Texas Life and Health Insurance Exam 2024, Exams of Personal Health

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Texas Life and Health Insurance Exam

1. A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1500 per month beginning at age 60. Which of these annuities did this woman purchase? - ✔✔Deferred Fixed Annuity
2. A characteristic of preferred provider organization (PPOs) would be:
   • ✔✔Discounted fees for the patient
3. A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? - ✔✔Claim will be paid and coverage will remain in force
4. A foreign insurance company conducting insurance business in Texas
   • ✔✔was formed under the-laws of another state
5. A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess

of the deductible amount as well. What would be this family's out- of-pocket medical expenses for 2013? - ✔✔$1,

6. A license may be denied, suspended, or revoked if the licensee - ✔✔is found guilty of misrepresentation in obtaining the license
7. A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as: - ✔✔Variable Life
8. A major medical policy typically: - ✔✔provides benefits for reasonable and necessary medical expenses, subject to policy limits
9. A medical Information Report (MIB) report may disclose which of the following: - ✔✔Prior use of marijuana
10. A medicare supplement policy may be cancelled for which of the following reasons? - ✔✔The premium has not been paid by the insured
11. 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)
    • ✔✔Aviation Exclusion

12. A plan through the Marketplace may be purchased by - ✔✔Any legal resident (except those imprisoned)
13. A policy of adhesion can only be modified by whom? - ✔✔The insurance company
14. A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. which type of designation would fulfill this need? - ✔✔irrevocable
15. A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the: - ✔✔Policy Loan Provision
16. A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a: - ✔✔profit-sharing plan
17. A(n) _________ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities
    • ✔✔Variable
18. A(n) _________ rider may be used to include coverage for children under their parents' life insurance policy. - ✔✔Term

19. ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering - ✔✔Unfair methods of competition
20. All of the following statements about traditional individual retirement accounts are false EXCEPT - ✔✔10% penalty is applied to withdrawals before age 59 1/
21. All of these statements about the Waiver of Premium provision are correct EXCEPT - ✔✔Insured must be eligible for Social Security disability for claim to be accepted
22. An applicant MUST receive an Outline of Coverage when an application is taken for a(n) - ✔✔Medicare Supplement policy
23. An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the - ✔✔Commissioner
24. An example of false advertising would be - ✔✔An insurer exaggerating its dividends in a magazine advertisement
25. An immediate annuity consists of a - ✔✔Single Premium

26. An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay is a total of $15,000 in covered medical expenses are incurred? - ✔✔$
27. $5,000 + 20% = $7,
28. An insurance agent has a fiduciary responsibility to all of the following except - ✔✔other agents
29. An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the - ✔✔Fair Credit Reporting Act
30. An insurance company organized under New York laws and licensed to do business in Texas is considered a(n) - ✔✔foreign company
31. An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ✔✔Full face amount minus any past due premiums

32. An insured owns an individual Disability Income policy with a 30- day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/ months, what is the MAXIMUM amount he would receive for an approved claim? - ✔✔$1,
33. An insurer may normally delay the payment of cash value loan or surrender value for up to - ✔✔6 months
34. An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? - ✔✔59 1/
35. 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? - ✔✔coercion
36. 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: - ✔✔Income tax and 10% penalty assessed upon funds withdrawn from the Qualified Plan
37. Before a life insurance policy is issued, which of these components of the contract is required? - ✔✔Applicant's signature on the application

38. Before a life policy is issued, which of these contract elements is necessary? - ✔✔A signed application by the prospect
39. Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this? - ✔✔Guaranteed insurability rider
40. Credit Life Insurance is - ✔✔insurance issued on a debtor to cover outstanding loan balances
41. Deductibles are used in health policies to lower - ✔✔overuse of medical services
42. During a sales presentation for a participating life insurance policy, an agent MUST - ✔✔make a prospect understand that dividends are NOT guaranteed
43. Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of - ✔✔31 days
44. Generally, how long is a benefit period for a Major Medical Expense Plan? - ✔✔One year

45. How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - ✔✔6 months
46. How often must an insurance agent license normally be renewed?
    • ✔✔Every two years
47. How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - ✔✔If the primary beneficiary dies before the insured
48. If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? - ✔✔Contributory
49. 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? - ✔✔Insured's contingent beneficiary
50. In Texas, an individual life insurance policy is REQUIRED to have a grace period of - ✔✔31 days
51. In Texas, how long must a policy be enforce before an insurance company must pay death benefits for suicide? - ✔✔2 years

52. In Texas, which of these statements regarding the Suicide clause is TRUE? - ✔✔An insurer may not use suicide as a defense agent payment after the second year
53. 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? - ✔✔The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
54. K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase? - ✔✔Single Premium Immediate Joint with Survivor Annuity
55. K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? - ✔✔Level
56. K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? - ✔✔Proceeds will be paid to P's estate

57. 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? - ✔✔$20,000 death benefit
58. K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT - ✔✔K will forfeit the right to use the automatic loan provision upon reinstatement
59. Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: - ✔✔Limited Pay Life
60. M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? - ✔✔Determined by the terms of the policy
61. Major Medical policies typically: - ✔✔contain a deductible and coinsurance
62. Medicare Part A and Part B do NOT pay for - ✔✔dental work
63. Medicare Part B does NOT cover - ✔✔inpatient hospital services

64. Medicare Part C is: - ✔✔available to those who are enrolled in Medicare Part A and Part B
65. N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? - ✔✔30 Pay Life
66. N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? - ✔✔Exclusion
67. On a life insurance policy, who is qualified to change the beneficiary designation? - ✔✔policyowner
68. One becomes eligible for Social Security disability benefits after having been disabled for - ✔✔5 Months
69. P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - ✔✔Set up a meeting with the applicant to answer the remaining questions.
70. P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? - ✔✔P will still receive declared dividends

71. P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own? - ✔✔Endowment at age 70
72. Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase? - ✔✔Term Life
73. S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? - ✔✔$50,
74. S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT - ✔✔beneficiary's age
75. S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be - ✔✔Universal Life
76. Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): - ✔✔Third-party with no insurable interest

77. T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company - ✔✔does NOT have to make any further payments
78. T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
    • ✔✔Income that cannot be outlived by the owner
79. The amount of coverage on a group credit life policy is limited to:
    • ✔✔The insured's total loan value
80. The consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and
    • ✔✔The initial premium
81. The consideration clause of an insurance contract includes - ✔✔the schedule and amount of premium payments
82. 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: - ✔✔The Cost

83. The phrase "transacting business" includes - ✔✔collecting premiums
84. The provision that defines to whom the insurer will pay benefits to is called: - ✔✔Payment of Claims
85. The reason for backdating a policy is - ✔✔to obtain a premium rate based on an earlier age
86. The sections of an insurance contract which limit coverage are called - ✔✔exclusions
87. Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement? - ✔✔ 6
88. To terminate an agent's appointment, an insurance company must - ✔✔send termination notice to the Texas Department of Insurance
89. Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - ✔✔If Tom's employment is terminated, 20% of the funds would be forfeited

90. Under a Graded Premium Whole Life policy, - ✔✔the premium increases each year during the early years of the contract and remains the same after that time
91. Under a Long Term Care policy, which benefit would be typically excluded or limited? - ✔✔Alcohol Rehabilitation
92. Under an interest sensitive whole life policy - ✔✔cash values are determined by interest rates
93. Variable whole Life Insurance can be described as - ✔✔both an insurance and securities product
94. What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? - ✔✔Face amount plus the policy's cash value
95. What is an organization that solicits insurance only to its members? - ✔✔Fraternal benefit society
96. What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy? - ✔✔Premiums may increase at time of renewable

97. What is required for an agent whose license has been revoked? - ✔✔Wait at least five years before applying for a new license.
98. What is the basic function of an annuity? - ✔✔The systematic liquidation of accumulated funds
99. What is the MINIMUM benefit period that must be offered by a Long-Term Care policy? - ✔✔12 months
100. What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made? - ✔✔Irrevocable beneficiary
101. What kind of life insurance product covers children under their parent's policy? - ✔✔A term rider
102. What type of life policy covers two people and pays upon the death of the last insured? - ✔✔Survivorship
103. What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled? - ✔✔Waiver of Premium Loan

104. When a policy pays dividends to its policyholders, it is said to be - ✔✔participating
105. When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the: - ✔✔Entire Contract Provision
106. When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? - ✔✔Recurrent disability
107. When determining the monthly benefit amount for a disability amount for a disability Income policy, the factor that limits the amount a prospective insured may purchase is: - ✔✔Income
108. When must insurable interest exist for a life insurance contract to be valid? - ✔✔Inception of the contract
109. When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - ✔✔insurable interest in the proposed insured

110. Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application? - ✔✔Pay an amount the premiums would have purchased at the insured's actual age
111. Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? - ✔✔Activate insurance companies' financial reserves
112. Which of the following actions is required by an insured who leave the primary area of medical coverage and seeks medical care?

- ✔✔Obtain prior approval from the insurer to the medical service 

113. Which of the following are Equity Indexed annuities typically invested in? - ✔✔S&P 500
114. Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment? - ✔✔Transportation to and from a treatment facility
115. Which of the following BEST describes how pre-admission certification is used? - ✔✔Used to prevent nonessential medical costs

116. Which of the following consists of an offer, acceptance, and consideration? - ✔✔Contract
117. Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ✔✔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
118. Which of the following does Social Security NOT provide benefits for? - ✔✔Dismemberment
119. Which of the following is a requirement for obtaining a Texas insurance agent's license? - ✔✔Be honest, trustworthy, and reliable
120. Which of the following is NOT a reason for a business to buy key person life insurance? - ✔✔A pension deficiency is the key employee dies
121. Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase? - ✔✔Applicant's monthly income
122. Which of the following is TRUE is the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are

made? - ✔✔The account can be rolled into the surviving spouse's IRA

123. Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy? - ✔✔Entire Contract
124. Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT? - ✔✔Premiums normally increase at the time of renewal
125. Which of the following statements about health coverage for newborns is NOT true? - ✔✔Coverage is limited to only congenital defects
126. Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy? - ✔✔Discourages overutilzation the insurance coverage
127. Which of the following types of care is typically not covered in a Long-Term Care policy? - ✔✔Acupuncture
128. Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of

participating physicians and hospitals that have agreements? - ✔✔HMO

129. Which of the following will a Long Term Care plan typically provide benefits for? - ✔✔home health care
130. Which of these characteristics is consistent with a Straight Life Policy? - ✔✔Premiums are payable for as long as there is insurance coverage in force
131. Which of these describe a participating insurance policy? - ✔✔Policyowners are entitled to receive dividends
132. Which of these is NOT an example of doing insurance business? - ✔✔Selling shares of stock
133. Which of these life products is NOT considered interest-sensitive?

- ✔✔Modified Whole Life 

134. Which of these needs is satisfied by Adjustable Life insurance? - ✔✔Insured's need for flexible premiums
135. Which of these options can an individual use their medical flexible spending account to pay for? - ✔✔prescription drugs

136. Which of these provisions is NOT required in life insurance policies? - ✔✔Extended Term
137. Which of these statements concerning an individual Straight Life annuity is accurate? - ✔✔Payments are made to an annuitant for life
138. Which of these statements describe a Modified Endowment Contract (MEC)? - ✔✔Exceed the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
139. Which of these would be considered a Limited-Pay Life policy? - ✔✔Life Paid-Up at Age 70
140. Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - ✔✔Life Income
141. Which statement is correct regarding the premium payment schedule for whole life policies? - ✔✔Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
142. Which statement is TRUE in regards to a policy loan? - ✔✔Past- due interest on a policy loan is added to the total debt

143. Which statement is true regarding a minor beneficiary? - ✔✔Normally, a guardian is required to be appointed in the beneficiary clause of the contract
144. Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? - ✔✔Misrepresentation
145. Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? - ✔✔policyowner
146. 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? - ✔✔The agent and the company
147. Who owns a stock insurance company? - ✔✔Stockholders
148. Why must an insurance applicant answer all questions on the application? - ✔✔Statements and representations on the application are part of the consideration for issuing a policy
149. Why would the Insurance Commissioner examine the records of an insurance company? - ✔✔To determine the solvency of the company

150. 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? - ✔✔Guaranteed Renewable