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ILLINOIS LIFE AND HEALTH INSURANCE PRACTICE
EXAM - ILLINOIS DEPARTMENT OF INSURANCE
(IDOI) ACTUAL PREP QUESTIONS AND WELL
REVISED ANSWERS - LATEST AND COMPLETE
UPDATE WITH VERIFIED SOLUTIONS – ASSURES
PASS
Brief Description
This comprehensive Illinois Life and Health Insurance practice exam is designed
to prepare candidates for the official state licensing examination. It covers life
insurance policies, annuities, health insurance plans, riders, underwriting, Illinois
insurance laws, federal regulations, ethics, and consumer protection. Each
question includes four multiple-choice options, followed by the correct answer and
a concise rationale to reinforce learning and exam readiness.
1. What is the primary purpose of life insurance?
A. To eliminate all debt
B. To create wealth
C. To provide financial protection against premature death
D. To supplement retirement income
Answer: C
Rationale: Life insurance is designed to protect beneficiaries from financial loss
due to the insured’s death.
2. Which type of life insurance provides coverage for a specified period?
A. Whole life
B. Universal life
C. Term life
D. Variable life
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Answer: C
Rationale: Term life insurance provides coverage for a defined term such as 10,
20, or 30 years.
3. What happens to a term life policy at the end of its term?
A. It pays the face amount
B. It converts automatically to whole life
C. It expires if not renewed
D. It accumulates cash value
Answer: C
Rationale: Term life expires at the end of the term unless renewed or converted.
4. Which life insurance policy guarantees level premiums and cash value?
A. Term life
B. Whole life
C. Variable life
D. Indexed universal life
Answer: B
Rationale: Whole life offers fixed premiums, guaranteed death benefit, and
guaranteed cash value.
5. Who owns the policy in a third-party ownership arrangement?
A. The insured
B. The beneficiary
C. The policyowner
D. The insurer
Answer: C
Rationale: The policyowner controls the policy, even if different from the insured.
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6. What rider allows a policyowner to purchase additional insurance without
evidence of insurability?
A. Waiver of premium
B. Accidental death
C. Guaranteed insurability
D. Accelerated benefit
Answer: C
Rationale: The guaranteed insurability rider allows future purchases without
medical underwriting.
7. What is the free-look period in Illinois for life insurance?
A. 5 days
B. 10 days
C. 14 days
D. 30 days
Answer: B
Rationale: Illinois requires a 10-day free-look period for life insurance policies.
8. Which policy feature allows borrowing against cash value?
A. Dividends
B. Policy loan provision
C. Paid-up additions
D. Face amount option
Answer: B
Rationale: Cash value policies allow loans secured by the policy’s cash value.
9. What reduces the death benefit if unpaid at death?
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A. Dividends
B. Premiums
C. Policy loans
D. Riders
Answer: C
Rationale: Outstanding loans plus interest reduce the death benefit.
10. What is considered the consideration in an insurance contract?
A. Application
B. Policy
C. Premium and statements
D. Riders
Answer: C
Rationale: Consideration includes the premium and statements made by the
applicant.
11. Which contract element requires truthful disclosure?
A. Adhesion
B. Aleatory
C. Utmost good faith
D. Unilateral
Answer: C
Rationale: Insurance contracts rely on utmost good faith from both parties.
12. Which health insurance plan pays benefits directly to the insured?
A. Indemnity plan
B. HMO
C. PPO
D. POS
ILLINOIS LIFE AND HEALTH INSURANCE PRACTICE
EXAM - ILLINOIS DEPARTMENT OF INSURANCE
(IDOI) ACTUAL PREP QUESTIONS AND WELL
REVISED ANSWERS - LATEST AND COMPLETE
UPDATE WITH VERIFIED SOLUTIONS – ASSURES
PASS
Brief Description
This comprehensive Illinois Life and Health Insurance practice exam is designed
to prepare candidates for the official state licensing examination. It covers life
insurance policies, annuities, health insurance plans, riders, underwriting, Illinois
insurance laws, federal regulations, ethics, and consumer protection. Each
question includes four multiple-choice options, followed by the correct answer and
a concise rationale to reinforce learning and exam readiness.
1. What is the primary purpose of life insurance?
A. To eliminate all debt
B. To create wealth
C. To provide financial protection against premature death
D. To supplement retirement income
Answer: C
Rationale: Life insurance is designed to protect beneficiaries from financial loss
due to the insured’s death.
2. Which type of life insurance provides coverage for a specified period?
A. Whole life
B. Universal life
C. Term life
D. Variable life
,2|Page
Answer: C
Rationale: Term life insurance provides coverage for a defined term such as 10,
20, or 30 years.
3. What happens to a term life policy at the end of its term?
A. It pays the face amount
B. It converts automatically to whole life
C. It expires if not renewed
D. It accumulates cash value
Answer: C
Rationale: Term life expires at the end of the term unless renewed or converted.
4. Which life insurance policy guarantees level premiums and cash value?
A. Term life
B. Whole life
C. Variable life
D. Indexed universal life
Answer: B
Rationale: Whole life offers fixed premiums, guaranteed death benefit, and
guaranteed cash value.
5. Who owns the policy in a third-party ownership arrangement?
A. The insured
B. The beneficiary
C. The policyowner
D. The insurer
Answer: C
Rationale: The policyowner controls the policy, even if different from the insured.
,3|Page
6. What rider allows a policyowner to purchase additional insurance without
evidence of insurability?
A. Waiver of premium
B. Accidental death
C. Guaranteed insurability
D. Accelerated benefit
Answer: C
Rationale: The guaranteed insurability rider allows future purchases without
medical underwriting.
7. What is the free-look period in Illinois for life insurance?
A. 5 days
B. 10 days
C. 14 days
D. 30 days
Answer: B
Rationale: Illinois requires a 10-day free-look period for life insurance policies.
8. Which policy feature allows borrowing against cash value?
A. Dividends
B. Policy loan provision
C. Paid-up additions
D. Face amount option
Answer: B
Rationale: Cash value policies allow loans secured by the policy’s cash value.
9. What reduces the death benefit if unpaid at death?
, 4|Page
A. Dividends
B. Premiums
C. Policy loans
D. Riders
Answer: C
Rationale: Outstanding loans plus interest reduce the death benefit.
10. What is considered the consideration in an insurance contract?
A. Application
B. Policy
C. Premium and statements
D. Riders
Answer: C
Rationale: Consideration includes the premium and statements made by the
applicant.
11. Which contract element requires truthful disclosure?
A. Adhesion
B. Aleatory
C. Utmost good faith
D. Unilateral
Answer: C
Rationale: Insurance contracts rely on utmost good faith from both parties.
12. Which health insurance plan pays benefits directly to the insured?
A. Indemnity plan
B. HMO
C. PPO
D. POS
