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PRIMERICA LIFE INSURANCE EXAM WITH 100% CORRECT
ANSWERS 2026/2027 WITH RATIONALES GUARANTEED
PASS
1.
A life insurance policy that accumulates cash value and allows the
policyholder to adjust premium payments and death benefit
amounts within limits is known as a flexible policy.
Correct Answer: Universal life insurance
Rationale: Universal life permits flexible premium payments and
adjustable death benefit; cash value accumulates based on
credited interest.
2.
A policyowner wants guaranteed level premium payments and a
fixed death benefit for life, and prefers a policy with guaranteed
cash value growth.
Correct Answer: Whole life insurance
Rationale: Whole life (ordinary) features level, guaranteed
premiums, guaranteed death benefit, and guaranteed cash value
accumulation.
3.
An insurer issues a policy for age 40 but the insured misstated his
birth year during application and is actually 45. Which provision
allows the insurer to adjust the benefit?
Correct Answer: Misstatement of age provision
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Rationale: If age is misstated, insurer adjusts benefits to the
amount the premium would have purchased at the correct age.
4.
Which beneficiary designation receives proceeds only if the
primary beneficiary dies before the insured?
Correct Answer: Contingent (secondary) beneficiary
Rationale: Contingent beneficiaries inherit only if primary
beneficiaries predecease the insured or disclaim the benefit.
5.
A policy loan is available from a permanent life policy’s cash
value. If the loan is not repaid, what happens at the insured’s
death?
Correct Answer: Outstanding loan balance reduces the death
benefit
Rationale: Unpaid loans plus interest are deducted from the
death benefit before payment to beneficiaries.
6.
Which underwriting classification typically results in standard
rates for applicants with average health and mortality risk?
Correct Answer: Standard risk
Rationale: Standard risk indicates average life expectancy;
premiums set at standard table rates.
7.
A policyowner exchanges one life policy for another under a tax-
favored provision without immediate tax consequences. What is
this provision called?
Correct Answer: Section 1035 exchange
,3 | Page
Rationale: IRS §1035 allows certain non-recognition exchanges
of life insurance/annuity policies without triggering tax.
8.
A term policy that automatically increases the death benefit
periodically to keep pace with inflation is called:
Correct Answer: Increasing term policy
Rationale: Increasing term raises the face amount over time,
commonly to offset inflation or income needs.
9.
What rider allows accelerated payment of a portion of the death
benefit if the insured is terminally ill?
Correct Answer: Accelerated (living) benefit rider
Rationale: Accelerated benefits provide a portion of death
benefit early if insured meets terminal illness criteria, reducing
final death payout.
10.
An agent recommends a policy that provides immediate lifetime
income to an annuitant in exchange for a lump sum. This is best
described as:
Correct Answer: Immediate annuity
Rationale: Immediate annuities begin payments soon after a
single premium is paid and provide lifetime income streams.
11.
Which settlement option guarantees income payments for a fixed
period (e.g., 20 years) whether the payee lives or dies?
Correct Answer: Period certain (or fixed period) option
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Rationale: Period certain pays for a set period; if payee dies,
remaining payments go to the designated payee/estate.
12.
A policy is incontestable after a set period, preventing insurer
cancellation for misstatements except for fraud. What is the
typical incontestability period?
Correct Answer: Two years
Rationale: Most life policies include a two-year incontestability
clause after issuance, limiting rescission for misstatements.
13.
Which type of term policy provides coverage for a specific length
of time and may be renewable without evidence of insurability?
Correct Answer: Renewable term insurance
Rationale: Renewable term allows renewal at the end of term,
often at higher premium due to older attained age.
14.
An insured makes an application but dies before the policy is
issued. The insurer’s obligation depends on which of the
following?
Correct Answer: Whether the insurer issued a conditional
receipt or approved and delivered the policy
Rationale: If conditional receipt was given and conditions met
(e.g., premiums paid and insurability met), coverage may be
effective; otherwise, no coverage until policy issued.
15.
Which tax treatment generally applies to death benefit proceeds
paid to a beneficiary?
PRIMERICA LIFE INSURANCE EXAM WITH 100% CORRECT
ANSWERS 2026/2027 WITH RATIONALES GUARANTEED
PASS
1.
A life insurance policy that accumulates cash value and allows the
policyholder to adjust premium payments and death benefit
amounts within limits is known as a flexible policy.
Correct Answer: Universal life insurance
Rationale: Universal life permits flexible premium payments and
adjustable death benefit; cash value accumulates based on
credited interest.
2.
A policyowner wants guaranteed level premium payments and a
fixed death benefit for life, and prefers a policy with guaranteed
cash value growth.
Correct Answer: Whole life insurance
Rationale: Whole life (ordinary) features level, guaranteed
premiums, guaranteed death benefit, and guaranteed cash value
accumulation.
3.
An insurer issues a policy for age 40 but the insured misstated his
birth year during application and is actually 45. Which provision
allows the insurer to adjust the benefit?
Correct Answer: Misstatement of age provision
,2 | Page
Rationale: If age is misstated, insurer adjusts benefits to the
amount the premium would have purchased at the correct age.
4.
Which beneficiary designation receives proceeds only if the
primary beneficiary dies before the insured?
Correct Answer: Contingent (secondary) beneficiary
Rationale: Contingent beneficiaries inherit only if primary
beneficiaries predecease the insured or disclaim the benefit.
5.
A policy loan is available from a permanent life policy’s cash
value. If the loan is not repaid, what happens at the insured’s
death?
Correct Answer: Outstanding loan balance reduces the death
benefit
Rationale: Unpaid loans plus interest are deducted from the
death benefit before payment to beneficiaries.
6.
Which underwriting classification typically results in standard
rates for applicants with average health and mortality risk?
Correct Answer: Standard risk
Rationale: Standard risk indicates average life expectancy;
premiums set at standard table rates.
7.
A policyowner exchanges one life policy for another under a tax-
favored provision without immediate tax consequences. What is
this provision called?
Correct Answer: Section 1035 exchange
,3 | Page
Rationale: IRS §1035 allows certain non-recognition exchanges
of life insurance/annuity policies without triggering tax.
8.
A term policy that automatically increases the death benefit
periodically to keep pace with inflation is called:
Correct Answer: Increasing term policy
Rationale: Increasing term raises the face amount over time,
commonly to offset inflation or income needs.
9.
What rider allows accelerated payment of a portion of the death
benefit if the insured is terminally ill?
Correct Answer: Accelerated (living) benefit rider
Rationale: Accelerated benefits provide a portion of death
benefit early if insured meets terminal illness criteria, reducing
final death payout.
10.
An agent recommends a policy that provides immediate lifetime
income to an annuitant in exchange for a lump sum. This is best
described as:
Correct Answer: Immediate annuity
Rationale: Immediate annuities begin payments soon after a
single premium is paid and provide lifetime income streams.
11.
Which settlement option guarantees income payments for a fixed
period (e.g., 20 years) whether the payee lives or dies?
Correct Answer: Period certain (or fixed period) option
, 4 | Page
Rationale: Period certain pays for a set period; if payee dies,
remaining payments go to the designated payee/estate.
12.
A policy is incontestable after a set period, preventing insurer
cancellation for misstatements except for fraud. What is the
typical incontestability period?
Correct Answer: Two years
Rationale: Most life policies include a two-year incontestability
clause after issuance, limiting rescission for misstatements.
13.
Which type of term policy provides coverage for a specific length
of time and may be renewable without evidence of insurability?
Correct Answer: Renewable term insurance
Rationale: Renewable term allows renewal at the end of term,
often at higher premium due to older attained age.
14.
An insured makes an application but dies before the policy is
issued. The insurer’s obligation depends on which of the
following?
Correct Answer: Whether the insurer issued a conditional
receipt or approved and delivered the policy
Rationale: If conditional receipt was given and conditions met
(e.g., premiums paid and insurability met), coverage may be
effective; otherwise, no coverage until policy issued.
15.
Which tax treatment generally applies to death benefit proceeds
paid to a beneficiary?
