PEARSON VUE LIFE & HEALTH INSURANCE EXAM 2026/2027
REAL EXAM QUESTIONS AND CORRECT VERIFIED ANSWERS WITH
RATIONALES / ALREADY GRADED A+ (MOST RECENT!!)
SECTION 1: LIFE INSURANCE BASICS (QUESTIONS 1-25)
QUESTION 1
P wants to name her husband as the beneficiary of her life policy but retain all
ownership rights. How should she designate him?
A) Irrevocable beneficiary
B) Revocable beneficiary
C) Secondary beneficiary
D) Tertiary beneficiary
Correct Answer: B
Rationale: A revocable beneficiary is the correct choice because the policyowner
retains the right to change the beneficiary at any time without the beneficiary's
consent. Choice A is incorrect because an irrevocable beneficiary cannot be
changed without written consent, which transfers some ownership rights. Choice
C
is incorrect because a secondary (contingent) beneficiary only receives benefits
if the primary predeceases the insured. Choice D is incorrect because a tertiary
beneficiary is a third-level contingent, not relevant to ownership rights.
QUESTION 2
Which of the following best describes the "insurable interest" requirement in
life insurance?
A) The policyowner must have a financial or emotional interest in the insured's
continued life at the time of application.
B) The policyowner must have insurable interest at the time of claim.
C) Any person can insure any other person regardless of relationship.
D) Insurable interest is only required for business insurance.
1
,Correct Answer: A
Rationale: Insurable interest must exist at the time of application (inception)
for a life insurance policy to be valid. It requires a reasonable expectation of
benefit from the insured's continued life (financial or emotional). Choice B is
incorrect because insurable interest does NOT need to exist at the time of claim
(except in some states for business cases). Choice C is false because a close
relationship or financial dependency is required. Choice D is false because
insurable interest is required for all life insurance policies.
QUESTION 3
What is the primary purpose of the "incontestability clause" in a life insurance
policy?
A) To allow the insurer to contest the policy at any time for any reason.
B) To prevent the insurer from contesting the policy after it has been in force
for a specified period (typically 2 years), except for fraud or non-payment.
C) To allow the insured to contest the insurer's payment of claims.
D) To prevent the insured from changing the beneficiary.
Correct Answer: B
Rationale: The incontestability clause prevents the insurer from voiding the
policy after it has been in force for 2 years (or the specified period) except
for fraud or non-payment of premiums. Choice A is false because the clause
limits the insurer's ability to contest. Choice C is incorrect because it is an
insurer protection, not an insured protection. Choice D is incorrect because it
does not affect beneficiary changes.
QUESTION 4
What is the "grace period" in a life insurance policy?
A) A period after the policy lapses during which the insured can reinstate
without evidence of insurability.
B) A period (usually 30 or 31 days) after the premium due date during which the
2
, policy remains in force while the premium is unpaid.
C) A period before the policy is issued when the applicant can withdraw.
D) A period after the death of the insured when the beneficiary can file a claim.
Correct Answer: B
Rationale: The grace period is a specified time (typically 30-31 days) after the
premium due date during which the policy remains in force even if the premium is
not paid. If the insured dies during this period, the death benefit is paid less
the overdue premium. Choice A is incorrect because the reinstatement period is
separate and often requires evidence of insurability. Choice C is incorrect
because this is the free-look period (not grace period). Choice D is incorrect
because claim filing has a separate time limit.
QUESTION 5
Which type of life insurance provides coverage for a specific period and pays
only if the insured dies during that period?
A) Whole life
B) Universal life
C) Term life
D) Variable life
Correct Answer: C
Rationale: Term life insurance provides coverage for a specific term (e.g., 10,
20, 30 years) and pays a death benefit only if the insured dies during that
term. It has no cash value. Choice A is incorrect because whole life provides
lifetime coverage and cash value. Choice B is incorrect because universal life
is permanent with flexible premiums and cash value. Choice D is incorrect
because variable life is permanent with investment-linked cash value.
QUESTION 6
What is the "cash surrender value" of a life insurance policy?
3
, A) The amount the policyowner can borrow from the insurer.
B) The amount the policyowner receives if they terminate the policy before death.
C) The amount paid to the beneficiary upon the insured's death.
D) The amount of the premium paid in the first year.
Correct Answer: B
Rationale: Cash surrender value is the amount the policyowner receives when
they voluntarily terminate (surrender) the policy before the insured's death. It is
the accumulated cash value minus any surrender charges. Choice A is incorrect
because that is the loan value (often a percentage of the cash value). Choice C
is incorrect because that is the death benefit. Choice D is incorrect because
premiums are not the same as cash value.
QUESTION 7
What is the "free-look period" in life insurance?
A) A period during which the applicant can review the policy and cancel for a
full refund (typically 10-30 days).
B) A period during which the insurer can cancel the policy without cause.
C) A period during which the insured can borrow against the policy.
D) A period during which the premium is waived.
Correct Answer: A
Rationale: The free-look period allows the policyowner to review the policy after
receipt and cancel it for a full refund of premiums paid. The period varies by
state (typically 10-30 days). Choice B is incorrect because the insurer cannot
cancel without cause after the policy is issued. Choice C is incorrect because
borrowing is a separate feature (policy loan). Choice D is incorrect because
premium waiver is a rider.
QUESTION 8
Which of the following is an example of a "non-forfeiture option"?
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REAL EXAM QUESTIONS AND CORRECT VERIFIED ANSWERS WITH
RATIONALES / ALREADY GRADED A+ (MOST RECENT!!)
SECTION 1: LIFE INSURANCE BASICS (QUESTIONS 1-25)
QUESTION 1
P wants to name her husband as the beneficiary of her life policy but retain all
ownership rights. How should she designate him?
A) Irrevocable beneficiary
B) Revocable beneficiary
C) Secondary beneficiary
D) Tertiary beneficiary
Correct Answer: B
Rationale: A revocable beneficiary is the correct choice because the policyowner
retains the right to change the beneficiary at any time without the beneficiary's
consent. Choice A is incorrect because an irrevocable beneficiary cannot be
changed without written consent, which transfers some ownership rights. Choice
C
is incorrect because a secondary (contingent) beneficiary only receives benefits
if the primary predeceases the insured. Choice D is incorrect because a tertiary
beneficiary is a third-level contingent, not relevant to ownership rights.
QUESTION 2
Which of the following best describes the "insurable interest" requirement in
life insurance?
A) The policyowner must have a financial or emotional interest in the insured's
continued life at the time of application.
B) The policyowner must have insurable interest at the time of claim.
C) Any person can insure any other person regardless of relationship.
D) Insurable interest is only required for business insurance.
1
,Correct Answer: A
Rationale: Insurable interest must exist at the time of application (inception)
for a life insurance policy to be valid. It requires a reasonable expectation of
benefit from the insured's continued life (financial or emotional). Choice B is
incorrect because insurable interest does NOT need to exist at the time of claim
(except in some states for business cases). Choice C is false because a close
relationship or financial dependency is required. Choice D is false because
insurable interest is required for all life insurance policies.
QUESTION 3
What is the primary purpose of the "incontestability clause" in a life insurance
policy?
A) To allow the insurer to contest the policy at any time for any reason.
B) To prevent the insurer from contesting the policy after it has been in force
for a specified period (typically 2 years), except for fraud or non-payment.
C) To allow the insured to contest the insurer's payment of claims.
D) To prevent the insured from changing the beneficiary.
Correct Answer: B
Rationale: The incontestability clause prevents the insurer from voiding the
policy after it has been in force for 2 years (or the specified period) except
for fraud or non-payment of premiums. Choice A is false because the clause
limits the insurer's ability to contest. Choice C is incorrect because it is an
insurer protection, not an insured protection. Choice D is incorrect because it
does not affect beneficiary changes.
QUESTION 4
What is the "grace period" in a life insurance policy?
A) A period after the policy lapses during which the insured can reinstate
without evidence of insurability.
B) A period (usually 30 or 31 days) after the premium due date during which the
2
, policy remains in force while the premium is unpaid.
C) A period before the policy is issued when the applicant can withdraw.
D) A period after the death of the insured when the beneficiary can file a claim.
Correct Answer: B
Rationale: The grace period is a specified time (typically 30-31 days) after the
premium due date during which the policy remains in force even if the premium is
not paid. If the insured dies during this period, the death benefit is paid less
the overdue premium. Choice A is incorrect because the reinstatement period is
separate and often requires evidence of insurability. Choice C is incorrect
because this is the free-look period (not grace period). Choice D is incorrect
because claim filing has a separate time limit.
QUESTION 5
Which type of life insurance provides coverage for a specific period and pays
only if the insured dies during that period?
A) Whole life
B) Universal life
C) Term life
D) Variable life
Correct Answer: C
Rationale: Term life insurance provides coverage for a specific term (e.g., 10,
20, 30 years) and pays a death benefit only if the insured dies during that
term. It has no cash value. Choice A is incorrect because whole life provides
lifetime coverage and cash value. Choice B is incorrect because universal life
is permanent with flexible premiums and cash value. Choice D is incorrect
because variable life is permanent with investment-linked cash value.
QUESTION 6
What is the "cash surrender value" of a life insurance policy?
3
, A) The amount the policyowner can borrow from the insurer.
B) The amount the policyowner receives if they terminate the policy before death.
C) The amount paid to the beneficiary upon the insured's death.
D) The amount of the premium paid in the first year.
Correct Answer: B
Rationale: Cash surrender value is the amount the policyowner receives when
they voluntarily terminate (surrender) the policy before the insured's death. It is
the accumulated cash value minus any surrender charges. Choice A is incorrect
because that is the loan value (often a percentage of the cash value). Choice C
is incorrect because that is the death benefit. Choice D is incorrect because
premiums are not the same as cash value.
QUESTION 7
What is the "free-look period" in life insurance?
A) A period during which the applicant can review the policy and cancel for a
full refund (typically 10-30 days).
B) A period during which the insurer can cancel the policy without cause.
C) A period during which the insured can borrow against the policy.
D) A period during which the premium is waived.
Correct Answer: A
Rationale: The free-look period allows the policyowner to review the policy after
receipt and cancel it for a full refund of premiums paid. The period varies by
state (typically 10-30 days). Choice B is incorrect because the insurer cannot
cancel without cause after the policy is issued. Choice C is incorrect because
borrowing is a separate feature (policy loan). Choice D is incorrect because
premium waiver is a rider.
QUESTION 8
Which of the following is an example of a "non-forfeiture option"?
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