PEARSON VUE LIFE AND HEALTH INSURANCE EXAM
STUDY GUIDE 2026 – COMPLETE CONCEPT REVIEW
& PRACTICE MATERIALS
Section 1: Fundamentals of Insurance & Regulations
1. What is the fundamental principle that prevents an insured from profiting from a loss?
A. Principle of Indemnity
B. Principle of Utmost Good Faith ✓
C. Principle of Waiver
D. Principle of Subrogation
2. Which risk management technique involves accepting the potential loss because it is small
or infrequent?
A. Avoidance
B. Reduction
C. Retention ✓
D. Transfer
3. What is the purpose of a "Free Look" provision in an insurance policy?
A. To allow the insurer to investigate the applicant
B. To allow the policyowner to cancel and receive a full refund ✓
C. To provide a period where coverage is free of charge
D. To waive premiums during a disability
4. In insurance, what does the term "hazard" refer to?
A. The chance of a loss occurring
B. A condition that increases the likelihood or severity of a loss ✓
C. The cause of a loss
D. The actual loss itself
5. What document must be provided to a life insurance applicant outlining policy features,
costs, and benefits?
A. Schedule of Benefits
B. Outline of Coverage
,C. Buyer's Guide and Policy Summary ✓
D. Certificate of Authority
6. An agent who fails to submit an applicant's premium with the application, causing the
policy to lapse, may be liable for:
A. Estoppel
B. Waiver
C. Negligence ✓
D. Subrogation
7. What is the primary purpose of state insurance regulation?
A. To maximize insurer profits
B. To ensure policy forms are identical across states
C. To protect consumers and ensure insurer solvency ✓
D. To set uniform national premium rates
8. Which entity is primarily responsible for regulating insurance at the state level?
A. The Federal Insurance Office (FIO)
B. The National Association of Insurance Commissioners (NAICC)
C. The Department of Insurance (or equivalent) in each state ✓
D. The Securities and Exchange Commission (SEC)
9. Concealing a material fact on an insurance application is an example of:
A. Concealment ✓
B. Warranty
C. Estoppel
D. Rider
10. The process by which an insurer selects and classifies risks is called:
A. Underwriting ✓
B. Ratemaking
C. Marketing
D. Actuarial Science
Section 2: Life Insurance Basics
11. Which life insurance policy provides pure protection for a specific period with no cash
value?
A. Whole Life
,B. Universal Life
C. Term Life ✓
D. Variable Life
12. What does the "Face Amount" of a life insurance policy refer to?
A. The cash surrender value
B. The total premiums paid
C. The death benefit payable to the beneficiary ✓
D. The accumulated policy dividends
13. A policy that combines term insurance with an investment component is a:
A. Straight Life Policy
B. Modified Life Policy
C. Permanent Life Policy ✓
D. Renewable Term Policy
14. In a life insurance contract, who is the grantor of an assignment?
A. The insurance company
B. The beneficiary
C. The assignee
D. The policyowner ✓
15. Which nonforfeiture option provides continued protection for the longest period?
A. Cash Surrender
B. Reduced Paid-Up Insurance ✓
C. Extended Term Insurance
D. Accelerated Death Benefit
16. The "Entire Contract Clause" states that the policy and what other document constitute
the entire contract?
A. The agent's notes
B. The application ✓
C. The initial premium receipt
D. The buyer's guide
17. A rider that pays a monthly income to the insured if they become totally disabled is called
a:
A. Waiver of Premium Rider ✓
B. Guaranteed Insurability Rider
, C. Accidental Death Benefit Rider
D. Disability Income Rider
18. What type of life insurance policy allows the policyowner to adjust the premium and
death benefit within limits?
A. Variable Life
B. Universal Life ✓
C. Indexed Life
D. Whole Life
19. The "Grace Period" in a life insurance policy is typically:
A. 10 days
B. 31 days ✓
C. 60 days
D. 90 days
20. Which settlement option pays the death benefit in equal installments until both the
principal and interest are exhausted?
A. Life Income
B. Fixed Amount ✓
C. Fixed Period
D. Interest Only
Section 3: Health Insurance Basics
21. What type of health insurance plan requires the insured to pay a specific dollar amount
before the insurer begins paying benefits?
A. Coinsurance
B. Deductible ✓
C. Copayment
D. Out-of-pocket maximum
22. A Major Medical policy designed to cover expenses above a specific threshold is called a:
A. First-dollar coverage plan
B. Base plan
C. Comprehensive plan
D. Supplemental or "Catastrophic" plan ✓
STUDY GUIDE 2026 – COMPLETE CONCEPT REVIEW
& PRACTICE MATERIALS
Section 1: Fundamentals of Insurance & Regulations
1. What is the fundamental principle that prevents an insured from profiting from a loss?
A. Principle of Indemnity
B. Principle of Utmost Good Faith ✓
C. Principle of Waiver
D. Principle of Subrogation
2. Which risk management technique involves accepting the potential loss because it is small
or infrequent?
A. Avoidance
B. Reduction
C. Retention ✓
D. Transfer
3. What is the purpose of a "Free Look" provision in an insurance policy?
A. To allow the insurer to investigate the applicant
B. To allow the policyowner to cancel and receive a full refund ✓
C. To provide a period where coverage is free of charge
D. To waive premiums during a disability
4. In insurance, what does the term "hazard" refer to?
A. The chance of a loss occurring
B. A condition that increases the likelihood or severity of a loss ✓
C. The cause of a loss
D. The actual loss itself
5. What document must be provided to a life insurance applicant outlining policy features,
costs, and benefits?
A. Schedule of Benefits
B. Outline of Coverage
,C. Buyer's Guide and Policy Summary ✓
D. Certificate of Authority
6. An agent who fails to submit an applicant's premium with the application, causing the
policy to lapse, may be liable for:
A. Estoppel
B. Waiver
C. Negligence ✓
D. Subrogation
7. What is the primary purpose of state insurance regulation?
A. To maximize insurer profits
B. To ensure policy forms are identical across states
C. To protect consumers and ensure insurer solvency ✓
D. To set uniform national premium rates
8. Which entity is primarily responsible for regulating insurance at the state level?
A. The Federal Insurance Office (FIO)
B. The National Association of Insurance Commissioners (NAICC)
C. The Department of Insurance (or equivalent) in each state ✓
D. The Securities and Exchange Commission (SEC)
9. Concealing a material fact on an insurance application is an example of:
A. Concealment ✓
B. Warranty
C. Estoppel
D. Rider
10. The process by which an insurer selects and classifies risks is called:
A. Underwriting ✓
B. Ratemaking
C. Marketing
D. Actuarial Science
Section 2: Life Insurance Basics
11. Which life insurance policy provides pure protection for a specific period with no cash
value?
A. Whole Life
,B. Universal Life
C. Term Life ✓
D. Variable Life
12. What does the "Face Amount" of a life insurance policy refer to?
A. The cash surrender value
B. The total premiums paid
C. The death benefit payable to the beneficiary ✓
D. The accumulated policy dividends
13. A policy that combines term insurance with an investment component is a:
A. Straight Life Policy
B. Modified Life Policy
C. Permanent Life Policy ✓
D. Renewable Term Policy
14. In a life insurance contract, who is the grantor of an assignment?
A. The insurance company
B. The beneficiary
C. The assignee
D. The policyowner ✓
15. Which nonforfeiture option provides continued protection for the longest period?
A. Cash Surrender
B. Reduced Paid-Up Insurance ✓
C. Extended Term Insurance
D. Accelerated Death Benefit
16. The "Entire Contract Clause" states that the policy and what other document constitute
the entire contract?
A. The agent's notes
B. The application ✓
C. The initial premium receipt
D. The buyer's guide
17. A rider that pays a monthly income to the insured if they become totally disabled is called
a:
A. Waiver of Premium Rider ✓
B. Guaranteed Insurability Rider
, C. Accidental Death Benefit Rider
D. Disability Income Rider
18. What type of life insurance policy allows the policyowner to adjust the premium and
death benefit within limits?
A. Variable Life
B. Universal Life ✓
C. Indexed Life
D. Whole Life
19. The "Grace Period" in a life insurance policy is typically:
A. 10 days
B. 31 days ✓
C. 60 days
D. 90 days
20. Which settlement option pays the death benefit in equal installments until both the
principal and interest are exhausted?
A. Life Income
B. Fixed Amount ✓
C. Fixed Period
D. Interest Only
Section 3: Health Insurance Basics
21. What type of health insurance plan requires the insured to pay a specific dollar amount
before the insurer begins paying benefits?
A. Coinsurance
B. Deductible ✓
C. Copayment
D. Out-of-pocket maximum
22. A Major Medical policy designed to cover expenses above a specific threshold is called a:
A. First-dollar coverage plan
B. Base plan
C. Comprehensive plan
D. Supplemental or "Catastrophic" plan ✓
