PEARSON VUE LIFE & HEALTH INSURANCE EXAM
2026 | VERIFIED QUESTIONS AND CORRECT
ANSWERS | STATE LICENSING PREPARATION |
COMPLETE STUDY GUIDE
• This question study guide mirrors the format of the Pearson VUE Life & Health
Insurance licensing exam — use it actively: attempt each question first, then check
the answer and EXPERT RATIONALE to reinforce understanding and target weak
areas.
• Each question features 5 options (A–E), a clearly highlighted correct answer, and a
detailed EXPERT RATIONALE — covering every major topic tested on the state
licensing exam.
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Q1. What type of life insurance provides coverage for a specified period and
pays a death benefit only if the insured dies during that period?
A. Whole life insurance
B. Universal life insurance
C. Term life insurance
D. Variable life insurance
E. Endowment policy
Correct Answer: C. Term life insurance
EXPERT RATIONALE: Term life insurance covers the insured for a specific time
period such as 10, 20, or 30 years. If the insured dies within the term the death
benefit is paid to beneficiaries. If the insured outlives the term coverage expires
with no cash value accumulated.
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Q2. Which type of life insurance combines a death benefit with a savings
component that grows on a tax-deferred basis at a guaranteed rate?
A. Term life insurance
B. Whole life insurance
,C. Variable life insurance
D. Credit life insurance
E. Industrial life insurance
Correct Answer: B. Whole life insurance
EXPERT RATIONALE: Whole life insurance provides lifetime coverage and includes
a cash value component that grows at a guaranteed rate on a tax-deferred basis.
Premiums remain fixed throughout the life of the policy making it the foundational
permanent life insurance product.
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Q3. Which type of life insurance policy allows the policyowner to adjust both
the premium amount and the death benefit and credits interest based on
current market rates?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Endowment policy
E. Credit life insurance
Correct Answer: C. Universal life insurance
EXPERT RATIONALE: Universal life (UL) insurance offers flexible premiums and an
adjustable death benefit. The cash value earns interest at current market rates
subject to a minimum guaranteed rate. This flexibility distinguishes UL from
traditional whole life insurance.
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━━━━━━━━━━━━━━
Q4. In a variable life insurance policy the cash value is invested in which type
of account?
,A. General account
B. Savings account
C. Money market account
D. Separate account
E. Checking account
Correct Answer: D. Separate account
EXPERT RATIONALE: In variable life insurance the cash value is placed in a separate
account made up of investment subaccounts similar to mutual funds. The
policyowner bears the investment risk and the cash value fluctuates based on
investment performance.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q5. Which type of life insurance policy combines the investment flexibility of
variable life with the premium flexibility of universal life?
A. Indexed universal life
B. Adjustable life insurance
C. Variable universal life (VUL) insurance
D. Survivorship life insurance
E. Modified premium whole life
Correct Answer: C. Variable universal life (VUL) insurance
EXPERT RATIONALE: Variable universal life (VUL) combines features of both
variable and universal life insurance. It offers flexible premiums and an adjustable
death benefit like UL while allowing cash value to be invested in separate account
subaccounts like variable life. The policyowner bears investment risk.
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━━━━━━━━━━━━━━
, Q6. An endowment policy pays the face amount to the policyowner if the
insured:
A. Dies before the policy term ends only
B. Survives to the end of the policy term only
C. Either dies during the policy term or survives to its maturity date
D. Cancels the policy voluntarily
E. Misses three consecutive premium payments
Correct Answer: C. Either dies during the policy term or survives to its
maturity date
EXPERT RATIONALE: An endowment policy pays the face amount as a death
benefit if the insured dies before the maturity date OR pays the face amount
directly to the policyowner if the insured survives to the maturity date.
Endowments build cash value rapidly and are generally treated as MECs under tax
law.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q7. A level term life insurance policy is characterized by:
A. Decreasing premiums and a fixed death benefit
B. Increasing death benefit and fixed premiums
C. Fixed premiums and a fixed death benefit throughout the term
D. Flexible premiums and an adjustable death benefit
E. A death benefit that decreases each year
Correct Answer: C. Fixed premiums and a fixed death benefit throughout
the term
EXPERT RATIONALE: Level term insurance maintains the same death benefit and
the same premium throughout the entire term of the policy making it the most
straightforward and commonly purchased type of term life insurance.
2026 | VERIFIED QUESTIONS AND CORRECT
ANSWERS | STATE LICENSING PREPARATION |
COMPLETE STUDY GUIDE
• This question study guide mirrors the format of the Pearson VUE Life & Health
Insurance licensing exam — use it actively: attempt each question first, then check
the answer and EXPERT RATIONALE to reinforce understanding and target weak
areas.
• Each question features 5 options (A–E), a clearly highlighted correct answer, and a
detailed EXPERT RATIONALE — covering every major topic tested on the state
licensing exam.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Q1. What type of life insurance provides coverage for a specified period and
pays a death benefit only if the insured dies during that period?
A. Whole life insurance
B. Universal life insurance
C. Term life insurance
D. Variable life insurance
E. Endowment policy
Correct Answer: C. Term life insurance
EXPERT RATIONALE: Term life insurance covers the insured for a specific time
period such as 10, 20, or 30 years. If the insured dies within the term the death
benefit is paid to beneficiaries. If the insured outlives the term coverage expires
with no cash value accumulated.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q2. Which type of life insurance combines a death benefit with a savings
component that grows on a tax-deferred basis at a guaranteed rate?
A. Term life insurance
B. Whole life insurance
,C. Variable life insurance
D. Credit life insurance
E. Industrial life insurance
Correct Answer: B. Whole life insurance
EXPERT RATIONALE: Whole life insurance provides lifetime coverage and includes
a cash value component that grows at a guaranteed rate on a tax-deferred basis.
Premiums remain fixed throughout the life of the policy making it the foundational
permanent life insurance product.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q3. Which type of life insurance policy allows the policyowner to adjust both
the premium amount and the death benefit and credits interest based on
current market rates?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Endowment policy
E. Credit life insurance
Correct Answer: C. Universal life insurance
EXPERT RATIONALE: Universal life (UL) insurance offers flexible premiums and an
adjustable death benefit. The cash value earns interest at current market rates
subject to a minimum guaranteed rate. This flexibility distinguishes UL from
traditional whole life insurance.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q4. In a variable life insurance policy the cash value is invested in which type
of account?
,A. General account
B. Savings account
C. Money market account
D. Separate account
E. Checking account
Correct Answer: D. Separate account
EXPERT RATIONALE: In variable life insurance the cash value is placed in a separate
account made up of investment subaccounts similar to mutual funds. The
policyowner bears the investment risk and the cash value fluctuates based on
investment performance.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q5. Which type of life insurance policy combines the investment flexibility of
variable life with the premium flexibility of universal life?
A. Indexed universal life
B. Adjustable life insurance
C. Variable universal life (VUL) insurance
D. Survivorship life insurance
E. Modified premium whole life
Correct Answer: C. Variable universal life (VUL) insurance
EXPERT RATIONALE: Variable universal life (VUL) combines features of both
variable and universal life insurance. It offers flexible premiums and an adjustable
death benefit like UL while allowing cash value to be invested in separate account
subaccounts like variable life. The policyowner bears investment risk.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
, Q6. An endowment policy pays the face amount to the policyowner if the
insured:
A. Dies before the policy term ends only
B. Survives to the end of the policy term only
C. Either dies during the policy term or survives to its maturity date
D. Cancels the policy voluntarily
E. Misses three consecutive premium payments
Correct Answer: C. Either dies during the policy term or survives to its
maturity date
EXPERT RATIONALE: An endowment policy pays the face amount as a death
benefit if the insured dies before the maturity date OR pays the face amount
directly to the policyowner if the insured survives to the maturity date.
Endowments build cash value rapidly and are generally treated as MECs under tax
law.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
━━━━━━━━━━━━━━
Q7. A level term life insurance policy is characterized by:
A. Decreasing premiums and a fixed death benefit
B. Increasing death benefit and fixed premiums
C. Fixed premiums and a fixed death benefit throughout the term
D. Flexible premiums and an adjustable death benefit
E. A death benefit that decreases each year
Correct Answer: C. Fixed premiums and a fixed death benefit throughout
the term
EXPERT RATIONALE: Level term insurance maintains the same death benefit and
the same premium throughout the entire term of the policy making it the most
straightforward and commonly purchased type of term life insurance.
