• Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
1. What is the primary purpose of life insurance?
o A) To provide investment opportunities
o B) To provide financial protection to beneficiaries upon the insured's
death
o C) To cover medical expenses
o D) To serve as a retirement fund
Correct Answer: B
RATIONALE: : The primary purpose of life insurance is to provide financial
protection to beneficiaries when the insured person passes away.
2. Which of the following is a common type of life insurance?
o A) Term life insurance
o B) Auto insurance
o C) Whole life insurance
o D) Health insurance
Correct Answer: C
RATIONALE: : Whole life insurance is a common type of life insurance
that provides coverage for the insured's entire life.
3. What is the main difference between term life insurance and whole life
insurance?
o A) Term life insurance is more expensive.
o B) Term life insurance provides coverage for a specific period, while
whole life provides lifelong coverage.
o C) Whole life insurance does not have a death benefit.
o D) Term life insurance accumulates cash value.
Correct Answer: B
RATIONALE: : The key difference is that term life insurance covers a
specific
,• Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
term, while whole life insurance provides coverage for the insured's entire
life.
4. What does the cash value component in whole life insurance represent?
o A) The initial premium paid
o B) The savings component that grows over time and can be borrowed
against
o C) The death benefit amount
o D) The total premiums paid
Correct Answer: B
RATIONALE: : The cash value is a savings component that accumulates
over time and can be accessed by the policyholder.
5. What is a beneficiary in a life insurance policy?
o A) The policyholder
o B) The person or entity designated to receive the death benefit
o C) The insurance company
o D) The agent selling the policy
Correct Answer: B
RATIONALE: : A beneficiary is the individual or entity that receives the
death benefit upon the insured's passing.
6. Which of the following best describes a "rider" in a life insurance policy?
o A) A type of claim
o B) An additional benefit or coverage added to a base policy
o C) A premium discount
o D) A type of policy cancellation
Correct Answer: B
RATIONALE: : A rider is an enhancement to a policy that provides
additional benefits or coverage beyond the standard terms.
,• Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
7. What is the purpose of the contestability period in a life insurance policy?
o A) To allow the policyholder to change beneficiaries
, • Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
o B) To give the insurer time to investigate claims for misrepresentation
or fraud
o C) To increase premiums
o D) To provide a grace period for premium payments
Correct Answer: B
RATIONALE: : The contestability period allows insurers to investigate
claims and contest them if fraud or misrepresentation is suspected.
8. Which of the following statements is true regarding universal life insurance?
o A) It has fixed premiums and benefits.
o B) It offers flexible premiums and a cash value component.
o C) It only covers the insured for a specific term.
o D) It has no cash value accumulation.
Correct Answer: B
RATIONALE: : Universal life insurance provides flexible premiums and
includes a cash value component that can grow over time.
9. What is an accelerated death benefit rider?
o A) A rider that increases premiums
o B) A rider that allows the insured to access part of the death benefit if
diagnosed with a terminal illness
o C) A rider that cancels the policy upon diagnosis
o D) A rider that extends the contestability period
Correct Answer: B
RATIONALE: : An accelerated death benefit rider allows the
insured to access a portion of the death benefit early due to
terminal illness.
10. What happens if a life insurance policyholder stops paying premiums?
o A) The policy automatically converts to a whole life policy.
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
1. What is the primary purpose of life insurance?
o A) To provide investment opportunities
o B) To provide financial protection to beneficiaries upon the insured's
death
o C) To cover medical expenses
o D) To serve as a retirement fund
Correct Answer: B
RATIONALE: : The primary purpose of life insurance is to provide financial
protection to beneficiaries when the insured person passes away.
2. Which of the following is a common type of life insurance?
o A) Term life insurance
o B) Auto insurance
o C) Whole life insurance
o D) Health insurance
Correct Answer: C
RATIONALE: : Whole life insurance is a common type of life insurance
that provides coverage for the insured's entire life.
3. What is the main difference between term life insurance and whole life
insurance?
o A) Term life insurance is more expensive.
o B) Term life insurance provides coverage for a specific period, while
whole life provides lifelong coverage.
o C) Whole life insurance does not have a death benefit.
o D) Term life insurance accumulates cash value.
Correct Answer: B
RATIONALE: : The key difference is that term life insurance covers a
specific
,• Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
term, while whole life insurance provides coverage for the insured's entire
life.
4. What does the cash value component in whole life insurance represent?
o A) The initial premium paid
o B) The savings component that grows over time and can be borrowed
against
o C) The death benefit amount
o D) The total premiums paid
Correct Answer: B
RATIONALE: : The cash value is a savings component that accumulates
over time and can be accessed by the policyholder.
5. What is a beneficiary in a life insurance policy?
o A) The policyholder
o B) The person or entity designated to receive the death benefit
o C) The insurance company
o D) The agent selling the policy
Correct Answer: B
RATIONALE: : A beneficiary is the individual or entity that receives the
death benefit upon the insured's passing.
6. Which of the following best describes a "rider" in a life insurance policy?
o A) A type of claim
o B) An additional benefit or coverage added to a base policy
o C) A premium discount
o D) A type of policy cancellation
Correct Answer: B
RATIONALE: : A rider is an enhancement to a policy that provides
additional benefits or coverage beyond the standard terms.
,• Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
7. What is the purpose of the contestability period in a life insurance policy?
o A) To allow the policyholder to change beneficiaries
, • Pearson VUE Life Insurance Licensing Exam
Guide | Fall Semester 2025/2026 Updated Study
Pack | 220+ Realistic Practice Questions with
Correct Answers & Detailed Rationales |
Complete Test Bank and Application-Based Study
Guide for Life Insurance Agents and Licensing
Candidates
o B) To give the insurer time to investigate claims for misrepresentation
or fraud
o C) To increase premiums
o D) To provide a grace period for premium payments
Correct Answer: B
RATIONALE: : The contestability period allows insurers to investigate
claims and contest them if fraud or misrepresentation is suspected.
8. Which of the following statements is true regarding universal life insurance?
o A) It has fixed premiums and benefits.
o B) It offers flexible premiums and a cash value component.
o C) It only covers the insured for a specific term.
o D) It has no cash value accumulation.
Correct Answer: B
RATIONALE: : Universal life insurance provides flexible premiums and
includes a cash value component that can grow over time.
9. What is an accelerated death benefit rider?
o A) A rider that increases premiums
o B) A rider that allows the insured to access part of the death benefit if
diagnosed with a terminal illness
o C) A rider that cancels the policy upon diagnosis
o D) A rider that extends the contestability period
Correct Answer: B
RATIONALE: : An accelerated death benefit rider allows the
insured to access a portion of the death benefit early due to
terminal illness.
10. What happens if a life insurance policyholder stops paying premiums?
o A) The policy automatically converts to a whole life policy.
