Which planet has cloulds of water vapor around it inner planet
has life
covered mostly in water

earth

Earth is the third inner planet and the one we know best. Of the four terrestrial planets, Earth is the largest, and the only one that currently has liquid water, which is necessary for life as we know it.

outside the solar system it is The first (known) of its kind. In a new study, a research team led by Björn Benneke, a professor at the Institute for Research on Exoplanets at the Université de Montréal, discovered water vapor and likely even raining clouds in the atmosphere of the exoplanet K2-18 b