ALU 202 Exam Study Guide | 200 Practice
Questions & Answer Key | 2026/2027
Updated
The Academy of Life Underwriting (ALU) Exam 202 is the third exam in the FALU sequence
and covers intermediate non-medical life insurance underwriting, including large-amount
cases, financial underwriting, and reinsurance. For the 2026–2027 exam cycles, ALU identifies
Intermediate Non-Medical Life Insurance Underwriting, 12th Edition as the required text.
ALU states that its examinations consist of 100 multiple-choice questions, with a passing score
of 70 or higher under the changes effective April 2025.
Below is an original 200-question practice study guide, not an actual/leaked ALU exam or
official answer key.
Questions 1–20
1. Which topic is specifically associated with ALU 202?
A. Basic anatomy and physiology
B. Intermediate non-medical underwriting
C. Advanced medical underwriting only
D. Property insurance underwriting
✅ Correct Answer: B. Intermediate non-medical underwriting
Rationale: ALU identifies Exam 202 as covering intermediate non-medical life insurance
underwriting. (
2. Which type of case is specifically emphasized in ALU 202?
A. Automobile claims
B. Large-amount life insurance cases
C. Workers' compensation claims
D. Homeowners claims
✅ Correct Answer: B. Large-amount life insurance cases
Rationale: Large-amount cases are specifically identified among the ALU 202 subject areas.
,3. Financial underwriting primarily evaluates:
A. The applicant's eye color
B. Whether the amount of insurance is financially justified
C. The applicant's blood type
D. The applicant's driving skill
✅ Correct Answer: B. Whether the amount of insurance is financially justified
Rationale: Financial underwriting evaluates the economic justification for requested coverage
and helps identify potentially excessive or inappropriate amounts.
4. Reinsurance involves:
A. An insurer transferring some risk to another insurer
B. A policyholder changing beneficiaries
C. An agent changing an application
D. A client canceling coverage
✅ Correct Answer: A. An insurer transferring some risk to another insurer
5. Which factor can be important when evaluating a large life insurance
application?
A. Financial need
B. Favorite color
C. Preferred vacation location
D. Shoe size
✅ Correct Answer: A. Financial need
6. The primary purpose of financial underwriting is to determine:
A. Whether the applicant has sufficient medical knowledge
B. Whether the requested insurance amount has a reasonable financial purpose
C. Whether the applicant owns a vehicle
D. Whether the applicant prefers term insurance
, ✅ Correct Answer: B. Whether the requested insurance amount has a reasonable
financial purpose
7. Which document may help establish an applicant's financial position?
A. Financial statements
B. Vaccination card only
C. Birth announcement
D. Restaurant receipt
✅ Correct Answer: A. Financial statements
8. When reviewing a business owner's application for substantial coverage, the
underwriter may consider:
A. Business valuation and ownership interest
B. Favorite sports team
C. Clothing preferences
D. Vacation schedule
✅ Correct Answer: A. Business valuation and ownership interest
9. A legitimate insurance need should generally be:
A. Financially reasonable and supportable
B. Completely unrelated to the applicant
C. Based only on the applicant's desired premium
D. Determined solely by the agent
✅ Correct Answer: A. Financially reasonable and supportable
10. Which situation may warrant additional financial documentation?
A. A request for unusually large coverage relative to documented financial circumstances
B. A routine low-amount policy
C. A request to change an address
D. A request for a duplicate insurance card
Questions & Answer Key | 2026/2027
Updated
The Academy of Life Underwriting (ALU) Exam 202 is the third exam in the FALU sequence
and covers intermediate non-medical life insurance underwriting, including large-amount
cases, financial underwriting, and reinsurance. For the 2026–2027 exam cycles, ALU identifies
Intermediate Non-Medical Life Insurance Underwriting, 12th Edition as the required text.
ALU states that its examinations consist of 100 multiple-choice questions, with a passing score
of 70 or higher under the changes effective April 2025.
Below is an original 200-question practice study guide, not an actual/leaked ALU exam or
official answer key.
Questions 1–20
1. Which topic is specifically associated with ALU 202?
A. Basic anatomy and physiology
B. Intermediate non-medical underwriting
C. Advanced medical underwriting only
D. Property insurance underwriting
✅ Correct Answer: B. Intermediate non-medical underwriting
Rationale: ALU identifies Exam 202 as covering intermediate non-medical life insurance
underwriting. (
2. Which type of case is specifically emphasized in ALU 202?
A. Automobile claims
B. Large-amount life insurance cases
C. Workers' compensation claims
D. Homeowners claims
✅ Correct Answer: B. Large-amount life insurance cases
Rationale: Large-amount cases are specifically identified among the ALU 202 subject areas.
,3. Financial underwriting primarily evaluates:
A. The applicant's eye color
B. Whether the amount of insurance is financially justified
C. The applicant's blood type
D. The applicant's driving skill
✅ Correct Answer: B. Whether the amount of insurance is financially justified
Rationale: Financial underwriting evaluates the economic justification for requested coverage
and helps identify potentially excessive or inappropriate amounts.
4. Reinsurance involves:
A. An insurer transferring some risk to another insurer
B. A policyholder changing beneficiaries
C. An agent changing an application
D. A client canceling coverage
✅ Correct Answer: A. An insurer transferring some risk to another insurer
5. Which factor can be important when evaluating a large life insurance
application?
A. Financial need
B. Favorite color
C. Preferred vacation location
D. Shoe size
✅ Correct Answer: A. Financial need
6. The primary purpose of financial underwriting is to determine:
A. Whether the applicant has sufficient medical knowledge
B. Whether the requested insurance amount has a reasonable financial purpose
C. Whether the applicant owns a vehicle
D. Whether the applicant prefers term insurance
, ✅ Correct Answer: B. Whether the requested insurance amount has a reasonable
financial purpose
7. Which document may help establish an applicant's financial position?
A. Financial statements
B. Vaccination card only
C. Birth announcement
D. Restaurant receipt
✅ Correct Answer: A. Financial statements
8. When reviewing a business owner's application for substantial coverage, the
underwriter may consider:
A. Business valuation and ownership interest
B. Favorite sports team
C. Clothing preferences
D. Vacation schedule
✅ Correct Answer: A. Business valuation and ownership interest
9. A legitimate insurance need should generally be:
A. Financially reasonable and supportable
B. Completely unrelated to the applicant
C. Based only on the applicant's desired premium
D. Determined solely by the agent
✅ Correct Answer: A. Financially reasonable and supportable
10. Which situation may warrant additional financial documentation?
A. A request for unusually large coverage relative to documented financial circumstances
B. A routine low-amount policy
C. A request to change an address
D. A request for a duplicate insurance card
