for all life insurance companies.
Answer: C
Rationale: The MIB is a non-profit trade association that stores coded medical
information shared between member insurers to identify “adverse” information
and prevent fraud.
3. In a life insurance contract, the “Consideration” on the part of the
applicant is:
A. The promise to pay the death benefit.
B. The statements made in the application and the initial premium.
C. The physical examination.
D. The insurable interest.
Answer: B
Rationale: In insurance, consideration is the “value” exchanged. For the
applicant, it is the premium plus the truthful information provided in the
application.
Section 2: Life Insurance Policies
, 4. A policy that allows the owner to skip premium payments as long as there
is enough cash value to cover the cost of insurance is:
A. Whole Life
B. Variable Life
C. Universal Life
D. Term Life
Answer: C
Rationale: Universal Life is known for its “flexible premium.” As long as the
cash account can cover monthly deductions, the policy stays in force even if
premiums aren’t paid.
5. Which type of life insurance is often used to pay off a mortgage upon the
death of the insured?
A. Increasing Term
B. Decreasing Term
C. Level Term
D. Whole Life
, Answer: B
Rationale: Decreasing Term features a death benefit that reduces over time,
mirroring the declining balance of a mortgage or loan.
6. A life insurance policy that covers two lives and pays the death benefit
only when the last person dies is called:
A. Joint Life
B. Family Income Policy
C. Survivorship Life (Second-to-Die)
D. Juvenile Life
Answer: C
Rationale: Survivorship Life is commonly used for estate planning to pay
federal estate taxes, which are generally due upon the death of the second
spouse.
7. Which policy is characterized by a “corridor” between the cash value and
the death benefit to maintain its tax-qualified status?
A. Whole Life
B. Variable Life
2026 ACTUAL EXAM COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS generate questions and answers with Rationales
1. A producer takes an application without collecting the initial premium.
Upon delivery of the policy, the producer must collect the premium and
which of the following?
A. A copy of the MIB report.
B. The applicant’s signed statement of continued good health.
C. A conditional receipt.
D. A copy of the agent’s report.
Answer: B
Rationale: If the premium is not paid with the application, the policy is not in
force until it is delivered and the premium is paid. Because time has passed, the
insurer requires a statement confirming the applicant’s health hasn’t changed.
2. Which of the following is the primary purpose of the Medical
Information Bureau (MIB)?
A. To provide low-cost health insurance to high-risk individuals.
B. To maintain medical records for all U.S. citizens.
, C. To prevent insurance fraud and misrepresentation.
D. To determine the premium rates for all life insurance companies.
Answer: C
Rationale: The MIB is a non-profit trade association that stores coded medical
information shared between member insurers to identify “adverse” information
and prevent fraud.
3. In a life insurance contract, the “Consideration” on the part of the
applicant is:
A. The promise to pay the death benefit.
B. The statements made in the application and the initial premium.
C. The physical examination.
D. The insurable interest.
Answer: B
Rationale: In insurance, consideration is the “value” exchanged. For the
applicant, it is the premium plus the truthful information provided in the
application.
Section 2: Life Insurance Policies
, 4. A policy that allows the owner to skip premium payments as long as there
is enough cash value to cover the cost of insurance is:
A. Whole Life
B. Variable Life
C. Universal Life
D. Term Life
Answer: C
Rationale: Universal Life is known for its “flexible premium.” As long as the
cash account can cover monthly deductions, the policy stays in force even if
premiums aren’t paid.
5. Which type of life insurance is often used to pay off a mortgage upon the
death of the insured?
A. Increasing Term
B. Decreasing Term
C. Level Term
D. Whole Life
, Answer: B
Rationale: Decreasing Term features a death benefit that reduces over time,
mirroring the declining balance of a mortgage or loan.
6. A life insurance policy that covers two lives and pays the death benefit
only when the last person dies is called:
A. Joint Life
B. Family Income Policy
C. Survivorship Life (Second-to-Die)
D. Juvenile Life
Answer: C
Rationale: Survivorship Life is commonly used for estate planning to pay
federal estate taxes, which are generally due upon the death of the second
spouse.
7. Which policy is characterized by a “corridor” between the cash value and
the death benefit to maintain its tax-qualified status?
A. Whole Life
B. Variable Life
