Texas Life and Health Insurance Practice Test Questions with Answers., Exams of Nursing

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Questions with Answers.

Which of these characteristics is consistent with a Straight Life Policy? - Exact

Answer Premiums are payable for as long as there is insurance coverage in force

Which of the following are Equity Indexed annuities typically invested in? - Exact

Answer S&P 500

Which of the following does Social Security NOT provide benefits for? - Exact

Answer Dismemberment

An example of false advertising would be - Exact Answer An insurer

exaggerating its dividends in a magazine advertisement 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? - Exact Answer Deferred Fixed Annuity

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? - Exact Answer HMO

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? - Exact

Questions with Answers.

Answer Pay an amount the premiums would have purchased at the insured's

actual age 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? - Exact Answer Term Life

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty

beginning at what age? - Exact Answer 59 1/

An applicant MUST receive an Outline of Coverage when an application is taken

for a(n) - Exact Answer Medicare Supplement policy

Life insurance that covers an insured's whole life with level premiums paid over a

limited time is called: - Exact Answer Limited Pay Life

An individual has a Major Medical policy with a $5,000 deductible and an 80/ Coinsurance clause. How much will the INSURED have to pay is a total of $15,

in covered medical expenses are incurred? - Exact Answer $

$5,000 + 20% = $7,

Questions with Answers.

How long can a cash surrender value payment be deferred by the insurance

company under the Nonforfeiture Law? - Exact Answer 6 months

An Evidence of Coverage form may be issued by a Health Maintenance

Organization (HMO) after being approved by the - Exact Answer Commissioner

What is an organization that solicits insurance only to its members? - Exact

Answer Fraternal benefit society

Which of the following is NOT a reason for a business to buy key person life

insurance? - Exact Answer A pension deficiency is the key employee dies

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: - Exact Answer Entire Contract

Provision One becomes eligible for Social Security disability benefits after having been

disabled for - Exact Answer 5 Months

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

Questions with Answers.

insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would

receive for an approved claim? - Exact Answer $1,

A license may be denied, suspended, or revoked if the licensee - Exact Answer is

found guilty of misrepresentation in obtaining the license Which Unfair Trade Practice involves an agent telling a prospective client that a

policy's dividends are guaranteed? - Exact Answer Misrepresentation

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 - Exact Answer K will forfeit the right to use

the automatic loan provision upon reinstatement

When a policy pays dividends to its policyholders, it is said to be - Exact Answer

participating

What is the basic function of an annuity? - Exact Answer The systematic

liquidation of accumulated funds Which of the following statements about health coverage for newborns is NOT

true? - Exact Answer Coverage is limited to only congenital defects

Questions with Answers.

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -

Exact Answer policyowner

A(n) _________ rider may be used to include coverage for children under their

parents' life insurance policy. - Exact Answer Term

Medicare Part C is: - Exact Answer available to those who are enrolled in

Medicare Part A and Part B 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? -

Exact Answer Guaranteed insurability rider

Which statement is true regarding a minor beneficiary? - Exact Answer

Normally, a guardian is required to be appointed in the beneficiary clause of the contract

What is required for an agent whose license has been revoked? - Exact Answer

Wait at least five years before applying for a new license.

Questions with Answers.

Which of these provisions is NOT required in life insurance policies? - Exact

Answer Extended Term

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? - Exact Answer 6

What is the MINIMUM benefit period that must be offered by a Long-Term Care

policy? - Exact Answer 12 months

What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary

requires his/her consent when a change of beneficiary is made? - Exact Answer

Irrevocable beneficiary Which settlement option pays a stated amount to an annuitant, but no residual

value to a beneficiary? - Exact Answer Life Income

Major Medical policies typically: - Exact Answer contain a deductible and

coinsurance 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

Questions with Answers.

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? -

Exact Answer Claim will be paid and coverage will remain in force

Which of these is NOT an example of doing insurance business? - Exact Answer

Selling shares of stock How would a contingent beneficiary receive the policy proceeds in an Accidental

Death and Dismemberment (AD&D) policy? - Exact Answer If the primary

beneficiary dies before the insured 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 - Exact Answer Unfair methods of

competition

P is a producer who notices 5 questions on a life application were not Exact

Answer ed. What actions should P take? - Exact Answer Set up a meeting with

the applicant to Exact Answer the remaining questions.

Questions with Answers.

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? - Exact Answer Exclusion

Under a Long Term Care policy, which benefit would be typically excluded or

limited? - Exact Answer Alcohol Rehabilitation

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: - Exact Answer Income tax and 10% penalty assessed upon

funds withdrawn from the Qualified Plan Why would the Insurance Commissioner examine the records of an insurance

company? - Exact Answer To determine the solvency of the company

Before a life insurance policy is issued, which of these components of the contract

is required? - Exact Answer Applicant's signature on the application

The reason for backdating a policy is - Exact Answer to obtain a premium rate

based on an earlier age

Medicare Part B does NOT cover - Exact Answer inpatient hospital services

Questions with Answers.

A foreign insurance company conducting insurance business in Texas - Exact

Answer was formed under the-laws of another state

K is looking to purchase Renewable Term insurance. Which of these types of Term

insurance may be renewable? - Exact Answer Level

All of the following statements about traditional individual retirement accounts

are false EXCEPT - Exact Answer 10% penalty is applied to withdrawals before

age 59 1/ All of these statements about the Waiver of Premium provision are correct

EXCEPT - Exact Answer Insured must be eligible for Social Security disability for

claim to be accepted P is the insured on a participating life policy. Which statement is true if P's

premiums are waived due to a disability? - Exact Answer P will still receive

declared dividends Which of the following consists of an offer, acceptance, and consideration? -

Exact Answer Contract

Questions with Answers.

Which of the following policy provisions prohibits an insurance company from

incorporating external documents into an insurance policy? - Exact Answer

Entire Contract 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? - Exact Answer $50,

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? - Exact Answer Proceeds will be paid to P's estate

What kind of life insurance product covers children under their parent's policy? -

Exact Answer A term rider

The consideration clause in a life insurance policy indicates that a policy owner's

consideration consists of a completed application and - Exact Answer The initial

premium

Questions with Answers.

Why must an insurance applicant Exact Answer all questions on the

application? - Exact Answer Statements and representations on the application

are part of the consideration for issuing a policy Which of these statements concerning an individual Straight Life annuity is

accurate? - Exact Answer Payments are made to an annuitant for life

The amount of coverage on a group credit life policy is limited to: - Exact

Answer The insured's total loan value

M is insured under a basic Hospital/Surgical Expense policy. A physician performs

surgery on M. What determines the claim M is eligible for? - Exact Answer

Determined by the terms of the policy

The sections of an insurance contract which limit coverage are called - Exact

Answer exclusions

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

Questions with Answers.

2014, each in excess of the deductible amount as well. What would be this

family's out-of-pocket medical expenses for 2013? - Exact Answer $1,

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: - Exact Answer Income

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? - Exact Answer

The account can be rolled into the surviving spouse's IRA 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: - Exact

Answer Variable Life

Under an interest sensitive whole life policy - Exact Answer cash values are

determined by interest rates

To terminate an agent's appointment, an insurance company must - Exact

Answer send termination notice to the Texas Department of Insurance

Questions with Answers.

Deductibles are used in health policies to lower - Exact Answer overuse of

medical services 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? - Exact Answer Full face amount minus any past due premiums

In Texas, how long must a policy be enforce before an insurance company must

pay death benefits for suicide? - Exact Answer 2 years

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 -

Exact Answer Universal Life

Under a Graded Premium Whole Life policy, - Exact Answer the premium

increases each year during the early years of the contract and remains the same after that time If its employees share in the cost of insurance, what type of group life insurance

plan would a corporation have? - Exact Answer Contributory

Questions with Answers.

Which of the following types of care is typically not covered in a Long-Term Care

policy? - Exact Answer Acupuncture

A pilot applies for Life Insurance. The insurer approves the application with a $ 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) - Exact Answer Aviation Exclusion

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? - Exact

Answer Single Premium Immediate Joint with Survivor Annuity

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: - Exact

Answer The Cost

An insurance applicant MUST be informed of an investigation regarding his/her

reputation and character according to the - Exact Answer Fair Credit Reporting

Act

Questions with Answers.

Before a life policy is issued, which of these contract elements is necessary? -

Exact Answer A signed application by the prospect

Which statement is TRUE in regards to a policy loan? - Exact Answer Past-due

interest on a policy loan is added to the total debt

An immediate annuity consists of a - Exact Answer Single Premium

Tom has a qualified retirement plan with his employer that is currently considered

to be 80% "vested". How can this be interpreted? - Exact Answer If Tom's

employment is terminated, 20% of the funds would be forfeited 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? - Exact Answer Insured's

contingent beneficiary Which of the following statements BEST describes the intent of a Coinsurance

clause in a Major Medical policy? - Exact Answer Discourages overutilzation the

insurance coverage

Questions with Answers.

What is considered to be a characteristic of a Conditionally Renewable Health

Insurance policy? - Exact Answer Premiums may increase at time of renewable

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance

only to sell to a(n): - Exact Answer Third-party with no insurable interest

Which of these statements describe a Modified Endowment Contract (MEC)? -

Exact Answer Exceed the maximum amount of premium that can be paid into a

policy and still have it recognized as a life insurance contract

Medicare Part A and Part B do NOT pay for - Exact Answer dental work

Which of the following correctly explains the actions an agent should take if a

customer wants to apply for an insurance policy? - Exact 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 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? - Exact Answer The insurer will adjust the benefit to

what the premiums paid would have purchased at the insured's actual age

Questions with Answers.

A characteristic of preferred provider organization (PPOs) would be: - Exact

Answer Discounted fees for the patient

A medical Information Report (MIB) report may disclose which of the following: -

Exact Answer Prior use of marijuana

A plan through the Marketplace may be purchased by - Exact Answer Any legal

resident (except those imprisoned) On a life insurance policy, who is qualified to change the beneficiary designation? -

Exact Answer policyowner

Every 12-months after the initial enrollment period, an HMO must hold an open

enrollment period of - Exact Answer 31 days

Which of these life products is NOT considered interest-sensitive? - Exact

Answer Modified Whole Life

In Texas, which of these statements regarding the Suicide clause is TRUE? - Exact

Answer An insurer may not use suicide as a defense agent payment after the

second year

Questions with Answers.

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 - Exact Answer beneficiary's age

The provision that defines to whom the insurer will pay benefits to is called: -

Exact Answer Payment of Claims

Which of the following statements about a Guaranteed Renewable Health

Insurance policy is CORRECT? - Exact Answer Premiums normally increase at the

time of renewal 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? -

Exact Answer Endowment at age 70

How often must an insurance agent license normally be renewed? - Exact

Answer Every two years

A(n) _________ Life policy offers the owner investment in products such as

money-market funds, long-term bonds and equities - Exact Answer Variable

Questions with Answers.

When must insurable interest exist for a life insurance contract to be valid? -

Exact Answer Inception of the contract

Which statement is correct regarding the premium payment schedule for whole

life policies? - Exact Answer Premiums are payable throughout the insured's

lifetime/ coverage lasts until death of the insured An insurer may normally delay the payment of cash value loan or surrender value

for up to - Exact Answer 6 months

Which of the following is the MOST important factor when deciding how much

Disability Income coverage an applicant should purchase? - Exact Answer

Applicant's monthly income Which of the following BEST describes how pre-admission certification is used? -

Exact Answer Used to prevent nonessential medical costs

Which of the following actions does the Commissioner of Insurance NOT have the

power to conduct? - Exact Answer Activate insurance companies' financial

reserves

Questions with Answers.

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? - Exact

Answer Guaranteed Renewable

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? - Exact Answer The

agent and the 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? - Exact Answer

coercion 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: - Exact Answer Policy

Loan Provision

Which of these describe a participating insurance policy? - Exact Answer

Policyowners are entitled to receive dividends

Who owns a stock insurance company? - Exact Answer Stockholders

Questions with Answers.

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? - Exact Answer Waiver of Premium Loan

The consideration clause of an insurance contract includes - Exact Answer the

schedule and amount of premium payments In Texas, an individual life insurance policy is REQUIRED to have a grace period of -

Exact Answer 31 days

Which of the following actions is required by an insured who leave the primary

area of medical coverage and seeks medical care? - Exact Answer Obtain prior

approval from the insurer to the medical service Which of the following is a requirement for obtaining a Texas insurance agent's

license? - Exact Answer Be honest, trustworthy, and reliable

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? - Exact

Answer Recurrent disability

Questions with Answers.

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?

• Exact Answer $20,000 death benefit When third-party ownership is involved, applicants who also happen to be the

stated primary beneficiary are required to have - Exact Answer insurable

interest in the proposed insured Which of these options can an individual use their medical flexible spending

account to pay for? - Exact Answer prescription drugs

A medicare supplement policy may be cancelled for which of the following

reasons? - Exact Answer The premium has not been paid by the insured

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life

Annuity. What will this transaction provide? - Exact Answer Income that cannot

be outlived by the owner 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? -

Exact Answer irrevocable

Questions with Answers.

Which of the following will a Long Term Care plan typically provide benefits for? -

Exact Answer home health care

What type of life policy covers two people and pays upon the death of the last

insured? - Exact Answer Survivorship

The phrase "transacting business" includes - Exact Answer collecting premiums

Which of these needs is satisfied by Adjustable Life insurance? - Exact Answer

Insured's need for flexible premiums An insurance company organized under New York laws and licensed to do

business in Texas is considered a(n) - Exact Answer foreign company

A major medical policy typically: - Exact Answer provides benefits for

reasonable and necessary medical expenses, subject to policy limits

Credit Life Insurance is - Exact Answer insurance issued on a debtor to cover

outstanding loan balances

Which of these would be considered a Limited-Pay Life policy? - Exact Answer

Life Paid-Up at Age 70

Questions with Answers.

A retirement plan that sets aside part of the company's net income for

distributions to qualified employees is called a: - Exact Answer profit-sharing

plan

Generally, how long is a benefit period for a Major Medical Expense Plan? - Exact

Answer One year

Which of the following benefits is NOT required under a group health plan for

drug and alcohol treatment? - Exact Answer Transportation to and from a

treatment facility

A policy of adhesion can only be modified by whom? - Exact Answer The

insurance company

Variable whole Life Insurance can be described as - Exact Answer both an

insurance and securities product An insurance agent has a fiduciary responsibility to all of the following except -

Exact Answer other agents

Questions with Answers.

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 - Exact Answer does NOT have to make any further

payments 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? - Exact Answer 30 Pay Life

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's

death? - Exact Answer Face amount plus the policy's cash value

During a sales presentation for a participating life insurance policy, an agent MUST

• Exact Answer make a prospect understand that dividends are NOT guaranteed