Life Health Insurance Exam Questions & Answers 2026 (1–10)

Question 1

At what point must insurable interest exist for a life insurance policy to be valid?

TheoryPractice · Accepted Answer

Only at the time the policy is applied for and issued. In life insurance, insurable interest must exist at the inception of the contract. Unlike property insurance, it need not exist at the time of loss.

Question 2

Which relationship would NOT automatically support insurable interest in another person's life?

TheoryPractice · Accepted Answer

A person insuring a casual acquaintance. Insurable interest requires a financial or close-family relationship. A casual acquaintance creates neither love-and-affection nor a financial stake, so no insurable interest exists.

Question 3

What is the defining characteristic of term life insurance?

TheoryPractice · Accepted Answer

It provides protection for a specified period with no cash value. Term life provides pure death-benefit protection for a stated term and ordinarily accumulates no cash value, making it the lowest-cost coverage per dollar of death benefit.

Question 4

A policyowner has annual renewable term insurance. What happens to the premium at each renewal?

TheoryPractice · Accepted Answer

It increases because it is based on the insured's attained age. Annual renewable term renews each year without evidence of insurability, but the premium rises because it is recalculated on the insured's higher attained age.

Question 5

Decreasing term insurance is most commonly used to cover which need?

TheoryPractice · Accepted Answer

A mortgage or other amortizing debt. Decreasing term has a death benefit that declines over time, matching it well to an amortizing debt such as a mortgage whose balance falls each year.

Question 6

Which is a feature of ordinary (straight) whole life insurance?

TheoryPractice · Accepted Answer

Level premiums and lifetime coverage with cash value. Straight whole life features level premiums payable for life, lifetime protection, and a guaranteed cash value that grows on a tax-deferred basis.

Question 7

In a whole life policy, what is guaranteed to equal the face amount at policy maturity?

TheoryPractice · Accepted Answer

The cash value. A whole life policy endows at maturity, meaning its guaranteed cash value grows to equal the face amount, at which point the policy pays out.

Question 8

A 20-pay whole life policy differs from straight whole life in that:

TheoryPractice · Accepted Answer

Premiums are paid only for 20 years but coverage lasts for life. Limited-pay whole life compresses premium payments into a set period; after that the policy is paid up, yet lifetime coverage continues.

Question 9

A single-premium whole life policy is most likely to be classified as a Modified Endowment Contract because:

TheoryPractice · Accepted Answer

It fails the 7-pay test by being overfunded early. A single large premium nearly always exceeds the 7-pay limit, causing the contract to be a MEC, which subjects lifetime distributions to LIFO taxation and possible penalties.

Question 10

A key feature distinguishing universal life from traditional whole life is:

TheoryPractice · Accepted Answer

Flexible premiums and an adjustable death benefit. Universal life unbundles the policy, allowing flexible premium payments and adjustable death benefit (subject to insurability for increases), with interest credited to cash value.

Life Health Insurance Exam Questions & Answers 2026 (1–10)

More Life Health Insurance practice questions

Free practice here. Timed mocks when you are ready.