FP1 / Practice Examination 2, 2026

FP1 / Practice Examination 2, 2026 Vivian buys a life insurance policy in which the insurer pays policyholders dividends based on how well the life insurer is doing. If the insurer is profitable, Vivian will receive dividends. If the insurer underperforms financially, Vivian and other policyholders will receive fewer dividends. Indicate the type of insurance policy Vivian purchased. A. Variable life insurance. B. Participating life insurance. C. Limited-pay life insurance. D. Non-participating life insurance - answer-B. Participating life insurance. Choose the type of insurance that combines term and whole life for a predetermined contract period and guarantees a sum of money for either the beneficiar(ies) or at the end of the term for the contract holder. A. Variable life insurance. B. Universal life Insurance. C. Permanent life Insurance. D. Endowment life insurance. - answer-D. Endowment life insurance. Endowment life insurance is a combination of term life and whole life. It provides coverage for a specified period of time (usually to age 65) and builds cash value. If the insured should die during the period of coverage, the beneficiary receives the face amount of coverage. If the insured does not die during the period of coverage, the policy owner receives the entire face value of the policy as a cash payment and the insurance coverage ceases. Reference: Module 4, Section 2.