Pearson VUE Texas Life and Health Insurance Exam
2026 - Full Verified Test Bank with Actual
Questions, Correct Answers & In-Depth Rationales
SECTION 1: LIFE INSURANCE POLICIES AND PRODUCTS
Question 1
Which type of life insurance policy provides coverage for a specified period and
does not build cash value?
A) Whole life insurance
B) Term life insurance
C) Universal life insurance
D) Variable life insurance
Rationale: Term life insurance provides pure death protection for a specified period
(e.g., 10, 20, 30 years) and does not accumulate cash value. Whole life, universal
life, and variable life all build cash value.
Question 2
A straight life (whole life) policy has what type of premium?
A) A decreasing annual premium for the life of the insured
B) A variable annual premium for the life of the insured
C) A level annual premium for the life of the insured
D) An increasing annual premium for the life of the insured
,Rationale: A straight life policy features level annual premiums that remain
constant throughout the insured's lifetime. The premium is calculated based on
the insured's age at issue and does not increase.
Question 3
When a reduced paid-up nonforfeiture option is chosen, what happens to the face
amount of the policy?
A) It is increased when extra premiums are paid
B) It decreases over the term of the policy
C) It remains the same as the original policy, regardless of differences in value
D) It is reduced to the amount that the cash value would buy as a single
premium
Rationale: The reduced paid-up option uses the policy's cash value as a single
premium to purchase a paid-up policy with a reduced face amount. The new face
amount is determined by what the cash value can purchase at the insured's
attained age.
Question 4
With Adjustable Life, the owner can change all of the following EXCEPT:
A) Premium amount
B) Face amount
C) Policy period
D) The insured
Rationale: Adjustable life policies allow the owner to adjust the premium, face
amount, and policy period. However, the insured person cannot be changed
because the policy is based on the life of the original insured.
Question 5
,Which of the following is a feature of a variable annuity?
A) Interest rate is guaranteed
B) Securities license is not required
C) Benefit payment amounts are not guaranteed
D) Payments into the annuity are kept in the company's general account
Rationale: Variable annuities have benefit payment amounts that fluctuate based
on the performance of the underlying investment subaccounts. Because they
involve securities, a securities license is required to sell them.
Question 6
Which of the following products requires a securities license?
A) Fixed annuity
B) Equity indexed annuity
C) Deferred annuity
D) Variable annuity
Rationale: Variable annuities are considered securities because the policyowner
bears the investment risk. A securities license (Series 6 or 7) is required in addition
to an insurance license to sell variable products.
Question 7
Which of the following determines the cash value of a variable life policy?
A) The performance of the policy portfolio
B) The company's general account
C) The policy's guarantees
D) The premium mode
Rationale: Variable life insurance cash value fluctuates based on the investment
performance of the subaccounts selected by the policyowner. The company's
general account is used for fixed products.
, Question 8
An annuity promises that if the annuitant dies before receiving payments equal to
the contract value, payments will be continued to a beneficiary until an amount
equal to the contract value has been paid. This type of annuity is called a(n):
A) Installment refund annuity
B) Cash refund annuity
C) Life annuity with period certain
D) Joint and survivor annuity
Rationale: An installment refund annuity guarantees that if the annuitant dies
before the total contract value has been paid out, payments will continue to the
beneficiary until an amount equal to the contract value has been received.
Question 9
All of the following are true of an annuity owner EXCEPT:
A) The owner has the right to name the beneficiary
B) The owner is the party who may surrender the annuity
C) The owner must be the party to receive benefits
D) The owner pays the premiums on the annuity
Rationale: The annuity owner has rights to name the beneficiary, surrender the
contract, and pay premiums. The annuitant receives the benefits, not necessarily
the owner.
Question 10
Which of the following is an example of a limited-pay life policy?
A) Level Term Life
B) Straight Life
2026 - Full Verified Test Bank with Actual
Questions, Correct Answers & In-Depth Rationales
SECTION 1: LIFE INSURANCE POLICIES AND PRODUCTS
Question 1
Which type of life insurance policy provides coverage for a specified period and
does not build cash value?
A) Whole life insurance
B) Term life insurance
C) Universal life insurance
D) Variable life insurance
Rationale: Term life insurance provides pure death protection for a specified period
(e.g., 10, 20, 30 years) and does not accumulate cash value. Whole life, universal
life, and variable life all build cash value.
Question 2
A straight life (whole life) policy has what type of premium?
A) A decreasing annual premium for the life of the insured
B) A variable annual premium for the life of the insured
C) A level annual premium for the life of the insured
D) An increasing annual premium for the life of the insured
,Rationale: A straight life policy features level annual premiums that remain
constant throughout the insured's lifetime. The premium is calculated based on
the insured's age at issue and does not increase.
Question 3
When a reduced paid-up nonforfeiture option is chosen, what happens to the face
amount of the policy?
A) It is increased when extra premiums are paid
B) It decreases over the term of the policy
C) It remains the same as the original policy, regardless of differences in value
D) It is reduced to the amount that the cash value would buy as a single
premium
Rationale: The reduced paid-up option uses the policy's cash value as a single
premium to purchase a paid-up policy with a reduced face amount. The new face
amount is determined by what the cash value can purchase at the insured's
attained age.
Question 4
With Adjustable Life, the owner can change all of the following EXCEPT:
A) Premium amount
B) Face amount
C) Policy period
D) The insured
Rationale: Adjustable life policies allow the owner to adjust the premium, face
amount, and policy period. However, the insured person cannot be changed
because the policy is based on the life of the original insured.
Question 5
,Which of the following is a feature of a variable annuity?
A) Interest rate is guaranteed
B) Securities license is not required
C) Benefit payment amounts are not guaranteed
D) Payments into the annuity are kept in the company's general account
Rationale: Variable annuities have benefit payment amounts that fluctuate based
on the performance of the underlying investment subaccounts. Because they
involve securities, a securities license is required to sell them.
Question 6
Which of the following products requires a securities license?
A) Fixed annuity
B) Equity indexed annuity
C) Deferred annuity
D) Variable annuity
Rationale: Variable annuities are considered securities because the policyowner
bears the investment risk. A securities license (Series 6 or 7) is required in addition
to an insurance license to sell variable products.
Question 7
Which of the following determines the cash value of a variable life policy?
A) The performance of the policy portfolio
B) The company's general account
C) The policy's guarantees
D) The premium mode
Rationale: Variable life insurance cash value fluctuates based on the investment
performance of the subaccounts selected by the policyowner. The company's
general account is used for fixed products.
, Question 8
An annuity promises that if the annuitant dies before receiving payments equal to
the contract value, payments will be continued to a beneficiary until an amount
equal to the contract value has been paid. This type of annuity is called a(n):
A) Installment refund annuity
B) Cash refund annuity
C) Life annuity with period certain
D) Joint and survivor annuity
Rationale: An installment refund annuity guarantees that if the annuitant dies
before the total contract value has been paid out, payments will continue to the
beneficiary until an amount equal to the contract value has been received.
Question 9
All of the following are true of an annuity owner EXCEPT:
A) The owner has the right to name the beneficiary
B) The owner is the party who may surrender the annuity
C) The owner must be the party to receive benefits
D) The owner pays the premiums on the annuity
Rationale: The annuity owner has rights to name the beneficiary, surrender the
contract, and pay premiums. The annuitant receives the benefits, not necessarily
the owner.
Question 10
Which of the following is an example of a limited-pay life policy?
A) Level Term Life
B) Straight Life
