← Life Insurance Basics – License Exam Flashcards

Free Life Insurance Basics – License Exam Flashcards Practice Test (2026)

150 questions · 180 min · 70% to pass

150 Questions · 180 Minutes · 70% to Pass

Question 1 of 5

Sample Questions

Question 1

In a variable life insurance policy, where are the cash values invested?

Answer: Cash values are invested in separate accounts chosen by the policyowner, such as stock or bond sub-accounts, meaning the cash value and death benefit can fluctuate based on investment performance.

Question 2

What type of life insurance provides coverage for a specified period and pays a death benefit only if the insured dies during that period?

Answer: Term life insurance. It provides pure death protection with no cash value accumulation, and coverage expires at the end of the term.

Question 3

What type of life insurance provides lifetime coverage and builds cash value on a guaranteed, fixed basis?

Answer: Whole life insurance. Premiums are fixed, the death benefit is guaranteed, and cash value grows at a guaranteed rate tax-deferred.

Question 4

How does universal life insurance differ from whole life insurance in terms of premium flexibility?

Answer: Universal life allows the policyowner to vary the amount and timing of premium payments within certain limits, while whole life requires fixed scheduled premiums.

Question 5

What is an endowment policy, and when does it pay its face amount?

Answer: An endowment policy pays the face amount either upon the insured's death or when the policy matures (reaches its endowment date), whichever comes first.