Pennsylvania types of life insurance practice questions
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Section 4.0 Types of Life Insurance Policies is 17% of the Pennsylvania Life exam (Series 16-01). [1] The outline lists term (level, decreasing, increasing, renewable), whole life (single premium, continuous premium, limited payment), adjustable life, universal life, index whole life, specialized policies (joint, survivorship, juvenile, return of premium term), and group life. [1] This page explains the main types using the Pennsylvania Insurance Department's consumer guide, then gives 10 practice questions.
The main types, as the Insurance Department describes them
- Term: covers you "for a set period (term) of one or more years," and pays only if you die during that term. [2]
- Renewable term: "Most term insurance policies are renewable for one or more additional terms even if your health status has changed." Each renewal brings a higher premium. [2]
- Convertible term: many term policies can be converted to whole life before a set time, even if you are not in good health, at a higher premium than the term. [2]
- Whole life: "Whole Life insurance protects you for as long as you live." With straight life or ordinary life, "you pay the same premium for as long as you live." [2]
- Limited payment: "Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65." [2]
- Universal life: premiums, less expense charges, go into a policy account that earns interest, and the cash value depends on interest earnings that change with market rates. [2]
- Variable life: death benefits and cash values depend on investment performance, and these policies "only can be sold by an agent registered as a securities dealer." [2]
- Endowment: pays a sum or income if you live to a certain age; if you die first, the beneficiary receives the death benefit. [2]
Practice questions
1. Which policy covers a set period of one or more years and pays only if the insured dies in that period?
A. Whole life
B. Term
C. Endowment
D. Universal life
Answer: B. [2]
2. A term policyholder renews. What happens to the premium?
Answer: It is higher each time the policy is renewed. [2]
3. Can a term policy usually be renewed even if the insured's health has changed?
Answer: Yes. Most term policies are renewable for one or more additional terms even if health has changed. [2]
4. A client converts term to whole life. How does the new premium compare?
Answer: It will be higher than the term premium. [2]
5. Which type is also called straight life or ordinary life?
Answer: The most common type of whole life, where you pay the same premium for as long as you live. [2]
6. A whole life policy with premiums paid for 20 years or until 65 is an example of what?
Answer: A limited payment whole life policy, which the guide describes as paying premiums for a shorter period. [2]
7. A whole life owner stops paying premiums. What can they do with the cash value?
Answer: Take the cash, or use the cash value to buy continuing protection for a limited time or a reduced benefit. [2]
8. In universal life, what drives the cash value?
Answer: Interest earnings that change with market rates. [2]
9. Who can sell variable life insurance, according to the Insurance Department?
Answer: Only an agent registered as a securities dealer. [2] Pennsylvania rules also require the seller to be an agent who has filed evidence of any license or authorization needed for variable life. (31 Pa. Code 82.81) [3]
10. An endowment policy matures while the insured is alive. What happens?
Answer: It pays a sum or income to the insured. If the insured dies before the set age, the beneficiary gets the death benefit. [2]
Policy loans on whole life
You may borrow against the cash value. Unpaid loan principal and interest are deducted from the death benefit, or from the cash value if premiums stop. [2]
Study tips
- Term: set period, renewable at higher premiums, often convertible.
- Whole life: lifetime coverage, cash values, ordinary or limited pay.
- Universal follows interest rates; variable follows investments and needs a securities registration to sell.
Practice more with the free Pennsylvania Life practice test.
Prep Retention is independent and is not affiliated with PSI or the state.
Sources
- PSI, Pennsylvania Life outline, Series 16-01 (effective 3/1/2026): https://proctor2.psionline.com/media/programs/PAINS/16-01xx.pdf
- Pennsylvania Insurance Department, A Consumer's Guide to Life Insurance: https://www.pa.gov/content/dam/copapwp-pagov/en/insurance/documents/coverage/documents/life-insurance/life.pdf
- 31 Pa. Code 82.81: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/031/chapter82/s82.81.html&d=reduce