,General Life Insurance Exam – Life Insurance
Licensing – Q&A (2026/2027) | Pearson VUE
1. Term life insurance provides:
A) Permanent coverage with a guaranteed cash value
B) Pure death protection for a specified period with no cash value
C) Flexible premiums and adjustable death benefits
D) Investment returns linked to a stock index
Correct Answer: B) Pure death protection for a specified period with no cash
value
Rationale: Term insurance offers temporary coverage for a set number of years.
It pays a death benefit only if the insured dies during that term and does not
accumulate cash value. It is the simplest and generally least expensive form of
life insurance.
2. Which permanent life insurance policy guarantees a fixed premium, a
guaranteed death benefit, and a guaranteed minimum cash value growth?
A) Universal life
B) Variable life
C) Whole life
D) Term life
Correct Answer: C) Whole life
,Rationale: Whole life (ordinary life) provides lifetime protection with level
premiums and a guaranteed cash value that grows at a guaranteed rate. It is the
most traditional form of permanent insurance.
3. A universal life insurance policy is characterized by:
A) Fixed premiums and a fixed death benefit
B) An adjustable death benefit and flexible premiums, with cash value earning
interest at current rates
C) Cash value invested in separate accounts chosen by the policyowner
D) Coverage that expires at the end of a specified term
Correct Answer: B) An adjustable death benefit and flexible premiums, with
cash value earning interest at current rates
Rationale: Universal life unbundles the protection, savings, and expense
components. The policyowner may vary premium payments and adjust the
death benefit within limits. Cash value earns interest based on current market
rates, subject to a guaranteed minimum.
4. An insured wants a life insurance policy where the cash value is invested in
subaccounts similar to mutual funds. The policy should be a:
A) Whole life policy
B) Universal life policy
C) Variable life policy
D) Term life policy
Correct Answer: C) Variable life policy
, Rationale: Variable life allows the policyowner to allocate cash value among
various investment options. The death benefit and cash value fluctuate with
investment performance. Because it is a security, the agent must hold a
securities license (e.g., FINRA Series 6).
5. An indexed universal life (IUL) policy credits interest based on:
A) A fixed rate declared by the insurer
B) The performance of a stock market index, subject to a cap and floor
C) The dividends paid by the insurer
D) Only the insurer's general account
Correct Answer: B) The performance of a stock market index, subject to a cap
and floor
Rationale: IUL links interest credits to an equity index (e.g., S&P 500). The policy
includes a cap (maximum rate) and a floor (minimum, often 0%) so that the
policyowner participates in market gains up to the cap but is protected from
market losses.
6. An annuity is primarily designed to protect against:
A) Premature death
B) The risk of outliving one's savings
C) Medical expenses
D) Property damage
Licensing – Q&A (2026/2027) | Pearson VUE
1. Term life insurance provides:
A) Permanent coverage with a guaranteed cash value
B) Pure death protection for a specified period with no cash value
C) Flexible premiums and adjustable death benefits
D) Investment returns linked to a stock index
Correct Answer: B) Pure death protection for a specified period with no cash
value
Rationale: Term insurance offers temporary coverage for a set number of years.
It pays a death benefit only if the insured dies during that term and does not
accumulate cash value. It is the simplest and generally least expensive form of
life insurance.
2. Which permanent life insurance policy guarantees a fixed premium, a
guaranteed death benefit, and a guaranteed minimum cash value growth?
A) Universal life
B) Variable life
C) Whole life
D) Term life
Correct Answer: C) Whole life
,Rationale: Whole life (ordinary life) provides lifetime protection with level
premiums and a guaranteed cash value that grows at a guaranteed rate. It is the
most traditional form of permanent insurance.
3. A universal life insurance policy is characterized by:
A) Fixed premiums and a fixed death benefit
B) An adjustable death benefit and flexible premiums, with cash value earning
interest at current rates
C) Cash value invested in separate accounts chosen by the policyowner
D) Coverage that expires at the end of a specified term
Correct Answer: B) An adjustable death benefit and flexible premiums, with
cash value earning interest at current rates
Rationale: Universal life unbundles the protection, savings, and expense
components. The policyowner may vary premium payments and adjust the
death benefit within limits. Cash value earns interest based on current market
rates, subject to a guaranteed minimum.
4. An insured wants a life insurance policy where the cash value is invested in
subaccounts similar to mutual funds. The policy should be a:
A) Whole life policy
B) Universal life policy
C) Variable life policy
D) Term life policy
Correct Answer: C) Variable life policy
, Rationale: Variable life allows the policyowner to allocate cash value among
various investment options. The death benefit and cash value fluctuate with
investment performance. Because it is a security, the agent must hold a
securities license (e.g., FINRA Series 6).
5. An indexed universal life (IUL) policy credits interest based on:
A) A fixed rate declared by the insurer
B) The performance of a stock market index, subject to a cap and floor
C) The dividends paid by the insurer
D) Only the insurer's general account
Correct Answer: B) The performance of a stock market index, subject to a cap
and floor
Rationale: IUL links interest credits to an equity index (e.g., S&P 500). The policy
includes a cap (maximum rate) and a floor (minimum, often 0%) so that the
policyowner participates in market gains up to the cap but is protected from
market losses.
6. An annuity is primarily designed to protect against:
A) Premature death
B) The risk of outliving one's savings
C) Medical expenses
D) Property damage
