Free Utah Life and Health Insurance Practice Test Online

Correct answer: B. Term life insurance

Correct. Term life insurance covers a stated period, such as 10, 20, or 30 years, has no cash value component, and typically offers the lowest initial premium because it is pure death-benefit protection.

• A: Whole life insurance provides permanent, lifelong coverage and builds cash value, which generally makes its premium higher than term for the same death benefit.
• C: Universal life is a permanent policy with flexible premiums and a cash value account that earns interest, unlike pure term coverage.
• D: Variable life is a permanent policy where cash value is invested in subaccounts chosen by the policyholder, carrying investment risk not present in term insurance.

Correct answer: B. Lifelong coverage, level premiums, and a guaranteed cash value that grows over time

Correct. Whole life insurance provides coverage for the insured's entire life as long as premiums are paid, with level premiums and a guaranteed, steadily growing cash value.

• A: Coverage that expires after a set term with no cash value describes term life insurance, not whole life.
• C: A death benefit and cash value that fluctuate with securities subaccounts describes variable life insurance, not traditional whole life.
• D: Whole life is commonly sold to individuals, not solely through employer groups.

Correct answer: C. Flexible premiums and an adjustable death benefit, with cash value credited interest based on the policy's crediting rate

Correct. Universal life insurance allows the policyholder flexibility in premium payments and, within limits, the death benefit amount, with cash value earning interest based on the insurer's declared crediting rate.

• A: Universal life always includes a death benefit; it is not merely a savings vehicle.
• B: Fixed, unchangeable premiums describe traditional whole life more closely; universal life is known for premium flexibility.
• D: Universal life is not limited to coverage that ends at a specific young age; it is designed as permanent, lifelong coverage.

Correct answer: B. May no longer contest the validity of the policy based on misstatements in the application, except for fraud in most states

Correct. The incontestability clause generally prevents the insurer, after the policy has been in force for the stated period (commonly two years), from voiding the policy over misstatements in the application, aside from limited exceptions such as fraud recognized under state law.

• A: An incontestability clause limits, rather than expands, the insurer's ability to cancel the policy after the contestable period.
• C: An incontestability clause has nothing to do with automatically doubling the death benefit.
• D: The incontestability clause addresses contestability of the policy's validity, not a right to raise premiums without notice.

Correct answer: B. Material misrepresentations made by the applicant on the application

Correct. During the contestable period, typically two years from issue, the insurer may investigate and deny a claim, or rescind the policy, based on material misrepresentations the applicant made on the application.

• A: A beneficiary's credit score has no bearing on the contestable period or claim investigation.
• C: The choice of funeral home is unrelated to the contestable period.
• D: Interest rate changes after issue relate to policy crediting or dividend performance, not to contestability of the application.