HEALTH AND LIFE INSURANCE EXAM 2026
UNDERWRITING AND RISK MANAGEMENT
WORKBOOK SOLVED QUESTIONS
COMPILATION
◉ Which of these arrangements allows one to bypass insurable
interest laws?
Answer: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to circumvent
state insurable interest statutes. This is done when an investor (or
stranger) persuades an individual to take out life insurance
specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then
collects the death benefit when the insured dies.
◉ Which of these is NOT considered to be an element of an
insurance contract?
the offer
acceptance
negotiating
consideration
,Answer: negotiating
◉ An agent is an individual that represents whom?
Answer: Insurer
◉ Insurable interest must exist at what time?
Answer: at the time of application
◉ Which policy requires an agent to register with the National
Association of Securities Dealers (NASD) before selling?
Answer: Variable Life
◉ Which of the following actions require a policy owner to provide
proof of insurability in an Adjustable Life policy?
Answer: increase face amount
◉ When a policy owner exchanges a term policy for a whole life
policy without providing proof of good health, which of these apply?
Answer: Conversion provision
◉ What type of life insurance are credit policies issued as?
Answer: Term
,◉ How long does the coverage normally remain on a limited-pay life
policy?
Answer: age 100
◉ All of these statements about Equity Indexed Life Insurance are
correct EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of
return, the cash value will mirror that of the index
The premiums can be lowered or raised, based on investment
performance
Tied to an equity index such as the S&P 500
Answer: The premiums can be lowered or raised, based on
investment performance
◉ Which of these is an element of a Variable Life policy?
Answer: A fixed, level premium
◉ What type of life insurance incorporates flexible premiums and an
adjustable death benefit?
Answer: Universal Life
, ◉ T would like to be assured $10,000 is available in 10 years to
replace a roof on his house. What kind of $10,000 policy should T
purchase?
Answer: Ten-Year Endowment
◉ What type of life policy covers 2 lives and pays the face amount
after the first one dies?
Answer: Joint Life Policy
◉ Life insurance that covers an insured's whole life with level
premiums paid over a limited time is called
Answer: Limited-Pay Life
◉ What kind of life insurance product covers children under their
parent's policy?
Answer: Term rider
◉ Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the
amount of the premium payment
Policyowner has no say where the investment will go but can
choose the premium mode
The investment vehicle for this type of policy is held in the insurer's
general portfolio
UNDERWRITING AND RISK MANAGEMENT
WORKBOOK SOLVED QUESTIONS
COMPILATION
◉ Which of these arrangements allows one to bypass insurable
interest laws?
Answer: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to circumvent
state insurable interest statutes. This is done when an investor (or
stranger) persuades an individual to take out life insurance
specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then
collects the death benefit when the insured dies.
◉ Which of these is NOT considered to be an element of an
insurance contract?
the offer
acceptance
negotiating
consideration
,Answer: negotiating
◉ An agent is an individual that represents whom?
Answer: Insurer
◉ Insurable interest must exist at what time?
Answer: at the time of application
◉ Which policy requires an agent to register with the National
Association of Securities Dealers (NASD) before selling?
Answer: Variable Life
◉ Which of the following actions require a policy owner to provide
proof of insurability in an Adjustable Life policy?
Answer: increase face amount
◉ When a policy owner exchanges a term policy for a whole life
policy without providing proof of good health, which of these apply?
Answer: Conversion provision
◉ What type of life insurance are credit policies issued as?
Answer: Term
,◉ How long does the coverage normally remain on a limited-pay life
policy?
Answer: age 100
◉ All of these statements about Equity Indexed Life Insurance are
correct EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of
return, the cash value will mirror that of the index
The premiums can be lowered or raised, based on investment
performance
Tied to an equity index such as the S&P 500
Answer: The premiums can be lowered or raised, based on
investment performance
◉ Which of these is an element of a Variable Life policy?
Answer: A fixed, level premium
◉ What type of life insurance incorporates flexible premiums and an
adjustable death benefit?
Answer: Universal Life
, ◉ T would like to be assured $10,000 is available in 10 years to
replace a roof on his house. What kind of $10,000 policy should T
purchase?
Answer: Ten-Year Endowment
◉ What type of life policy covers 2 lives and pays the face amount
after the first one dies?
Answer: Joint Life Policy
◉ Life insurance that covers an insured's whole life with level
premiums paid over a limited time is called
Answer: Limited-Pay Life
◉ What kind of life insurance product covers children under their
parent's policy?
Answer: Term rider
◉ Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the
amount of the premium payment
Policyowner has no say where the investment will go but can
choose the premium mode
The investment vehicle for this type of policy is held in the insurer's
general portfolio
