UPDATED 2024/2025 Texas Life and Health Insurance Exam Questions And Answers with complete solution (Graded A+)
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Course
Texas life and health
Institution
Texas Life And Health
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? - CORRECT ANS Upon completion of the application
Who elects the governing body of a mutual insurance company? - CORRECT ANS policyholders
An insurance applicant MUST ...
Texas Life and Health Insurance Exam
2023 Questions And Answers with
complete solution (Graded A+)
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - CORRECT ANS Upon completion of the
application
Who elects the governing body of a mutual insurance company? - CORRECT ANS
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - CORRECT ANS Fair Credit Reporting
Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure? - CORRECT ANS Treaty
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called - CORRECT ANS
reserves
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated - CORRECT ANS 1970 - Fair Credit Reporting
Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - CORRECT ANS Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - CORRECT ANS insurable interest in
the proposed insured
Statements made on an insurance application that are believed to be true to the best
of the applicant's knowledge are called - CORRECT ANS representations
The part of a life insurance policy guaranteed to be true is called a(n) - CORRECT
ANS warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - CORRECT ANS Principal
The Consideration clause of an insurance contract includes - CORRECT ANS the
schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate their
business, and four months later E dies. Although E was married with three children
at the time of death, the primary beneficiary is still F. However, an insurable interest
no longer exists. Where will the proceeds from E's life insurance policy be directed
to? - CORRECT ANS In this situation, the proceeds from E's life insurance policy
will go to F.
Which of the following terms defines the legally enforceable promise in an insurance
contract by the insurer? - CORRECT ANS Unilateral
When must insurable interest exist for a life insurance contract to be valid? -
CORRECT ANS Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - CORRECT ANS conditional
,Texas Life and Health Insurance Exam
2023 Questions And Answers with
complete solution (Graded A+)
Which of these require an offer, acceptance, and consideration? - CORRECT ANS
Contract
Which of these arrangements allows one to bypass insurable interest laws? -
CORRECT ANS Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated life
insurance (or STOLI) is used to circumvent state insurable interest statutes. This is
done when an investor (or stranger) persuades an individual to take out life
insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the death
benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - CORRECT ANS negotiating
An agent is an individual that represents whom? - CORRECT ANS Insurer
Insurable interest must exist at what time? - CORRECT ANS at the time of
application
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling? - CORRECT ANS Variable Life
Which of the following actions require a policy owner to provide proof of insurability
in an Adjustable Life policy? - CORRECT ANS increase face amount
When a policy owner exchanges a term policy for a whole life policy without
providing proof of good health, which of these apply? - CORRECT ANS
Conversion provision
What type of life insurance are credit policies issued as? - CORRECT ANS Term
How long does the coverage normally remain on a limited-pay life policy? -
CORRECT ANS age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of return, the cash
value will mirror that of the index
The premiums can be lowered or raised, based on investment performance
Tied to an equity index such as the S&P 500 - CORRECT ANS The premiums
can be lowered or raised, based on investment performance
Which of these is an element of a Variable Life policy? - CORRECT ANS A fixed,
level premium
What type of life insurance incorporates flexible premiums and an adjustable death
benefit? - CORRECT ANS Universal Life
T would like to be assured $10,000 is available in 10 years to replace a roof on his
house. What kind of $10,000 policy should T purchase? - CORRECT ANS Ten-
Year Endowment
What type of life policy covers 2 lives and pays the face amount after the first one
dies? - CORRECT ANS Joint Life Policy
, Texas Life and Health Insurance Exam
2023 Questions And Answers with
complete solution (Graded A+)
Life insurance that covers an insured's whole life with level premiums paid over a
limited time is called - CORRECT ANS Limited-Pay Life
What kind of life insurance product covers children under their parent's policy? -
CORRECT ANS Term rider
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the
premium payment
Policyowner has no say where the investment will go but can choose the premium
mode
The investment vehicle for this type of policy is held in the insurer's general portfolio
The death benefit can vary but the policyowner has no say in the premium amount
paid - CORRECT ANS Policyowner controls where the investment will go and
selects the amount of the premium payment
P is looking to purchase a life insurance policy that will pay a stated monthly income
to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end
of that 20 year period. What type of policy should P purchase? - CORRECT ANS
Family Maintenance policy
Which of the following statements about a Variable Whole Life policy is CORRECT?
It provides a minimum guaranteed Death benefit
It is a combination of a Limited Period Endowment and a Decreasing Term policy
Its premiums and benefits are variable
It has a guaranteed rate of return - CORRECT ANS It provides a minimum
guaranteed Death benefit
Credit Life insurance is - CORRECT ANS issued in an amount not to exceed the
amount of the loan
The amount of coverage on a group credit life policy is limited to - CORRECT ANS
the insured's total loan value
Term insurance has which of the following characteristics? - CORRECT ANS
Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's
death? - CORRECT ANS Face amount plus the policy's cash value
A life policy with a death benefit that can fluctuate according to the performance of its
underlying investment portfolio is referred to as - CORRECT ANS Variable Life
K buys a policy where the premium stays fixed for the first 5 years. The premium
then increases in year 6 and stays level thereafter, all the while the death benefit
remains the same. What kind of policy is this? - CORRECT ANS Modified Whole
Life
Which of these life products is NOT considered interest-sensitive? - CORRECT
ANS Modified Whole Life
What type of life policy covers two people and pays upon the death of the last
insured? - CORRECT ANS Survivorship
Which is true concerning a Variable Universal Life policy? - CORRECT ANS
Policyowner controls where the investment will go and selects the amount of the
premium payment
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