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Hawaii types of life insurance practice questions

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The general part of the Hawaii Life exam has 50 scoreable questions, and section I, Types of Policies, has 15 of them. [1] The outline lists traditional whole life (ordinary, limited pay and single premium), interest and market sensitive products (universal, variable whole life, variable universal, interest sensitive whole life, indexed life), term life (level, decreasing, return of premium, annually renewable; renewable and convertible features), annuities (single and flexible premium, immediate and deferred, fixed and variable, indexed, accumulation and annuity periods, payout options), and combination plans (joint life and survivorship life). [1] This page explains the main types using the Hawaii Insurance Division's life insurance page and Hawaii law, then gives 10 practice questions.

What Hawaii law counts as life insurance

The Hawaii insurance code defines life insurance as "insurance on human lives and insurance appertaining thereto or connected therewith." Transacting life insurance also includes added benefits for accidental death or dismemberment or total and permanent disability, optional modes of settling proceeds, and granting annuities and endowment benefits. [2]

The main policy types

The Insurance Division describes these types: [3]

Cash value and taxes

If coverage is no longer needed, the cash value may be returned to you, and the Division says withdrawals are nontaxable until the total withdrawn exceeds the total premiums paid. [3] The IRS says life insurance proceeds received as a beneficiary are generally not includable in gross income, but interest received on them is taxable. [4]

Variable products

The SEC's investor site explains that a variable life policy's cash value depends on the premiums paid and on the performance of a menu of investment options, typically mutual funds. [5] Hawaii law requires a variable contract to state that its dollar amount will vary with investment experience and to say on the first page that benefits are on a variable basis. [6]

Annuities

Hawaii's annuity disclosure law defines a "generic name" as a short title describing the contract, such as "single premium deferred annuity." [7] Its report rule applies to deferred annuities during the accumulation period and to annuities in the payout period whose non-guaranteed elements change. [8]

Practice questions

1. Which policy provides coverage only for a specified period of time?

A. Whole life
B. Term life
C. Universal life
D. Variable life

Answer: B. [3]

2. Which policy pays the insured a set amount if the insured is still living at the end of the period?

Answer: An endowment policy. [3]

3. Which lifetime policy has flexible premiums and death benefits under the policy's terms?

Answer: Universal life. [3]

4. Which policy adds an element of investment to the cash value account?

Answer: Variable life. [3]

5. A whole life owner withdraws less than the total premiums paid. Is the withdrawal taxable, according to the Insurance Division?

Answer: No. Withdrawals are nontaxable until the total withdrawn exceeds the total premiums paid. [3]

6. Under Hawaii law, does transacting life insurance include granting annuities?

Answer: Yes, along with endowment benefits, with a narrow exception for certain charitable gift annuities. (HRS 431:1-204(c)) [2]

7. A beneficiary receives the death benefit and some interest on it. What is taxable?

Answer: The interest. The proceeds themselves are generally not included in gross income. [4]

8. What must appear on the first page of a variable contract delivered in Hawaii?

A. The agent's license number
B. A statement that benefits are on a variable basis
C. A guaranteed interest rate
D. The insurer's financial rating

Answer: B. (HRS 431:10D-118(b)) [6]

9. What drives the cash value of a variable life policy?

Answer: The premiums paid and the performance of the chosen investment options. [5]

10. Is there a precise formula for how much life insurance to buy, according to the Insurance Division?

Answer: No. The Division says there is no precise formula, and notes guidelines of five times annual income (a consumer group) and ten times yearly income (industry groups). [3]

Study tips for section I

Practice more with the free Hawaii life practice test.

Prep Retention is independent and is not affiliated with Pearson VUE or the state.

Sources

Laws and exam documents quoted as of October 2026.

  1. Pearson VUE, Hawaii content outlines 121201 (effective January 1, 2026): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/121201.pdf
  2. HRS 431:1-204: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0001-0204.htm
  3. Hawaii Insurance Division, Life Insurance: https://cca.hawaii.gov/ins/life-insurance/
  4. IRS, Life Insurance and Disability Insurance Proceeds: https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds
  5. SEC Investor.gov, Variable Life Insurance: https://www.investor.gov/introduction-investing/investing-basics/glossary/variable-life-insurance
  6. HRS 431:10D-118: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0118.htm
  7. HRS 431:10D-601: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0601.htm
  8. HRS 431:10D-604: https://data.capitol.hawaii.gov/hrscurrent/Vol09_Ch0431-0435H/HRS0431/HRS_0431-0010D-0604.htm

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