Fundamentals QUESTIONS AND ANSWERS
(VERIFIED ANSWERS) Q&A 2026|INSTANT
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1. Which of the following are types of life insurance policies?
A. Term life
B. Whole life
C. Universal life
D. Short-term disability
Rationale: Life insurance policies provide financial protection
upon death. Term life is temporary, while whole life and
universal life provide permanent coverage. Short-term disability
is not life insurance.
Correct answer: A, B, C
2. What is the primary purpose of health insurance?
A. To provide income after retirement
B. To cover medical expenses
C. To accumulate cash value
D. To pay off home mortgages
Rationale: Health insurance is designed to help pay for medical
bills and related healthcare costs.
,Correct answer: B
3. Which factors can affect life insurance premiums?
A. Age
B. Health status
C. Occupation
D. Favorite color
Rationale: Insurers evaluate risk using age, health, occupation,
lifestyle, and sometimes hobbies. Favorite color is irrelevant.
Correct answer: A, B, C
4. What is the “grace period” in a life insurance policy?
A. Time after policy cancellation to reinstate
B. Period during which premiums can be missed without policy
lapse
C. Free trial of the insurance policy
D. Period during which dividends are paid
Rationale: A grace period allows policyholders to pay late
premiums without losing coverage.
Correct answer: B
5. Which of the following are common exclusions in a health
insurance policy?
A. Cosmetic surgery
,B. Pre-existing conditions
C. Experimental treatments
D. Routine preventive care
Rationale: Insurers often exclude cosmetic procedures,
experimental treatments, and sometimes pre-existing
conditions. Routine preventive care is typically covered.
Correct answer: A, B, C
6. Which features are found in a universal life insurance
policy?
A. Flexible premiums
B. Adjustable death benefit
C. Guaranteed cash value
D. Coverage expires automatically at age 65
Rationale: Universal life policies offer flexibility in premiums
and death benefits. Cash value is not guaranteed. Coverage
does not automatically expire at age 65.
Correct answer: A, B
7. What is the “beneficiary” in a life insurance policy?
A. The person who pays the premiums
B. The person insured under the policy
C. The person who receives the death benefit
D. The insurance agent
, Rationale: The beneficiary is the individual who receives the
proceeds upon the death of the insured.
Correct answer: C
8. Which of the following statements about term life
insurance are true?
A. It provides coverage for a specific period
B. It builds cash value over time
C. Premiums are usually lower than permanent insurance
D. Death benefits are always level during the term
Rationale: Term life is temporary coverage, usually affordable,
and may have level or decreasing benefits. It does not build
cash value.
Correct answer: A, C, D
9. What are common types of health insurance plans?
A. HMO (Health Maintenance Organization)
B. PPO (Preferred Provider Organization)
C. POS (Point of Service)
D. IRA (Individual Retirement Account)
Rationale: HMO, PPO, and POS are types of health insurance
plans; IRA is a retirement account, not health insurance.
Correct answer: A, B, C