Texas Life Insurance Exam Questions and Answers | Latest Version | 2025/2026 | Correct & Verified

Texas Life Insurance Exam Questions and Answers | Latest Version | 2025/2026 | Correct & Verified What is the primary purpose of life insurance under Texas law? To provide a financial benefit to beneficiaries upon the insured’s death. Who owns a life insurance policy unless ownership is transferred? The policyowner. When must insurable interest exist in a Texas life insurance policy? At the time the policy is issued. What happens if a Texas life insurance premium is not paid by the end of the grace period? The policy lapses. What is the typical grace period for life insurance premiums in Texas? Thirty-one days. What does the face amount of a life insurance policy represent? The death benefit payable upon the insured’s death. Who selects the beneficiary in a life insurance policy? 2 The policyowner. What type of beneficiary can be changed at any time without permission? A revocable beneficiary. What is a contingent beneficiary? A secondary beneficiary who receives benefits if the primary beneficiary cannot. What is the purpose of a free-look period in Texas life insurance policies? To allow the policyowner to review and cancel the policy for a full refund. How long is the Texas free-look period for life insurance policies? At least 10 days. What does the incontestability clause protect against? Policy cancellation after a set time except for fraud. When does the incontestability period usually begin? On the policy issue date. What is the typical incontestability period for Texas life insurance? Two years. 3 What is the suicide clause in a life insurance policy? A provision limiting payment if death is by suicide within a certain period. How long is the suicide exclusion period in Texas life insurance policies? Two years from policy issue. What is the purpose of a misstatement of age provision? To adjust benefits if the insured’s age was stated incorrectly. What happens if the insured’s age is misstated on a Texas life policy? Benefits are adjusted to what premiums would have purchased at the correct age. What type of life insurance provides coverage for a specific time period? Term life insurance. What happens at the end of a term life policy if it is not renewed? Coverage ends. Which type of life insurance builds guaranteed cash value? Whole life insurance. 4 What is cash value in a life insurance policy? The savings component that grows over time. When can a policyowner borrow against a life insurance policy? When the policy has accumulated cash value. What happens if a policy loan is not repaid? The outstanding amount is deducted from the death benefit. What is the purpose of a nonforfeiture option? To prevent loss of policy value if premiums stop. What is reduced paid-up insurance? A nonforfeiture option providing a smaller paid-up policy. What is extended term insurance? A nonforfeiture option that uses cash value to buy term coverage. What does the automatic premium loan provision do? Uses cash value to pay overdue premiums. What is universal life insurance?