Idaho types of life insurance practice questions
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The general part of the Idaho Life Producer exam has 50 scored questions, and section I, Types of Policies, has 15 of them. [1] The outline lists traditional whole life products (ordinary whole life; limited-pay and single-premium life), interest/market-sensitive/adjustable life products (universal life, variable whole life, variable universal life, interest-sensitive whole life, indexed life), term life (level, decreasing, return of premium and annually renewable types; 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, first to die; survivorship life, second to die). [1] This page explains the main types using the Idaho Department of Insurance's consumer pages and Idaho law, then gives 10 practice questions.
What Idaho law counts as life insurance
Idaho Code defines life insurance as "insurance on human lives." Transacting life insurance also includes endowment benefits, added benefits for death or dismemberment by accident, added benefits if the insured is disabled, and optional ways of settling the proceeds. [2]
Term and whole life
- Term: the Department of Insurance says term life "guarantees payment of the policy coverage limit" if the insured dies during the term period stated in the policy. [3]
- Whole life: "Whole Life insurance provides coverage for the life of the insured." The Department notes these policies are also called permanent or traditional life insurance. [3]
- Cash value: whole life may build cash value. The Department lists uses such as paying the premium, taking a policy loan, and supplementing retirement income. [3]
Universal and variable life
- Universal life: the Department calls it "permanent life insurance with an investment savings element and low premiums." Most universal policies have a flexible premium option; some use a single premium and others fixed premiums. [3]
- Variable life: the SEC's investor site describes a policy that pays a set amount to beneficiaries at death, with a cash value that depends on the premiums paid and on how a menu of investment options, typically mutual funds, performs. [4]
Annuities
The Department explains that annuities are contracts sold by insurance companies and financial institutions, mainly used for retirement income, and that they "come in three main varieties": fixed, variable and indexed. [5]
- Fixed: promises a specific, guaranteed interest rate on contributions. [5]
- Variable: value can change based on an underlying portfolio of mutual funds. [5]
- Indexed: earns interest based on a market index; also called equity indexed or fixed indexed. [5]
- Immediate or deferred: an annuity pays income now or in the future; one that pays later is a deferred annuity. It can be bought with a lump sum or a series of payments. [5]
Idaho's standard provisions for individual life policies do not apply to annuity contracts. [6] Annuities have their own standard provisions in a separate section. [8]
Policies on more than one life
Idaho law says a life policy insuring more than one person must fit one of the group types in chapter 20, unless it insures only people related by blood, marriage or legal adoption, business owners actively managing the business, or people who otherwise have an insurable interest in each other's lives. [7]
Practice questions
1. A policy pays only if the insured dies during the period stated in the policy. What type is it?
A. Whole life
B. Term life
C. Universal life
D. Endowment
Answer: B. [3]
2. Which policy provides coverage for the life of the insured?
Answer: Whole life, also called permanent or traditional life insurance. [3]
3. Name two ways an owner can use whole life cash value, according to the Idaho Department of Insurance.
Answer: Examples: pay the policy premium, take out a loan, or supplement retirement income. [3]
4. Which permanent policy is known for flexible premiums and an investment savings element?
Answer: Universal life. [3]
5. In a variable life policy, what makes the cash value go up or down?
Answer: The premiums paid and the performance of the investment options, typically mutual funds. [4]
6. Which annuity promises a specific, guaranteed interest rate on contributions?
A. Variable annuity
B. Indexed annuity
C. Fixed annuity
D. Reversionary annuity
Answer: C. [5]
7. An annuity credits interest based on a market index. What else is it called?
Answer: An equity indexed or fixed indexed annuity. [5]
8. An annuity will begin paying income years from now. What is it called?
Answer: A deferred annuity. [5]
9. Under Idaho law, does "life insurance" include additional benefits for accidental death or dismemberment?
Answer: Yes. The definition includes added benefits in the event of death or dismemberment by accident or accidental means. (Idaho Code 41-502) [2]
10. Two business partners who actively manage their company want one policy covering both lives. Does Idaho's group requirement block this?
Answer: No. A policy insuring only individuals with a common ownership interest who are actively engaged in managing the business is an exception. (Idaho Code 41-2002(2)(b)) [7]
Study tips for section I
- Sort policies by length of coverage first: term for a set period, whole life for life.
- Then sort permanent policies: whole life (lifetime coverage, may build cash value), universal (flexible premiums, savings element), variable (cash value tied to investment options).
- Learn the three annuity varieties and the immediate versus deferred split.
- For the Idaho law questions on life policies, see our Idaho life flashcards.
Try the free Idaho life practice test for mixed questions.
Prep Retention is independent and is not affiliated with Pearson VUE or the state.
Sources
Laws and exam documents quoted as of October 2026.
- Pearson VUE, Idaho content outlines 121301 (effective July 31, 2025): https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/121301.pdf
- Idaho Code 41-502: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH5/SECT41-502/
- Idaho Department of Insurance, Life Insurance: https://doi.idaho.gov/consumers/life-insurance-annuities/life-insurance/
- SEC Investor.gov, Variable Life Insurance: https://www.investor.gov/introduction-investing/investing-basics/glossary/variable-life-insurance
- Idaho Department of Insurance, Annuities: https://doi.idaho.gov/consumers/life-insurance-annuities/annuities/
- Idaho Code 41-1903: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1903/
- Idaho Code 41-2002: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH20/SECT41-2002/
- Idaho Code 41-1917: https://legislature.idaho.gov/statutesrules/idstat/Title41/T41CH19/SECT41-1917/