PEARSON VUE LIFE INSURANCE PRACTICE
EXAM COMPLETE 150 QUESTIONS WITH
100% CORRECT ANSWERS
1. P wants to name her husband as the beneficiary of her life policy. However,
she wishes to retain all of the rights of ownership. P should have her husband
named as the
A) irrevocable beneficiary
B) revocable beneficiary
C) secondary beneficiary
D) tertiary beneficiary
Correct Answer: B
Explanation: A revocable beneficiary can be changed by the policyowner at any
time without the beneficiary's consent. This allows P to retain all ownership rights,
including the right to change beneficiaries. An irrevocable beneficiary would
require the beneficiary's consent to make changes.
2. A contract that has as its basic function the systematic liquidation of
accumulated assets through periodic payments is called an
A) indemnity contract
B) investment contract
C) endowment
D) annuity
,Correct Answer: D
Explanation: An annuity is designed to liquidate an accumulated sum of money
through periodic payments over a specified period or for life. It converts a lump
sum into a stream of income.
3. An insurance producer takes an application for a life insurance policy but does
not collect the initial premium. On delivery of the policy to the proposed
insured, the producer must collect the initial premium and which of the
following?
A) A copy of the MIB report
B) The insured's signed statement of continued good health
C) A copy of the conditional receipt
D) A copy of the temporary insurance agreement that covered the period
between the application date and the delivery date
Correct Answer: B
Explanation: When no premium is collected at application, the insurer typically
requires a statement of continued good health at delivery to ensure no material
change in the insured's health occurred between application and delivery.
4. An employer can deduct premium payments as an ordinary business expense
for which of the following life coverages?
A) Buy and Sell Agreements
B) Group
C) Key Employee
D) Joint Life, if the business is named as the beneficiary
Correct Answer: B
Explanation: Group life insurance premiums paid by an employer are generally
,deductible as an ordinary business expense. Premiums for key employee or buy-
sell coverage are typically not deductible.
5. A producer takes applications from identical twins who want to buy the same
type of policy in the same amount. The insurer issues the policies as applied for,
but charges a 25 percent higher premium for one of the policies. The difference
in premiums is probably due to which of the following factors?
A) Incontestability
B) Insurable interest
C) Consideration
D) Risk classification
Correct Answer: D
Explanation: Insurers classify risks based on health, occupation, hobbies, and
other factors. Even identical twins may have different health histories or risk
factors that place them in different underwriting classes.
6. In the event of an insured's death, which of the following provides an income
for the family during a designated period of time followed by a lump sum death
benefit?
A) Family Income rider
B) Survivorship Life policy
C) Joint Life policy
D) Modified Life policy
Correct Answer: A
Explanation: A Family Income rider pays a monthly income to beneficiaries for a
specified period (e.g., 10 or 20 years) after the insured's death, and then pays the
face amount as a lump sum at the end of that period.
, 7. Which of the following statements is CORRECT about Group Life conversion
privileges?
A) Under the COBRA law, a departing employee may elect to remain a member of
the Group Life plan for a limited period of time.
B) Death during the conversion period is covered even if the departing employee
chose not to convert the policy.
C) A departing employee must individually pay the premium if the employee
elects to be covered during the conversion period.
D) If a departing employee elects to convert a life insurance policy, the insurer
must offer Term insurance as one of the choices.
Correct Answer: B
Explanation: Most group life policies provide that if an employee dies during the
conversion period (typically 31 days after leaving the group), the full death benefit
is payable even if the employee had not yet converted to an individual policy.
8. Which of the following policies is an interest-sensitive form of permanent
protection?
A) Universal Life
B) Limited-Pay Life
C) Graded Premium Whole Life
D) Modified Whole Life
Correct Answer: A
Explanation: Universal Life is an interest-sensitive permanent policy where the
cash value earns interest at current market rates (often tied to an index).
Premiums and death benefits may be flexible.
EXAM COMPLETE 150 QUESTIONS WITH
100% CORRECT ANSWERS
1. P wants to name her husband as the beneficiary of her life policy. However,
she wishes to retain all of the rights of ownership. P should have her husband
named as the
A) irrevocable beneficiary
B) revocable beneficiary
C) secondary beneficiary
D) tertiary beneficiary
Correct Answer: B
Explanation: A revocable beneficiary can be changed by the policyowner at any
time without the beneficiary's consent. This allows P to retain all ownership rights,
including the right to change beneficiaries. An irrevocable beneficiary would
require the beneficiary's consent to make changes.
2. A contract that has as its basic function the systematic liquidation of
accumulated assets through periodic payments is called an
A) indemnity contract
B) investment contract
C) endowment
D) annuity
,Correct Answer: D
Explanation: An annuity is designed to liquidate an accumulated sum of money
through periodic payments over a specified period or for life. It converts a lump
sum into a stream of income.
3. An insurance producer takes an application for a life insurance policy but does
not collect the initial premium. On delivery of the policy to the proposed
insured, the producer must collect the initial premium and which of the
following?
A) A copy of the MIB report
B) The insured's signed statement of continued good health
C) A copy of the conditional receipt
D) A copy of the temporary insurance agreement that covered the period
between the application date and the delivery date
Correct Answer: B
Explanation: When no premium is collected at application, the insurer typically
requires a statement of continued good health at delivery to ensure no material
change in the insured's health occurred between application and delivery.
4. An employer can deduct premium payments as an ordinary business expense
for which of the following life coverages?
A) Buy and Sell Agreements
B) Group
C) Key Employee
D) Joint Life, if the business is named as the beneficiary
Correct Answer: B
Explanation: Group life insurance premiums paid by an employer are generally
,deductible as an ordinary business expense. Premiums for key employee or buy-
sell coverage are typically not deductible.
5. A producer takes applications from identical twins who want to buy the same
type of policy in the same amount. The insurer issues the policies as applied for,
but charges a 25 percent higher premium for one of the policies. The difference
in premiums is probably due to which of the following factors?
A) Incontestability
B) Insurable interest
C) Consideration
D) Risk classification
Correct Answer: D
Explanation: Insurers classify risks based on health, occupation, hobbies, and
other factors. Even identical twins may have different health histories or risk
factors that place them in different underwriting classes.
6. In the event of an insured's death, which of the following provides an income
for the family during a designated period of time followed by a lump sum death
benefit?
A) Family Income rider
B) Survivorship Life policy
C) Joint Life policy
D) Modified Life policy
Correct Answer: A
Explanation: A Family Income rider pays a monthly income to beneficiaries for a
specified period (e.g., 10 or 20 years) after the insured's death, and then pays the
face amount as a lump sum at the end of that period.
, 7. Which of the following statements is CORRECT about Group Life conversion
privileges?
A) Under the COBRA law, a departing employee may elect to remain a member of
the Group Life plan for a limited period of time.
B) Death during the conversion period is covered even if the departing employee
chose not to convert the policy.
C) A departing employee must individually pay the premium if the employee
elects to be covered during the conversion period.
D) If a departing employee elects to convert a life insurance policy, the insurer
must offer Term insurance as one of the choices.
Correct Answer: B
Explanation: Most group life policies provide that if an employee dies during the
conversion period (typically 31 days after leaving the group), the full death benefit
is payable even if the employee had not yet converted to an individual policy.
8. Which of the following policies is an interest-sensitive form of permanent
protection?
A) Universal Life
B) Limited-Pay Life
C) Graded Premium Whole Life
D) Modified Whole Life
Correct Answer: A
Explanation: Universal Life is an interest-sensitive permanent policy where the
cash value earns interest at current market rates (often tied to an index).
Premiums and death benefits may be flexible.
