Pearson Vue Life Practice Exam
Questions With Complete Solutions
Graded A+
Universal Life - CORRECT ANSWER-a whole life policy that combines term insurance
and investment elements
Modified Whole Life - CORRECT ANSWER-Low premiums in the early years and jumps
to a higher premium in the later years and remains fixed thereafter. Premiums increase
just once.
Graded Premium Whole Life - CORRECT ANSWER-Variation of a traditional whole life
contract providing for lower than normal premium rates during the first few policy years,
with premiums increasing gradually each year. After the preliminary period, premiums
level off and remain constant.
Variable Universal Life - CORRECT ANSWER-Builds cash value that can be invested in
separate accounts (Need Securities License)
Interest Sensitive Whole Life - CORRECT ANSWER-Coverage provides flexible
premiums based on a changing interest rate. Synonymous with current assumption
whole life.
(High rate=Low Prem: Low Rate=Raise Prem)
Equity Indexed Universal Life - CORRECT ANSWER-Works the same way as universal
life insurance except the interest rate is tied to a stock market index.
Ordinary Life - CORRECT ANSWER-Basic whole life with level face amount and
premium
, Limited Pay - CORRECT ANSWER-Coverage for life with limited premium payments
Adjustable Life - CORRECT ANSWER-Life insurance which permits changes in the face
amount, premium amount, period of protection, and the duration of the premium
payment period.
Fixed - CORRECT ANSWER-Constant Interest Rate
Variable - CORRECT ANSWER-Fluctuating Interest Rate
Participating - CORRECT ANSWER-Pay dividends to policyholders,
Nonparticipating - CORRECT ANSWER-Pay dividends to shareholders (Stock
Companies)
Term Life - CORRECT ANSWER-An insurance policy with a set duration limit on the
coverage period. Once the policy is expired, it is up to the policy owner to decide
whether to renew the term life insurance policy or to let the coverage end. No cash
value
Decreasing Term - CORRECT ANSWER-A type of life insurance that features a level
premium and a death benefit that decreases each year over the duration of the policy.
Return of Premium - CORRECT ANSWER-Pays the total amount of premiums paid into
the policy as long as the insured dies within a certain time period specified in the policy.
Increasing Term - CORRECT ANSWER-Term life insurance that provides an increasing
face amount with level premiums
Questions With Complete Solutions
Graded A+
Universal Life - CORRECT ANSWER-a whole life policy that combines term insurance
and investment elements
Modified Whole Life - CORRECT ANSWER-Low premiums in the early years and jumps
to a higher premium in the later years and remains fixed thereafter. Premiums increase
just once.
Graded Premium Whole Life - CORRECT ANSWER-Variation of a traditional whole life
contract providing for lower than normal premium rates during the first few policy years,
with premiums increasing gradually each year. After the preliminary period, premiums
level off and remain constant.
Variable Universal Life - CORRECT ANSWER-Builds cash value that can be invested in
separate accounts (Need Securities License)
Interest Sensitive Whole Life - CORRECT ANSWER-Coverage provides flexible
premiums based on a changing interest rate. Synonymous with current assumption
whole life.
(High rate=Low Prem: Low Rate=Raise Prem)
Equity Indexed Universal Life - CORRECT ANSWER-Works the same way as universal
life insurance except the interest rate is tied to a stock market index.
Ordinary Life - CORRECT ANSWER-Basic whole life with level face amount and
premium
, Limited Pay - CORRECT ANSWER-Coverage for life with limited premium payments
Adjustable Life - CORRECT ANSWER-Life insurance which permits changes in the face
amount, premium amount, period of protection, and the duration of the premium
payment period.
Fixed - CORRECT ANSWER-Constant Interest Rate
Variable - CORRECT ANSWER-Fluctuating Interest Rate
Participating - CORRECT ANSWER-Pay dividends to policyholders,
Nonparticipating - CORRECT ANSWER-Pay dividends to shareholders (Stock
Companies)
Term Life - CORRECT ANSWER-An insurance policy with a set duration limit on the
coverage period. Once the policy is expired, it is up to the policy owner to decide
whether to renew the term life insurance policy or to let the coverage end. No cash
value
Decreasing Term - CORRECT ANSWER-A type of life insurance that features a level
premium and a death benefit that decreases each year over the duration of the policy.
Return of Premium - CORRECT ANSWER-Pays the total amount of premiums paid into
the policy as long as the insured dies within a certain time period specified in the policy.
Increasing Term - CORRECT ANSWER-Term life insurance that provides an increasing
face amount with level premiums
