LIFE HEALTH PRACTICE
TEST EXAM PREP 100
QUESTIONS
Question 1: A 35-year-old parent wants the largest death bene�t possible for a �xed budget during the next 20 years. Which policy is generally the best �t?
Choices:
1) 20-year level term life 2) Whole life 3) Single-premium whole life 4) Variable universal life
Correct Answer: 20-year level term life
Explanation: Level term life is designed to provide a relatively large death bene�t for a speci�ed period at a lower initial premium than permanent coverage. It is commonly used for temporary needs such as income replacement while children are dependent.Page 1
Question 2: Which feature most clearly distinguishes whole life insurance from term life insurance?
Choices:
1) Premiums must increase every year 2) It provides permanent coverage with guaranteed cash value if required premiums are paid 3) The death bene�t is paid only for accidental death 4) It has no policy reserves Correct Answer: It provides permanent coverage with guaranteed cash value if required premiums are paid Explanation: Whole life combines permanent death protection with guaranteed cash value accumulation under the policy's guarantees. Term insurance generally provides temporary death protection and ordinarily does not build cash value.Question 3: In an ordinary whole life policy, premiums are typically designed to be paid until what point?
Choices:
1) The insured reaches age 65 only 2) The �rst policy loan is taken 3) The insured's death or the policy's maturity age 4) The bene�ciary changes
Correct Answer: The insured's death or the policy's maturity age
Explanation: Ordinary whole life uses level premiums designed to continue for life, subject to the policy's maturity provision. Limited-pay whole life instead compresses premium payments into a shorter stated period.Page 2
Question 4: A policyowner wants permanent life insurance but prefers to pay all
required premiums within 20 years. Which policy best matches that objective?
Choices:
1) Decreasing term 2) 20-pay whole life 3) Annually renewable term 4) Credit life
Correct Answer: 20-pay whole life
Explanation: A 20-pay whole life policy is a limited-payment whole life contract. Premiums are higher than ordinary whole life because the policy is fully paid after the stated 20-year premium-paying period while coverage continues.
Question 5: Which type of term insurance is commonly used to cover a debt whose
outstanding balance declines over time?
Choices:
1) Increasing term 2) Decreasing term 3) Return-of-premium whole life 4) Single-premium life
Correct Answer: Decreasing term
Explanation: Decreasing term insurance reduces the death bene�t over the term and is often used to match a declining obligation such as certain loan balances. The premium may remain level even while the bene�t decreases.Page 3