Illinois Life & Health Insurance Exam
(2026/2027)Questions & Answers (Best answered)100%
Verified Answers!!
Perfect! I can create a comprehensive, difficult, and highly tested question set for the Illinois Life &
Health Insurance Exam, in the same detailed format as before, with:
• Full question
• Multiple-choice options
• Correct answer
• Detailed explanation
We can start with Questions 1–20.
Illinois Life & Health Insurance Exam – Questions 1–20
Question 1
Which of the following is a key characteristic of a life insurance policy?
A. It provides benefits only while the insured is alive.
B. It transfers financial risk from the insured to the insurer.
C. It guarantees investment growth with no risk.
D. It pays benefits only for hospital expenses.
Correct Answer: B
Explanation:
Life insurance transfers the financial risk of premature death from the insured to the insurance
company, providing a death benefit to beneficiaries. It does not cover living expenses or guarantee
investment growth unless it is a cash-value policy.
,Question 2
Which type of life insurance provides coverage for a specified period and pays a death benefit only if
the insured dies during that term?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: B
Explanation:
Term life insurance is temporary coverage, typically 10, 20, or 30 years, paying benefits only if the
insured dies within the term. It has no cash value.
Question 3
In Illinois, what is the primary purpose of a replacement notice when a new life insurance policy is
issued?
A. To explain premium payment options
B. To inform the insured that a new policy will replace an existing policy
C. To show the insurer’s profit margin
D. To provide investment advice
Correct Answer: B
Explanation:
Replacement notices inform the applicant that a new policy may replace an existing one, helping the
insured understand the implications, such as potential loss of benefits or surrender charges.
Question 4
Which of the following is a nonforfeiture option in a whole life insurance policy?
A. Extended term
B. Accidental death benefit
C. Term rider
D. Waiver of premium
Correct Answer: A
Explanation:
Nonforfeiture options protect the policyholder’s cash value if they stop paying premiums. Extended
term allows the policy to continue as a term policy using existing cash value.
,Question 5
Which life insurance policy type allows the policyholder to adjust premiums and death benefits over
time?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Group life insurance
Correct Answer: C
Explanation:
Universal life insurance is flexible, allowing changes in premiums and death benefits within certain
limits, while maintaining a cash value component.
Question 6
Which of the following best describes a variable life insurance policy?
A. Premiums are fixed and cash value is guaranteed
B. Cash value is invested in separate accounts and can fluctuate with market performance
C. Coverage is temporary and only lasts 1–5 years
D. It only provides accidental death coverage
Correct Answer: B
Explanation:
Variable life insurance allows policyholders to invest the cash value in subaccounts, which are subject to
market risk. Death benefit may vary with account performance.
Question 7
Which of the following is true regarding the grace period in Illinois life and health insurance policies?
A. Coverage ends immediately if the premium is late
B. Policies must provide a minimum of 31 days to pay overdue premiums
C. Only applies to group insurance
D. Only applies to premiums paid annually
Correct Answer: B
Explanation:
The grace period ensures coverage continues temporarily while overdue premiums are paid. Illinois law
mandates at least 31 days for life and health insurance policies.
, Question 8
Which statement correctly describes accidental death and dismemberment (AD&D) insurance?
A. Pays benefits only if the insured dies from illness
B. Pays benefits if the insured dies or loses a limb or sight in a covered accident
C. Is a type of term life insurance with cash value
D. Only provides disability benefits
Correct Answer: B
Explanation:
AD&D insurance pays for death or specific injuries caused by accidents, not illness, offering a limited
coverage supplement to life insurance.
Question 9
Which of the following statements about group health insurance is correct?
A. It is usually more expensive than individual insurance
B. Coverage is issued to a group, such as employees, under a single master policy
C. Each member must complete underwriting individually
D. It does not cover pre-existing conditions
Correct Answer: B
Explanation:
Group insurance covers multiple individuals under one master policy. Individual underwriting is usually
not required, and premiums are generally lower due to pooled risk.
Question 10
Which of the following is an example of a pre-existing condition exclusion?
A. Coverage denial for heart disease diagnosed before the policy start date
B. Denial of benefits after an accidental injury
C. Coverage of preventive care
D. Payment for elective cosmetic surgery
Correct Answer: A
Explanation:
A pre-existing condition is a medical condition diagnosed or treated before the policy begins. Insurers
may limit or exclude coverage for a defined period.
(2026/2027)Questions & Answers (Best answered)100%
Verified Answers!!
Perfect! I can create a comprehensive, difficult, and highly tested question set for the Illinois Life &
Health Insurance Exam, in the same detailed format as before, with:
• Full question
• Multiple-choice options
• Correct answer
• Detailed explanation
We can start with Questions 1–20.
Illinois Life & Health Insurance Exam – Questions 1–20
Question 1
Which of the following is a key characteristic of a life insurance policy?
A. It provides benefits only while the insured is alive.
B. It transfers financial risk from the insured to the insurer.
C. It guarantees investment growth with no risk.
D. It pays benefits only for hospital expenses.
Correct Answer: B
Explanation:
Life insurance transfers the financial risk of premature death from the insured to the insurance
company, providing a death benefit to beneficiaries. It does not cover living expenses or guarantee
investment growth unless it is a cash-value policy.
,Question 2
Which type of life insurance provides coverage for a specified period and pays a death benefit only if
the insured dies during that term?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
Correct Answer: B
Explanation:
Term life insurance is temporary coverage, typically 10, 20, or 30 years, paying benefits only if the
insured dies within the term. It has no cash value.
Question 3
In Illinois, what is the primary purpose of a replacement notice when a new life insurance policy is
issued?
A. To explain premium payment options
B. To inform the insured that a new policy will replace an existing policy
C. To show the insurer’s profit margin
D. To provide investment advice
Correct Answer: B
Explanation:
Replacement notices inform the applicant that a new policy may replace an existing one, helping the
insured understand the implications, such as potential loss of benefits or surrender charges.
Question 4
Which of the following is a nonforfeiture option in a whole life insurance policy?
A. Extended term
B. Accidental death benefit
C. Term rider
D. Waiver of premium
Correct Answer: A
Explanation:
Nonforfeiture options protect the policyholder’s cash value if they stop paying premiums. Extended
term allows the policy to continue as a term policy using existing cash value.
,Question 5
Which life insurance policy type allows the policyholder to adjust premiums and death benefits over
time?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Group life insurance
Correct Answer: C
Explanation:
Universal life insurance is flexible, allowing changes in premiums and death benefits within certain
limits, while maintaining a cash value component.
Question 6
Which of the following best describes a variable life insurance policy?
A. Premiums are fixed and cash value is guaranteed
B. Cash value is invested in separate accounts and can fluctuate with market performance
C. Coverage is temporary and only lasts 1–5 years
D. It only provides accidental death coverage
Correct Answer: B
Explanation:
Variable life insurance allows policyholders to invest the cash value in subaccounts, which are subject to
market risk. Death benefit may vary with account performance.
Question 7
Which of the following is true regarding the grace period in Illinois life and health insurance policies?
A. Coverage ends immediately if the premium is late
B. Policies must provide a minimum of 31 days to pay overdue premiums
C. Only applies to group insurance
D. Only applies to premiums paid annually
Correct Answer: B
Explanation:
The grace period ensures coverage continues temporarily while overdue premiums are paid. Illinois law
mandates at least 31 days for life and health insurance policies.
, Question 8
Which statement correctly describes accidental death and dismemberment (AD&D) insurance?
A. Pays benefits only if the insured dies from illness
B. Pays benefits if the insured dies or loses a limb or sight in a covered accident
C. Is a type of term life insurance with cash value
D. Only provides disability benefits
Correct Answer: B
Explanation:
AD&D insurance pays for death or specific injuries caused by accidents, not illness, offering a limited
coverage supplement to life insurance.
Question 9
Which of the following statements about group health insurance is correct?
A. It is usually more expensive than individual insurance
B. Coverage is issued to a group, such as employees, under a single master policy
C. Each member must complete underwriting individually
D. It does not cover pre-existing conditions
Correct Answer: B
Explanation:
Group insurance covers multiple individuals under one master policy. Individual underwriting is usually
not required, and premiums are generally lower due to pooled risk.
Question 10
Which of the following is an example of a pre-existing condition exclusion?
A. Coverage denial for heart disease diagnosed before the policy start date
B. Denial of benefits after an accidental injury
C. Coverage of preventive care
D. Payment for elective cosmetic surgery
Correct Answer: A
Explanation:
A pre-existing condition is a medical condition diagnosed or treated before the policy begins. Insurers
may limit or exclude coverage for a defined period.
