California Life Insurance Exam Practice
Test 2026/2027 – 25 Questions with
Expert-Verified Answers A+ Graded | 100%
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Question 1
An applicant intentionally withholds information about a serious heart condition on a life
insurance application. After the policy is issued, the insurer discovers this omission during the
contestable period. What action may the insurer legally take?
A. Cancel the policy and refund all premiums.
B. Deny the claim and rescend the policy.
C. Increase future premiums only.
D. continue coverage without changes.
Answer B.
Material misrepresentation during the contestable period gives the insurer the right to resend the
policy and deny claims.
Question 2
The withheld medical condition directly affects underwriting risk, making the contract voidable.
Which party has the right to change the beneficiary designation in a revocable life insurance
policy?
A. The beneficiary.
B. The insurer.
C. The policy owner.
D. The insured only.
Answer. C.
In a revocable policy, the policy owner retains full control over beneficiary changes without
needing beneficiary consent. This flexibility is a key feature tested on the California exam.
Question 3
What is the primary purpose of the insurable interest requirement in life insurance?
A. To maximize insurer profit.
B. to prevent wagering on human life.
, C to ensure faster claim payment.
D to lower premium costs.
Answer B.
Insurable interest ensures the policy owner has a legitimate financial or emotional interest in the
insured's life, preventing insurance from being used as a gambling mechanism.
Question 4
A whole life policy includes a guaranteed cash value. What determines the rate at which this
cash value grows?
A. Market performance.
B. Policy dividends.
C. The policy's guaranteed interest rate.
D. Inflation rate.
Answer C.
Whole life policies grow cash value based on a guaranteed interest rate stated in the policy
regardless of market fluctuations. Dividends may enhance growth but are not guaranteed.
Question 5
Which life insurance policy is most appropriate for temporary income replacement during
working years?
A whole life.
B universal life.
C variable life.
D term life.
Answer D.
Term life provides coverage for a specific period at lower cost, making it ideal for temporary
needs such as income replacement or mortgage protection.
Question 6
When does a life insurance policy typically becoming contestable?
A immediately upon issue.
B after one year.
C after 2 years.
D upon policy maturity.
Answer C.
California law generally mandates a 2-year contestability period after which the insurer cannot
void the policy for misstatements except fraud.
Test 2026/2027 – 25 Questions with
Expert-Verified Answers A+ Graded | 100%
Guaranteed
Question 1
An applicant intentionally withholds information about a serious heart condition on a life
insurance application. After the policy is issued, the insurer discovers this omission during the
contestable period. What action may the insurer legally take?
A. Cancel the policy and refund all premiums.
B. Deny the claim and rescend the policy.
C. Increase future premiums only.
D. continue coverage without changes.
Answer B.
Material misrepresentation during the contestable period gives the insurer the right to resend the
policy and deny claims.
Question 2
The withheld medical condition directly affects underwriting risk, making the contract voidable.
Which party has the right to change the beneficiary designation in a revocable life insurance
policy?
A. The beneficiary.
B. The insurer.
C. The policy owner.
D. The insured only.
Answer. C.
In a revocable policy, the policy owner retains full control over beneficiary changes without
needing beneficiary consent. This flexibility is a key feature tested on the California exam.
Question 3
What is the primary purpose of the insurable interest requirement in life insurance?
A. To maximize insurer profit.
B. to prevent wagering on human life.
, C to ensure faster claim payment.
D to lower premium costs.
Answer B.
Insurable interest ensures the policy owner has a legitimate financial or emotional interest in the
insured's life, preventing insurance from being used as a gambling mechanism.
Question 4
A whole life policy includes a guaranteed cash value. What determines the rate at which this
cash value grows?
A. Market performance.
B. Policy dividends.
C. The policy's guaranteed interest rate.
D. Inflation rate.
Answer C.
Whole life policies grow cash value based on a guaranteed interest rate stated in the policy
regardless of market fluctuations. Dividends may enhance growth but are not guaranteed.
Question 5
Which life insurance policy is most appropriate for temporary income replacement during
working years?
A whole life.
B universal life.
C variable life.
D term life.
Answer D.
Term life provides coverage for a specific period at lower cost, making it ideal for temporary
needs such as income replacement or mortgage protection.
Question 6
When does a life insurance policy typically becoming contestable?
A immediately upon issue.
B after one year.
C after 2 years.
D upon policy maturity.
Answer C.
California law generally mandates a 2-year contestability period after which the insurer cannot
void the policy for misstatements except fraud.
