Life Health Insurance Exam Questions & Answers 2026 (21–30)

Question 1

The extended term nonforfeiture option provides:

TheoryPractice · Accepted Answer

The same face amount as term insurance for a limited period. Extended term uses the net cash value as a single premium to continue the full original face amount as term insurance for whatever period that amount will buy.

Question 2

In key-person life insurance, who is the policyowner, premium payer, and beneficiary?

TheoryPractice · Accepted Answer

The business (employer). For key-person coverage the business owns the policy, pays the premiums, and is the beneficiary, protecting itself against the financial loss of losing a vital employee.

Question 3

A cross-purchase buy-sell agreement funded with life insurance works such that:

TheoryPractice · Accepted Answer

Each owner buys a policy on each other owner. In a cross-purchase plan, each business owner owns and is beneficiary of a policy on each other owner, providing cash to buy a deceased owner's share.

Question 4

Under an entity (stock-redemption) buy-sell plan:

TheoryPractice · Accepted Answer

The business owns policies on each owner and buys back a deceased owner's interest. In an entity plan the business itself owns policies on each owner and uses the proceeds to redeem the deceased owner's interest from the estate.

Question 5

A juvenile life insurance policy is one in which:

TheoryPractice · Accepted Answer

The insured is a minor child. Juvenile policies insure the life of a minor; an adult (usually a parent) is typically the applicant, owner, and premium payer until the child reaches adulthood.

Question 6

A survivorship (second-to-die) life policy pays the death benefit:

TheoryPractice · Accepted Answer

When the last surviving insured dies. Second-to-die policies insure two lives and pay only after the second death; they are popular for estate-liquidity needs because premiums are lower than two single policies.

Question 7

A first-to-die joint life policy is commonly used to:

TheoryPractice · Accepted Answer

Provide funds when the first of two insureds dies, such as for business partners. First-to-die joint coverage pays on the first death, useful for business partners or spouses who need cash upon the loss of either person.

Question 8

Credit life insurance is designed to:

TheoryPractice · Accepted Answer

Pay off a borrower's loan balance if the borrower dies. Credit life pays the outstanding loan balance to the creditor if the insured borrower dies, so the debt does not pass to the estate or co-signers.

Question 9

A modified whole life policy typically has:

TheoryPractice · Accepted Answer

Lower premiums in the early years that increase to a higher level later. Modified whole life charges lower premiums in the first few years, then a higher level premium thereafter, helping buyers who expect rising income.

Question 10

As a whole life policy ages, the net amount at risk to the insurer:

TheoryPractice · Accepted Answer

Decreases as cash value grows. In level whole life, as cash value rises the pure insurance (net amount at risk) shrinks, because the death benefit equals cash value plus net amount at risk.

Life Health Insurance Exam Questions & Answers 2026 (21–30)

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