ESTUDYR
PEARSONVUE LIFE INSURANCE 2025 UPDATED EXAM WITH
MOST TESTED QUESTIONS AND ANSWERS | GRADED A+ |
ASSURED SUCCESS WITH DETAILED RATIONALES
1. The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life
policy is that the Variable Whole Life policy:
A. Guarantees a minimum interest rate on cash value
B. Offers lower initial premiums
C. Is less complex to administer
D. Has the potential to earn a higher rate of return on the cash value
Rationale: Variable policies invest cash values in subaccounts, offering growth potential linked to market
performance.
2. Paid-Up Additions in a participating Whole Life policy are purchased on a(n): A. Original age
basis B. Cash value basis C. Attained age basis D. Preferred risk basis
Rationale: Participating policies use the insured’s current (attained) age to calculate the cost of
additional paid-up insurance.
3. Regarding Group Life conversion privileges, if the insured dies during the conversion period
without converting, the insurer will: A. Deny any death benefit B. Pay only the group policy
benefit C. Pay the individual converted policy benefit D. Require proof of insurability
Rationale: Conversion privileges include coverage for death during the conversion period, regardless of
election to convert.
4. If an insured commits suicide after the suicide clause period has expired, the insurer will: A.
Return only premiums paid B. Void the policy C. Deduct an administrative fee D. Pay the full
death benefit
Rationale: Once the contestability and suicide exclusion periods end (usually two years), suicide is
covered like other causes of death.
5. A Guaranteed Insurability rider allows the insured to purchase: A. Lower premiums upon
renewal B. Reduced face amount later C. Additional coverage at specified ages D. Waiver of
premium during disability
Rationale: GI riders permit specified future increases in coverage without evidence of insurability.
, ESTUDYR
6. If an applicant for life insurance is classified as a substandard risk, the insurer will most likely: A.
Decline coverage B. Offer a waiver of premium rider C. Charge an extra (loading) premium D.
Automatically issue a term policy
Rationale: Substandard risks typically face higher premiums to compensate for increased mortality.
7. To name her husband as beneficiary while retaining ownership rights, P should designate him as
a: A. Irrevocable beneficiary B. Secondary beneficiary C. Revocable beneficiary D. Contingent
beneficiary
Rationale: A revocable designation allows the owner to change beneficiary or exercise policy rights
freely.
8. Which provision allows an insurance policy to stay in force for a period beyond the premium due
date? A. Reinstatement provision B. Automatic premium loan C. Grace period provision D.
Incontestability clause
Rationale: The grace period (typically 31 days) extends coverage while the overdue premium is paid.
9. In life insurance, insurable interest must exist at the time the: A. Policy is approved by
underwriter B. First dividend is declared C. Producer writes and the applicant signs the
application D. Insured dies
Rationale: Insurable interest ensures the applicant would suffer a financial loss upon the insured’s
death.
10. The term referring to transfer of ownership rights from one party to another is: A. Novation B.
Cancellation C. Assignment D. Endorsement
Rationale: Assignment transfers policy ownership or benefits per the assignment form.
11. A Renewable Term policy is characterized by being: A. Convertible only at issue B. Renewable at
the option of the insured without proof of insurability C. Guaranteed to remain level term for
life D. Offering cash accumulation
Rationale: Renewable term allows policy renewal at specified dates without health evidence.
12. Two business partners own life insurance on each other. A contract that funds the survivor’s
purchase of the deceased partner’s interest is a: A. Key Person policy B. Cross-Purchase plan C.
Exchange agreement D. Buy-Sell agreement (split-dollar arrangement)
Rationale: Buy-sell funded by life policies ensures liquidity to purchase interests upon a partner’s death.
13. If an insured understates her age on the application, at death the insurer will: A. Deny the claim
B. Pay full benefit and charge premium difference to beneficiary C. Adjust the death benefit to
the amount the premiums would have purchased at the correct age D. Return all premiums
paid
PEARSONVUE LIFE INSURANCE 2025 UPDATED EXAM WITH
MOST TESTED QUESTIONS AND ANSWERS | GRADED A+ |
ASSURED SUCCESS WITH DETAILED RATIONALES
1. The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life
policy is that the Variable Whole Life policy:
A. Guarantees a minimum interest rate on cash value
B. Offers lower initial premiums
C. Is less complex to administer
D. Has the potential to earn a higher rate of return on the cash value
Rationale: Variable policies invest cash values in subaccounts, offering growth potential linked to market
performance.
2. Paid-Up Additions in a participating Whole Life policy are purchased on a(n): A. Original age
basis B. Cash value basis C. Attained age basis D. Preferred risk basis
Rationale: Participating policies use the insured’s current (attained) age to calculate the cost of
additional paid-up insurance.
3. Regarding Group Life conversion privileges, if the insured dies during the conversion period
without converting, the insurer will: A. Deny any death benefit B. Pay only the group policy
benefit C. Pay the individual converted policy benefit D. Require proof of insurability
Rationale: Conversion privileges include coverage for death during the conversion period, regardless of
election to convert.
4. If an insured commits suicide after the suicide clause period has expired, the insurer will: A.
Return only premiums paid B. Void the policy C. Deduct an administrative fee D. Pay the full
death benefit
Rationale: Once the contestability and suicide exclusion periods end (usually two years), suicide is
covered like other causes of death.
5. A Guaranteed Insurability rider allows the insured to purchase: A. Lower premiums upon
renewal B. Reduced face amount later C. Additional coverage at specified ages D. Waiver of
premium during disability
Rationale: GI riders permit specified future increases in coverage without evidence of insurability.
, ESTUDYR
6. If an applicant for life insurance is classified as a substandard risk, the insurer will most likely: A.
Decline coverage B. Offer a waiver of premium rider C. Charge an extra (loading) premium D.
Automatically issue a term policy
Rationale: Substandard risks typically face higher premiums to compensate for increased mortality.
7. To name her husband as beneficiary while retaining ownership rights, P should designate him as
a: A. Irrevocable beneficiary B. Secondary beneficiary C. Revocable beneficiary D. Contingent
beneficiary
Rationale: A revocable designation allows the owner to change beneficiary or exercise policy rights
freely.
8. Which provision allows an insurance policy to stay in force for a period beyond the premium due
date? A. Reinstatement provision B. Automatic premium loan C. Grace period provision D.
Incontestability clause
Rationale: The grace period (typically 31 days) extends coverage while the overdue premium is paid.
9. In life insurance, insurable interest must exist at the time the: A. Policy is approved by
underwriter B. First dividend is declared C. Producer writes and the applicant signs the
application D. Insured dies
Rationale: Insurable interest ensures the applicant would suffer a financial loss upon the insured’s
death.
10. The term referring to transfer of ownership rights from one party to another is: A. Novation B.
Cancellation C. Assignment D. Endorsement
Rationale: Assignment transfers policy ownership or benefits per the assignment form.
11. A Renewable Term policy is characterized by being: A. Convertible only at issue B. Renewable at
the option of the insured without proof of insurability C. Guaranteed to remain level term for
life D. Offering cash accumulation
Rationale: Renewable term allows policy renewal at specified dates without health evidence.
12. Two business partners own life insurance on each other. A contract that funds the survivor’s
purchase of the deceased partner’s interest is a: A. Key Person policy B. Cross-Purchase plan C.
Exchange agreement D. Buy-Sell agreement (split-dollar arrangement)
Rationale: Buy-sell funded by life policies ensures liquidity to purchase interests upon a partner’s death.
13. If an insured understates her age on the application, at death the insurer will: A. Deny the claim
B. Pay full benefit and charge premium difference to beneficiary C. Adjust the death benefit to
the amount the premiums would have purchased at the correct age D. Return all premiums
paid
