Texas Life and Health Insurance Exam 150 Questions

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Texas Life and Health Insurance Exam 150Questions and Answers (Verified Solutions) 2023-TEXAS LIFE LATEST UPDATE GRADED AAt what point must a life insurance applicant be informed of their rights that fall underthe Fair Credit Reporting Act? - ANSWER»Upon completion of the applicationWho elects the governing body of a mutual insurance company? -A N S W E R »policyholdersAn insurance applicant MUST be informed of an investigation regarding his/herreputation and character according to the - ANSWER» Fair Credit Reporting ActWhat type of reinsurance contract involves two companies automatically sharing theirrisk exposure? - AN S W E R » TreatyThe stated amount or percent of liquid assets that an insurer must have on hand thatwill satisfy future obligations to its policyholders is called - ANSWER»reservesWhich of the following requires insurers to disclose when an applicant's consumer orcredit history is being investigated - ANSWER>>1970 - Fair Credit Reporting ActWhat is the consideration given by an insurer in the Consideration clause of a lifepolicy? - ANSWER»Promise to pay a death benefitWhen third-party ownership is involved, applicants who also happen to be the statedprimary beneficiary are required to have - ANSWER»insurable interest in the proposedinsured

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Statements made on an insurance application that are believed to be true to the best ofthe applicant's knowledge are called - ANSW E R » representationsThe part of a life insurance policy guaranteed to be true is called a(n) -ANSWER » warrantyWhich of these is NOT a type of agent authority?ExpressImpliedPrincipalApparent - ANSWER»PrincipalThe Consideration clause of an insurance contract includes - ANSWER»the scheduleand amount of premium paymentsEand F are business partners. Each takes out a $500,000 life insurance policy on theother, naming himself as primary beneficiary. E and F eventually terminate theirbusiness, and four months later E dies. AlthoughEwas married with three children atthe time of death, the primary beneficiary is still F. However, an insurable interest nolonger exists. Where will the proceeds from E's life insurance policy be directed to? -A N S W E R » l n this situation, the proceeds from E's life insurance policy wil go to F.Which of the following terms defines the legally enforceable promise in an insurancecontract by the insurer? - ANSWER»UnilateralWhen must insurable interest exist for a life insurance contract to b e valid? -A N S W E R »Inception of the contractInsurance contracts are known asbecause certain future conditions or acts mustoccur before any claims can be paid. - ANS W E R »conditional

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Which of these require an offer, acceptance, and consideration? - ANSWER»ContractWhich of these arrangements allows one to bypass insurable interest laws? -ANS W E R »Investor-Originated Life InsuranceInvestor-originated life insurance (or IOLI), sometimes called stranger-originated lifeinsurance (or STOLI) is used to circumvent state insurable interest statutes. This isdone when an investor (or stranger) persuades an individual to take out life insurancespecifically for the purpose of selling the policy to the investor. The investorcompensates the insured and makes the premiums, then collects the death benefitwhen the insured dies.Which of these is NOT considered to be an element of an insurance contract?the offeracceptancenegotiatingconsideration - ANS W E R »negotiatingAn agent is an individual that represents whom? - ANSWER>>lnsurerInsurable interest must exist at what time? - ANSWER»at the time of applicationWhich policy requires an agent to register with the National Association of SecuritiesDealers (NASD) before selling? - ANS W E R »Variable LifeWhich of the following actions require a policy owner to provide proof of insurability inan Adjustable Life policy? - ANS W E R »increase face amountWhen a policy owner exchanges a term policy for a whole life policy without providingproof of good health, which of these apply? - ANS W E R »Conversion provision

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What type of life insurance are credit policies issued as? - ANSWER»TermHow long does the coverage normally remain on a limited-pay life policy? -ANSWER»age 100All of these statements about Equity Indexed Life Insurance are correct EXCEPTCash value has a minimum rate of accumulationIf the gain on the index goes beyond the policy's minimum rate of return, the cash valuewill mirror that of the indexThe premiums can be lowered or raised, based on investment performanceTied to an equity index such as the S&P 500 - ANSWER»The premiums can belowered or raised, based on investment performanceWhich of these is an element of a Variable Life policy? - ANSWER»A fixed, levelpremiumWhat type of life insurance incorporates flexible premiums and an adjustable deathbenefit? - ANSWER»Universal LifeT would like to be assured 510,000 is available in 10 years to replace a roof on hishouse. What kind of $10,000 policy should T purchase? - ANSWER»Ten-YearEndowmentWhat type of life policy covers 2 lives and pays the face amount after the first one dies?- ANSWER»Joint Life PolicyLife insurance that covers an insured's whole life with level premiums paid over a limitedtime is called - ANSWER»Limited-Pay LifeWhat kind of life insurance product covers children under their parent's policy? -ANSWER»Term rider

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Which is true concerning a Variable Universal Life policy?Policyowner controls where the investment will go and selects the amount of thepremium paymentPolicyowner has no say where the investment will go but can choose the premiummodeThe investment vehicle for this type of policy is held in the insurer's general portfolioThe death benefit can vary but the policyowner has no say in the premium amount paid- ANSWER.Policyowner controls where the investment will go and selects the amountof the premium paymentP is looking to purchase a life insurance policy that will pay a stated monthly income tohis beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that20 year period. What type of policy should P purchase? - ANS W E R »FamilyMaintenance policyWhich of the following statements about a Variable Whole Life policy is CORRECT?It provides a minimum guaranteed Death benefitIt is a combination of a Limited Period Endowment and a Decreasing Term policyIts premiums and benefits are variableIt has a guaranteed rate of return - ANSWER»lt provides a minimum guaranteedDeath benefitCredit Life insurance is - ANSWER»issued in an amount not to exceed the amount ofthe loanThe amount of coverage on a group credit life policy is limited to - ANSWER»theinsured's total loan valueTerm insurance has which of the following characteristics? - ANS W E R »Expires at theend of the policy period

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What does a Face Amount Plus Cash Value Policy supposed to pay at the insured'sdeath? - ANSWER»Face amount plus the policy's cash valueA life policy with a death benefit that can fluctuate according to the performance of itsunderlying investment portfolio is referred to as - ANSWER»Variable LifeK buys a policy where the premium stays fixed for the first 5 years. The premium thenincreases in year 6 and stays level thereafter, all the while the death benefit remains thesame. What kind of policy is this? - ANSWER»Modified Whole LifeWhich of these life products is NOT considered interest-sensitive? -ANS W E R »Modified Whole LifeWhat type of life policy covers two people and pays upon the death of the last insured? -ANSWER»SurvivorshipWhich is true concerning a Variable Universal Life policy? - ANSWER»Policyownercontrols where the investment will go and selects the amount of the premium paymentT has a term policy that allows him to continue the coverage after expiration of the initialpolicy period. What type of term coverage is this? - ANSWER»RenewableF needs life insurance that provides coverage for only a limited amount of time with adeath benefit that changes regularly according to a schedule. What kind of policy isneeded? - ANSWER»Decreasing term policyG purchased a Family Income policy at age 40, The policy has a 20-year rider period. IfG were to die at age 50, how long would G's family receive an income? - A N S W E R » 1 0years

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The most important factor to consider when determining whether to convert terminsurance at the insured's attained age or the insured's original age is - ANSWER»thecostS would like to use dividends from her life insurance policy to purchase paid-upadditions. All of these would be factors that determine how much coverage can bepurchased EXCEPT - ANSWER»beneficiary's ageWhen an insurer issues a policy that refuses to cover certain risks, this is referred to asa(n) - ANSWER»exclusionsWhich statement regarding the Misstatement of Age provision is considered to be true?Coverage will be adjusted to reflect the insured's true age if a misstatement of age isdiscoveredRequires that a new policy must be applied for if a misstatement of age is found on thecurrent policyMisstatement of Age provision is valid only during the contestable periodInsurer may void the policy if a misstatement of age is discovered -ANSWER»Coverage will be adjusted to reflect the insured's true age if a misstatementof age is discoveredWhich of these is NOT considered to be a right given to a policyowner? -ANSWER»Modify a provision in the insurance contractJ let her life insurance policy lapse 8 months ago due to nonpayment. She canreestablish coverage under which of the following provisions? -ANSWER»Reinstatement provisionT took out a $50,000 life insurance policy with an Accidental Death andDismemberment rider. Five years later, T commits suicide. How much will the insurerpay? - ANSWER»50,000

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Dwas actively servinginthe Marines when he was killedinan automobile accidentwhile on leave. His $100,000 Whole life policy contains a War Exclusion clause. Howmuch will Drs beneficiary's receive? - ANSWER»The full face amountWhich of these statements about a Guaranteed Insurability Option rider is NOT TRUE?Coverage can be added at specific events such as marriage or having achildEvidence of insurability is not required when the option is exercisedEvidence of insurability is required when the option is exercisedCoverage can be added at specific ages - ANS W E R »Evidence of insurability isrequired when the option is exercisedAn insured is past due on his life insurance premium, but isstillwithin the Grace Period.What will the beneficiary receive if the insured dies during this Grace Period? -ANSWER»Full face amount minus any past due premiumsWhich of these are NOT an example of a Nonforfeiture option?Extended TermReducedPaid-upCash SurrenderLife Income - ANSWER»life incomeA provision in a life insurance policy that pays the policyowner an amount that does notsurpass the guaranteed cash value is called the - ANS W E R »Policy Loan provisionThe Consideration clause in a life insurance contract contains what pertinentinformation? - A N S W E R »Amount of premium payments and when they are dueWhat does the insuring agreement in a Life insurance contract establish? -ANSWER»An insurer's basic promise

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A young, married teacher has two children and owns aWholeLife policy.Ifthe teacherwants an increasing Death Benefit to protect against inflation, the teacher should selectwhich ofthefollowing Dividend Options? - ANSWER»Paid-Up Additional InsuranceWhich of the following statements is CORRECT about accumulated interest earned ondividends from an insurance policy? - ANSWER»lt is taxed as ordinary incomeWhen can a policyowner change a revocable beneficiary? - ANS W E R »anytimeKhas a life insurance policy where her husband is beneficiary and her daughter iscontingent beneficiary. Under the Common Disaster clause, if K and her husbandareboth killed in an automobile accident, where would the death proceeds be directed? -ANSWER » d aughterMpurchased an Accidental Death and Dismemberment (AD&D) policy and named hisson as beneficiary. M has the right to change the beneficiary designation at anytime.What type of beneficiary is his son? - ANSWER>>revocableKis the insured and P is the sole beneficiary on a life insurance policy. Both areinvolvedina fatal accident where K dies before P. Under the Common Disasterprovision, which of these statements is true? - ANSWER>>Proceedswillbe paid to P'sestateWhich statement regarding the Change of Beneficiary provision is true? -ANSWER»The policyowner can change the beneficiaryA policyowner’s rights are limited under which beneficiary designation? -ANS W E R »IrrevocableWhat is the underlying concept regarding level premiums? - ANSWER>>The earlyyears are charged more than what is needed

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