1 Exampromax - Stuvia US
Texas Life and Health Insurance Exam
Questions and Answers 100% Correct Answers
Already Graded A+
Q: At what point must a life insurance applicant be informed of their rights
that fall under the Fair Credit Reporting Act?
Ans: Upon completion of the application
Q: Who elects the governing body of a mutual insurance company?
Ans: policyholders
Exampromax - Stuvia US
Q: An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Ans: Fair Credit Reporting Act
Q: What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
Ans: Treaty
Q: The stated amount or percent of liquid assets that an insurer must have
on hand that will satisfy future obligations to its policyholders is called
Ans: reserves
Q: Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Ans: 1970 - Fair Credit Reporting Act
Q: What is the consideration given by an insurer in the Consideration
clause of a life policy?
, 2 Exampromax - Stuvia US
Ans: Promise to pay a death benefit
Q: When third-party ownership is involved, applicants who also happen to
be the stated primary beneficiary are required to have
Ans: insurable interest in the proposed insured
Q: Statements made on an insurance application that are believed to be true
to the best of the applicant's knowledge are called
Ans: representations
Q: The part of a life insurance policy guaranteed to be true is called a(n)
Ans: warranty
Exampromax - Stuvia US
Q: Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Ans: Principal
Q: The Consideration clause of an insurance contract includes
Ans: the schedule and amount of premium payments
Q: E and F are business partners. Each takes out a $500,000 life insurance
policy on the other, naming himself as primary beneficiary. E and F
eventually terminate their business, and four months later E dies. Although
E was married with three children at the time of death, the primary
beneficiary is still F. However, an insurable interest no longer exists. Where
will the proceeds from E's life insurance policy be directed to?
Ans: In this situation, the proceeds from E's life insurance policy will go to F.
Q: Which of the following terms defines the legally enforceable promise in
an insurance contract by the insurer?
, 3 Exampromax - Stuvia US
Ans: Unilateral
Q: When must insurable interest exist for a life insurance contract to be
valid?
Ans: Inception of the contract
Q: Insurance contracts are known as ____ because certain future conditions
or acts must occur before any claims can be paid.
Ans: conditional
Q: Which of these require an offer, acceptance, and consideration?
Ans: Contract
Exampromax - Stuvia US
Q: Which of these arrangements allows one to bypass insurable interest
laws?
Ans: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out
life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the
death benefit when the insured dies.
Q: Which of these is NOT considered to be an element of an insurance
contract?
the offer
acceptance
negotiating
consideration
Ans: negotiating
Q: An agent is an individual that represents whom?
Ans: Insurer
, 4 Exampromax - Stuvia US
Q: Insurable interest must exist at what time?
Ans: at the time of application
Q: Which policy requires an agent to register with the National Association
of Securities Dealers (NASD) before selling?
Ans: Variable Life
Q: Which of the following actions require a policy owner to provide proof
of insurability in an Adjustable Life policy?
Ans: increase face amount
Q: When a policy owner exchanges a term policy for a whole life policy
without providing proof of good health, which of these apply?
Exampromax - Stuvia US
Ans: Conversion provision
Q: What type of life insurance are credit policies issued as?
Ans: Term
Q: How long does the coverage normally remain on a limited-pay life
policy?
Ans: age 100
Q: All of these statements about Equity Indexed Life Insurance are correct
EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of return,
the cash value will mirror that of the index
The premiums can be lowered or raised, based on investment performance
Tied to an equity index such as the S&P 500
Ans: The premiums can be lowered or raised, based on investment performance
Q: Which of these is an element of a Variable Life policy?
Texas Life and Health Insurance Exam
Questions and Answers 100% Correct Answers
Already Graded A+
Q: At what point must a life insurance applicant be informed of their rights
that fall under the Fair Credit Reporting Act?
Ans: Upon completion of the application
Q: Who elects the governing body of a mutual insurance company?
Ans: policyholders
Exampromax - Stuvia US
Q: An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Ans: Fair Credit Reporting Act
Q: What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
Ans: Treaty
Q: The stated amount or percent of liquid assets that an insurer must have
on hand that will satisfy future obligations to its policyholders is called
Ans: reserves
Q: Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Ans: 1970 - Fair Credit Reporting Act
Q: What is the consideration given by an insurer in the Consideration
clause of a life policy?
, 2 Exampromax - Stuvia US
Ans: Promise to pay a death benefit
Q: When third-party ownership is involved, applicants who also happen to
be the stated primary beneficiary are required to have
Ans: insurable interest in the proposed insured
Q: Statements made on an insurance application that are believed to be true
to the best of the applicant's knowledge are called
Ans: representations
Q: The part of a life insurance policy guaranteed to be true is called a(n)
Ans: warranty
Exampromax - Stuvia US
Q: Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Ans: Principal
Q: The Consideration clause of an insurance contract includes
Ans: the schedule and amount of premium payments
Q: E and F are business partners. Each takes out a $500,000 life insurance
policy on the other, naming himself as primary beneficiary. E and F
eventually terminate their business, and four months later E dies. Although
E was married with three children at the time of death, the primary
beneficiary is still F. However, an insurable interest no longer exists. Where
will the proceeds from E's life insurance policy be directed to?
Ans: In this situation, the proceeds from E's life insurance policy will go to F.
Q: Which of the following terms defines the legally enforceable promise in
an insurance contract by the insurer?
, 3 Exampromax - Stuvia US
Ans: Unilateral
Q: When must insurable interest exist for a life insurance contract to be
valid?
Ans: Inception of the contract
Q: Insurance contracts are known as ____ because certain future conditions
or acts must occur before any claims can be paid.
Ans: conditional
Q: Which of these require an offer, acceptance, and consideration?
Ans: Contract
Exampromax - Stuvia US
Q: Which of these arrangements allows one to bypass insurable interest
laws?
Ans: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out
life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the
death benefit when the insured dies.
Q: Which of these is NOT considered to be an element of an insurance
contract?
the offer
acceptance
negotiating
consideration
Ans: negotiating
Q: An agent is an individual that represents whom?
Ans: Insurer
, 4 Exampromax - Stuvia US
Q: Insurable interest must exist at what time?
Ans: at the time of application
Q: Which policy requires an agent to register with the National Association
of Securities Dealers (NASD) before selling?
Ans: Variable Life
Q: Which of the following actions require a policy owner to provide proof
of insurability in an Adjustable Life policy?
Ans: increase face amount
Q: When a policy owner exchanges a term policy for a whole life policy
without providing proof of good health, which of these apply?
Exampromax - Stuvia US
Ans: Conversion provision
Q: What type of life insurance are credit policies issued as?
Ans: Term
Q: How long does the coverage normally remain on a limited-pay life
policy?
Ans: age 100
Q: All of these statements about Equity Indexed Life Insurance are correct
EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of return,
the cash value will mirror that of the index
The premiums can be lowered or raised, based on investment performance
Tied to an equity index such as the S&P 500
Ans: The premiums can be lowered or raised, based on investment performance
Q: Which of these is an element of a Variable Life policy?
