Life Insurance Exam (Pearson VUE)
Questions With Complete Solutions
Rated A+
Ordinary Whole life (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-- Insurance protection to age 100
- Cash value accumulation to age 100
- Fixed level premium payments
Limited Payment (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-Premium payments are for a specified time (20-Pay Life or 30-Pay Life) or to
a specified age (Life Paid up at 65). The face amount (death benefit) remains level and
cash value continues to earn interest and mature at age 100. While the annual premium
is higher than Straight Life, it is paid for a shorter period of time and will have a lower
total premium outlay.
Single Premium (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-The entire premium is paid in a lump sum at the time of purchase and
creates immediate cash value. The face amount (death benefit) remains level and cash
value continues to earn interest and mature at age 100. This policy has the lowest total
premium outlay for the life of the policy.
Universal Life (I Types of Policies, B. Interest/market-sensitive/adjustable life products) -
CORRECT ANSWER-- insurance protection and a savings element (cash value) that
grows on a tax-deferred basis
-unbundled policy, individual elements of the policy and premium(morality risk, policy
expenses, and the cash value) are credited to the account separately after the premium
is paid
- Built in guarantees regarding the cost of insurance (morality risk) and the interest rates
applied to cash values
Questions With Complete Solutions
Rated A+
Ordinary Whole life (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-- Insurance protection to age 100
- Cash value accumulation to age 100
- Fixed level premium payments
Limited Payment (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-Premium payments are for a specified time (20-Pay Life or 30-Pay Life) or to
a specified age (Life Paid up at 65). The face amount (death benefit) remains level and
cash value continues to earn interest and mature at age 100. While the annual premium
is higher than Straight Life, it is paid for a shorter period of time and will have a lower
total premium outlay.
Single Premium (I Types of Policies, A. Traditional whole life products) - CORRECT
ANSWER-The entire premium is paid in a lump sum at the time of purchase and
creates immediate cash value. The face amount (death benefit) remains level and cash
value continues to earn interest and mature at age 100. This policy has the lowest total
premium outlay for the life of the policy.
Universal Life (I Types of Policies, B. Interest/market-sensitive/adjustable life products) -
CORRECT ANSWER-- insurance protection and a savings element (cash value) that
grows on a tax-deferred basis
-unbundled policy, individual elements of the policy and premium(morality risk, policy
expenses, and the cash value) are credited to the account separately after the premium
is paid
- Built in guarantees regarding the cost of insurance (morality risk) and the interest rates
applied to cash values
