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CURRENTLY TESTING EXAM OF TEXAS INSURANCE LICENSE

EXAM 3 LATEST VERSIONS (VERSION A, B AND C) QUESTIONS

WITH ACTUAL CORRECT DETAILED ANSWERS

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT - ANSWER-Bilateral A domestic insurance company in Texas is considered a company that? - ANSWER-is incorporated and formed in Texas A certificate of permits an insurance company to transact business in Texas. - ANSWER-authority Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)? - ANSWER-More physicians to choose from What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? - ANSWER-variable When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates? - ANSWER-Change of occupation provision A plan through the Marketplace may be purchased by - ANSWER-Any legal resident (except those imprisoned)

A license may be denied, suspended, or revoked if the licensee? - ANSWER-is found guilty of misrepresentation in obtaining the license A Business Overhead Expense policy - ANSWER-covers business expenses such as rent and utilities The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is - ANSWER-Time Limit on Certain Defenses T is the policyowner for a Life Insurance policy with an Irrevocable beneficiary designation, If T wishes to change the beneficiary, T must obtain permission from the - ANSWER-beneficiary The individual Health Insurance policy that offers the broadest protection is a(n) policy - ANSWER-major medical When an insurance application is taken by a producer, which of these statements is true? - ANSWER-Any changes made on the application require the applicant's initials Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period - ANSWER-varies according to the contract A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be - ANSWER-noncancellable An example of false advertising would be - ANSWER-An insurer exaggerating its dividends in a magazine advertisement B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary? - ANSWER-$300, Which of the following is an example of a nonforfeiture option? - ANSWER-reduced paid-up option

An applicant MUST receive an Outline of Coverage when an application is taken for a(n) - ANSWER- Medicare Supplement policy Which mode of payment is NOT used by health insurance policies? - ANSWER-Single Premium What type of life policy covers two people and pays upon the death of the last insured? - ANSWER- survivorship During a sales presentation for a participating life insurance policy, an agent MUST - ANSWER-make a prospect understand that dividends are NOT guaranteed What is the elimination period of an individual disability policy? - ANSWER-Time period a disabled person must wait before benefits are paid When is the face amount of a Whole Life policy paid? - ANSWER-When the insured dies or at the policy's maturity date, whichever happens first Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires? - ANSWER-An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed Medicare is intended for all of the following groups, EXCEPT: - ANSWER-Those enrolled as a full-time student When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following? - ANSWER-Residual disability At what point does an informal agreement become a binding contract? - ANSWER-When consideration is provided by one of the parties to the contract An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be: - ANSWER-converted to an individual permanent policy at an individual rate

How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - ANSWER-6 months The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the: - ANSWER-Waiver of Premium Additional coverage can be added to a Whole Life policy by adding a(n): - ANSWER-decreasing term rider K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? - ANSWER-$20,000 death benefit In regards to representations or warranties, which of these statements is TRUE? - ANSWER-If material to the risk, false representations will void a policy P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim? - ANSWER-Claim will be denied All are true statements regarding the underwriting process, EXCEPT - ANSWER-AIDS and HIV virus exams can be conducted in a discriminatory fashion Which of the following phrases refers to the fees charged by a healthcare professional? - ANSWER-Usual, customary, and reasonable expenses ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has - ANSWER-waived one of its legal rights Dental care coverage is designed to cover the costs of all of the following EXCEPT - ANSWER-loss of income

What is the Suicide provision designed to do? - ANSWER-safeguard the insurer from an applicant who is contemplating suicide A(n) rider may be used to include coverage for children under their parents' life insurance policy. - ANSWER- term Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas? - ANSWER-agent What is the MINIMUM benefit period that must be offered by a Long-Term Care policy? - ANSWER- 12 months Which of the following is a requirement for obtaining a Texas insurance agent's license? - ANSWER-Be honest, trustworthy, and reliable Which type of provider is known for stressing preventative medical care and routine physical examinations? - ANSWER-Health Maintenance Organizations (HMO's) of continuing education MUST be completed in the classroom or classroom equivalent. - ANSWER-50% A policy of adhesion can only be modified by whom? - ANSWER-insurance company Which statement is true regarding a minor beneficiary? - ANSWER-Normally, a guardian is required to be appointed in the Beneficiary clause of the contract An underwriter determines that a life insurance applicant's risk should be reclassified due to a health issue. This policy may be issued with a(n). - ANSWER-extra premium Which statement regarding the Change of Beneficiary provision is true? - ANSWER-The policyowner can change the beneficiary

The guarantee of insurability option provides a long-term care policyowner the ability to: - ANSWER-buy additional coverage at a later date S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a: - ANSWER-High Deductible Health Plan 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? - ANSWER-Modified Whole Life Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party? - ANSWER-Subrogation Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due? - ANSWER-grace period C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? - ANSWER-ABC is the policyowner, C is the insured, and ABC is the beneficiary A Term Life rider offers the insured - ANSWER-additional life coverage Which of the following will a Long Term Care plan typically provide benefits for? - ANSWER-home health care 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? - ANSWER-Family Maintenance Policy J was reviewing her Health Insurance policy and noticed the phrase "This policy will only pay for a semi- private room". This phrase is considered to be a(n) - ANSWER-internal limit

All of the following statements about traditional individual retirement accounts are false EXCEPT - ANSWER-10% penalty is applied to withdrawals before age 59 1/ What action can a policyowner take if an application for a bank loan requires collateral? - ANSWER- Assign policy ownership to the bank Which of the following actions may NOT be taken by an insurance company to insure a substandard applicant for disability income coverage? - ANSWER-Lengthen the contestability period A temporary agent's license issued by the Commissioner of Insurance is valid for up to days. - ANSWER- 90 An insurer is NOT required to provide information on fraudulent claims if requested by - ANSWER-an insured To terminate an agent's appointment, an insurance company must - ANSWER-send termination notice to the Texas Department of Insurance If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

• ANSWER-Insured's contingent beneficiary The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true? - ANSWER-This clause provides the payment of proceeds to the insured's estate A new general property and casualty licensee must complete at LEAST hours of continuing education within 24 months of initial licensure - ANSWER- 24 T sends proof of loss to her insurer for an acceptable medical expense claim under her individual Health Insurance policy. Upon receipt, the insurer must pay the benefits - ANSWER-immediately

The provision that defines to whom the insurer will pay benefits to is called: - ANSWER-Payment of Claims On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? - ANSWER-January 26 A life insurance application must be signed by all of these, EXCEPT - ANSWER-beneficiary The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is. - ANSWER-to cost Which of the following BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition? - ANSWER-Less restrictive Which of the following is considered to be the time period after a Health Policy is issued, during which no benefits are provided for illness? - ANSWER-probationary period A(n) contained in a life insurance policy states that the policy will NOT cover certain risks. - ANSWER- exclusion Which of these statements concerning an Individual Straight Life annuity is accurate? - ANSWER- Payments are made to an annuitant for life According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? - ANSWER-31 days Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of - ANSWER-31 days

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age, as stated on the application five years ago, was found to be understated by ten years. Which of the following actions will the insurance company take? - ANSWER-The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age What is the monetary penalty for willfully violating a cease-and-desist order? - ANSWER-fine up to $ Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ANSWER-Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? - ANSWER-coercion In Texas, which of these statements regarding the Suicide clause is TRUE? - ANSWER-An insurer may not use suicide as a defense against payment after the second year The Accelerated Death Benefit provision in a life insurance policy is also known as a(n): - ANSWER-Living Benefit What is being delivered during a policy delivery? - ANSWER-Insurance contract to the proposed insured What is an organization that solicits insurance only to its members? - ANSWER-fraternal benefit society T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? - ANSWER-$ A 'reimbursement policy" pays what amount of covered Long-Term Care expenses? - ANSWER-Actual covered expenses up to the daily maximum

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? - ANSWER-Misrepresentation The Legal Actions provision of an insurance contract is designed to do all of the following, EXCEPT - ANSWER-protect the producer P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? - ANSWER- Sign an enrollment card Which type of contract liquidates an estate through recurrent payments? - ANSWER-annuity Which of the following statements BEST describes dental care indemnity coverage? - ANSWER-Services are reimbursed after insurer receives the invoice Which of these factors does NOT influence an applicant's need for life insurance? - ANSWER-Self- maintenance expenses An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager? - ANSWER-Key Person Life Policy Which provision is NOT a requirement in a group life policy? - ANSWER-accidental The phrase "transacting business" includes - ANSWER-collecting premiums T applied for a Disability Income policy and has a history of back injuries. The insurer issued the policy with a statement that excludes coverage for back injuries. This statement is called a(n) - ANSWER- Impairment rider Credit Life Insurance is - ANSWER-insurance issued on a debtor to cover outstanding loan balances

Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment? - ANSWER-Transportation to and from a treatment facility M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary iS his son? - ANSWER-Revocable Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ANSWER-Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company X is insured with a Disability Income policy that provides coverage until age 65. This policy allows the insurer to change the premium rate for the overall risk class assigned. Which of these renewability features does this policy contain? - ANSWER-Guaranteed renewable In Texas, an individual life insurance policy is REQUIRED to have a grace period of - ANSWER-31 days The reason for backdating a policy is - ANSWER-to obtain a premium rate based on an earlier age which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? - ANSWER-Entire Contract provision Who has the right to change a revocable beneficiary? - ANSWER-Policyowner What must the policyowner provide to the insurer for validation that a loss has occurred? - ANSWER- Proof of Loss Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? - ANSWER-increase face amount Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary? - ANSWER-The initial premium was NOT submitted with the application

Medicare Part A and Part B do NOT pay for. - ANSWER-dental work A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application Which of the following actions would the insurance company NOT take? - ANSWER-Send a notice to the MIB that the applicant was declined A CEO's personal assistant suffered infuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant? - ANSWER-Disability Income P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P. Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to - ANSWER-P only C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/20 coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000? - ANSWER-$ What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision? - ANSWER-Submit the claim in any form An insurance agent has a fiduciary responsibility to all of the following EXCEPT - ANSWER-other agents Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? - ANSWER-Risk classification Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. - ANSWER-conditional

"A producer does not have the authority to change a policy or waive any of its provisions". The health provision that best describes this statement is called the - ANSWER-Entire Contract Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured? - ANSWER-PPO What advantage does the renewability feature give to a term policy? - ANSWER-The insured may extend the coverage period An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the - ANSWER-commissioner An insurance company organized under New York laws and licensed to do business in Texas is considered a(n) - ANSWER-foreign company If an insurance company issues a Disability income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called - ANSWER- noncancellable Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges? - ANSWER-The maximum amount considered eligible for reimbursement by an insurance company under a health plan Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? - ANSWER-Legal Purpose (Insurable Interest) in a qualified retirement plan, the yearly contributions to an employee's account: - ANSWER-are restricted to maximum levels set by the IRS Who is NOT required to sign a life insurance application? - ANSWER-beneficiary Which of these is NOT considered to be a right given to a policyowner? - ANSWER-Modify a provision in the insurance contract

Which of the following statements about health coverage for newborns is NOT true? - ANSWER- Coverage is limited to only congenital defects Which of the following best describes a contingent beneficiary? - ANSWER-Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as. - ANSWER-Employee's premiums paid by the employer is tax-deductible to the employer as a business expenditure Which of the following is NOT included in a life insurance illustration? - ANSWER-company's mortality table Which of the following is NOT a required provision in group life policies? - ANSWER-Right to Loan Which of the following is a valid reason for an enrollee to be cancelled by a Health Maintenance Organization (HMO) plan? - ANSWER-Nonpayment of coverage What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy? - ANSWER-Premiums may increase at time of renewal Under a Renewable Term policy. - ANSWER-the renewal premium is calculated on the basis of the insured's attained age A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n) - ANSWER-Aviation exclusion If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be - ANSWER-an amount that the premiums paid would have purchased at the current age

A Nonforfeiture clause gives the policyowner - ANSWER-guaranteed values even if the policy has lapsed One becomes eligible for Social Security disability benefits after having been disabled for: - ANSWER- 5 months Insurance policies are considered aleatory contracts because - ANSWER-performance is conditioned upon a future occurrence What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue it he/she ever becomes totally disabled? - ANSWER-Waiver of Premium rider J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this? - ANSWER-Modified Premium Life varable Whole Life Insurance can be described as. - ANSWER-both an insurance and securities product This type of deductible provision waives the deductible for all family members after some of them have satisfied individual deductibles within the same year. - ANSWER-Family maximum deductible How long does an insurance company appointment remain in force? - ANSWER-Until terminated Who owns a stock insurance company? - ANSWER-stockholders What type of life insurance incorporates flexible, premiums, and an adjustable death benefit - ANSWER- Universal Life As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? - ANSWER-coercion

An employee is covered under a company group life plan with a $50,000 death benefit. What is the maximum amount of spouse may be insured for under this program. - ANSWER-$25, A license may be denied suspended or revoked if the licensee - ANSWER-is found guilty of misrepresentation in obtaining the license Which of the following is not required provision in group life policies - ANSWER-Right to Loan On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? - ANSWER-Collect initial premium along with a signed health statement Variable whole life insurance can be described as - ANSWER-both an insurance and securities product Which unfair trade practice involves an agent telling a prospective client that a policy dividends are guaranteed - ANSWER-Misrepresentation An insurer is not required to provide information on fraudulent claims if requested by - ANSWER-an insured How long does an insurance company appointment remain in force? - ANSWER-Until terminated In Texas, which of these statements regarding the suicide clause is true - ANSWER-An insurer may not use suicide as a defense against payment after the second year A certificate of _____ permits, and insurance company to transact business in Texas - ANSWER-authority Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - ANSWER-Inspection report

Before a life policy is issued, which of these contract elements is necessary? - ANSWER-A signed application by the prospect A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? - ANSWER-Proceeds will go to the contingent beneficiary Statements made on an insurance application that are believed to be true to the best of the applicants knowledge are called: - ANSWER-representations Which of these life insurance riders allows the applicant to have excess coverage? - ANSWER-Term rider Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? - ANSWER-Portion of the premiums paid for by the employer may be a tax deduction What type of policy would offer a 40-year-old the quickest accumulation of cash value? - ANSWER- 20 - pay life Which of these provisions is not required in life insurance policies? - ANSWER-Extended term An insured may assign up to _____ of policy ownership under an individual life insurance policy. - ANSWER-100% The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is: - ANSWER-the cost In Texas, how long must the policy be enforced before an insurance company must pay death benefits for suicide? - ANSWER-2 years B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of - ANSWER-coercion

T purchased a $100,000 single premium straight life annuity five years ago. He has received monthly payment since the inception of the annuity. If T dies, the insurance company - ANSWER-Does not have to make any further payments The _____ has the right to change a life insurance policies beneficiary - ANSWER-Policyowner K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Continue to the common disaster provision which of these statements is true? - ANSWER-Proceeds will be payable to K's estate if P dies within specified time If an insured's age was misstated on a life insurance contract, the miss statement of age provision requires that any death benefit payable would be - ANSWER-An amount that the premiums paid would have purchased at the current age What is being delivered during a policy delivery? - ANSWER-Insurance contract to the proposed insured P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to - ANSWER-P only An example of rebating would be - ANSWER-returning a portion of a premium as inducement to purchase insurance A new general property and casualty licensing must complete at least __ hours of continuing education with 24 months of initial licensure. - ANSWER- 24 Premature IRA distributions are assisted a penalty tax of - ANSWER-10% What is the monetary penalty for willfully violating a cease-and-desist order? - ANSWER-fine up to $ Which statement about a whole life policy is true? - ANSWER-Cash value may be borrowed against

What benefit does the Payor clause on a Juvenile Life policy provide? - ANSWER-Premiums are waived if payor becomes disabled Which type of policy is considered to be overfunded as stated by IRS guidelines? - ANSWER-Modified Endowment Contract Who is liable when an insured suffers a loss on a policy sold by an agent through an insured, not authorized to conduct business in Texas? - ANSWER-The agent What does the insuring agreement in a life insurance contract establish? - ANSWER-An insurer's basic promise Three law partners from a cross purchased by and cell agreement. this agreement is funded with individual life insurance. How many total life policies are needed for this agreement? (Hint: Double) - ANSWER- 6 What is the basic function of an annuity? - ANSWER-The systematic liquidation of accumulated funds The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called an: - ANSWER-Insuring agreement When an employee is terminated, which statement about a group term life conversion is true? - ANSWER-Policy proceeds will be paid if the employee dies during the conversion period A foreign insurance company conducting insurance business in Texas - ANSWER-was formed under the laws of another state D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? - ANSWER-Level term A(n) _____ beneficiary, may change by the policy owner without the consent of the beneficiary. - ANSWER-Revocable

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? - ANSWER-Unilateral Insurance contracts are unilateral. This means that only one party (the insurer) makes any kind of enforceable promise. A domestic insurance company in Texas is considered a company that - ANSWER-is incorporated and formed in Texas How often must an insurance agent license normally be renewed? - ANSWER-every two years Which of the following provisions guarantees that premiums will be waived if a juvenile life policy owner becomes disabled? - ANSWER-Payor clause B owns a whole life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amount of - ANSWER-additional Whole Life coverage at specified times Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? - ANSWER-The entire contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract. With whom made an agent legally share commissions? - ANSWER-Another agent with the same line of insurance What is an organization that solicits insurance only to its members? - ANSWER-fraternal benefit society Which action will a life insurance company most likely take if an insured dies, and it is discovered that the insured age was misstated on the application? - ANSWER-Pay an amount the premiums would have purchased at the insured actual age

At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in - ANSWER-Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? - ANSWER-Single Premium D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - ANSWER-The full face amount/full death benefit An applicant's medical information received from the medical information bureau may be furnished to the: - ANSWER-Applicants physician A cost of living rider gives the insured - ANSWER-additional death benefits A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n) - ANSWER-Variable universal life policy What is Old Age and Survivors Health Insurance (OASDHI) also known as? - ANSWER-Social Security Social Security, also known as Old Age, Survivors, and Disability Insurance (OASDI), was signed into law in 1935 by President Roosevelt as part of the Social Security Act. Which of these is not considered to be a cost connected with an individual death? - ANSWER-Business expenses Which of these is not an example of doing insurance business? - ANSWER-Selling shares of stock A 15-year mortgage is best protected by what kind of life policy? - ANSWER- 15 - year decreasing term

What is the maximum number of employees earning at least $5000 that an employer can have in order to start a simple retirement plan? - ANSWER- 100 ___ of continuing education must be completed in the classroom or classroom equivalent - ANSWER- 50% Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? - ANSWER-Legal Purpose (Insurable Interest) T is given a receipt after completing a life insurance application and paying the initial premium. Under this situation T's coverage is - ANSWER-Conditional depending on the insurer's underwriting guidelines Which statement is true regarding minor beneficiary? (Hint: beneficiary clause) - ANSWER-Normally, a guardian is required to be appointed in the Beneficiary clause of the contract Which of the following is not included in an annuity contract? (Hint: rider) - ANSWER-AD&D rider Which type of planet allows an employer to give money to an employee for buying a life insurance policy, and also permits the employee to select the beneficiary? - ANSWER-Split dollar plan The cash value in an _________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors. - ANSWER-universal In Texas and individual life insurance policy is required to have a grace period of - ANSWER-31 days A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n) - ANSWER-Aviation exclusion Which of the following is not included in a life insurance illustration? - ANSWER-company's mortality table

An insurance agent has a fiduciary responsibility to all of the following, except - ANSWER-other agents What is required for an agent whose license has been revoked? - ANSWER-Wait at least 5 years before applying for a new license Which of the following statements is correct regarding the tax treatment of a lump sum payment paid to a life insurance policies primary beneficiary? - ANSWER-All proceeds are income tax free in the year they are received Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policy owner? - ANSWER-Irrevocable beneficiary Which of these is not considered to be a right given to a policy owner? - ANSWER-Modify a provision in the insurance contract Which of the following groups may not be insured by a group life insurance policy? - ANSWER-Individuals who are related by blood Credit life insurance is - ANSWER-insurance issued on a debtor to cover outstanding loan balances A non-forfeiture clause gives the policy owner - ANSWER-guaranteed values even if the policy has lapsed Which of the following is a requirement for obtaining a Texas insurance agents license? - ANSWER-Be honest, trustworthy, and reliable How long can a cashier renew value payment be deferred by the insurance company under the nonforfeiture law? - ANSWER-6 months During a sales presentation for a participating life insurance policy and agent must - ANSWER-make a prospect understand that dividends are NOT guaranteed

How do life insurance companies handle cases where the insured commit suicide within the contract stated contestable period? - ANSWER-Claims are denied under the Suicide clause of the policy When will a hearing be held after a notice of hearing, alleging participation in an unfair or deceptive act, is served to a licensee or insurer by the Commissioner? - ANSWER-No sooner than 6 days The phrase "transacting business" includes - ANSWER-collecting premiums A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount? - ANSWER-$25 A(n) _____ contained in a life insurance policy states that the policy will not cover certain risks. - ANSWER-exclusion Which of these require an offer, acceptance, and consideration? - ANSWER-Contract Offer, acceptance, and consideration are all elements of a contract. Under a trustee group life policy, who would be eligible for a certificate of coverage? - ANSWER- employee Which of these types of life insurance allows the policy owner to have level premiums, and to also choose from a selection of investment options? - ANSWER-Variable Life All are true statements regarding the underwriting process, EXCEPT: - ANSWER-AIDS and HIV virus exams can be conducted in a discriminatory fashion A whole life insurance is sometimes referred to as straight life. What does the word straight indicate when using this phrase? - ANSWER-The duration of premium payments All of the following are considered to be typical characteristics, describing the nature of an insurance contract except: - ANSWER-Bilateral

Unilateral, aleatory, and adhesion are all special features of insurance contracts. Bilateral is not. What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? - ANSWER-whole life Susie set fire to her house to collect the insurance. This is an example of a(n) - ANSWER-MORAL HAZARDS Henry's tires on his SUV are so worn that the steel belt is showing through the tread. The condition of the tires is known as - ANSWER-PHYSICAL HAZARDS When a driver of an auto breaks the posted speed limit, the driver's liability imposed by the law is known as - ANSWER-ABOSLUTE LIABILITY Under compensatory damages, medical expenses are an example of - ANSWER-SPECIAL damages. Josh attends a hockey game. While at the game he is hit in the head by the hockey puck resulting in a broken cheek bone. Josh immediately sues the hockey team for damages. What might be the most logical defense for the hockey team? - ANSWER-ASSUMPTION OF RISK The Smith family is planning to build a new house. They want the house to be constructed entirely of fire resistance materials. This construction type is an example of a - ANSWER-FIRE RESISTIVE building. ________ contracts are written for a specified amount and they list the value of the insured property as agreed to by both the insured and the insurer at policy inception. - ANSWER-Susie set fire to her house to collect the insurance. This is an example of a(n) MORAL HAZARDS Henry's tires on his SUV are so worn that the steel belt is showing through the tread. The condition of the tires is known as - ANSWER-PHYSICAL HAZARDS When a driver of an auto breaks the posted speed limit, the driver's liability imposed by the law is known as - ANSWER-ABOSLUTE LIABILITY