TEXAS LIFE HEALTH INSURANCE EXAM
QUESTIONS AND ANSWERS
An applicant for an agent's license must meet which of the following requirements? -
Answer-Be honest, trustworthy, and reliable
After the initial enrollment period, an HMO must hold an open enrollment period of how
many days at LEAST once in every 12-month period? - Answer-31
A Health Maintenance Organization (HMO) may issue an Evidence of Coverage form
after it has been approved by the - Answer-Commissioner of Insurance
A Long-Term Care policy must offer a MINIMUM benefit period of how many months? -
Answer-12
A foreign insurance company is one that is incorporated - Answer-under the laws of
another state
Under an individual life insurance policy, an insured may assign a MAXIMUM of what
percentage of policy ownership? - Answer-100%
The Commissioner of Insurance has the power and duty to take all of the following
actions EXCEPT - Answer-activate insurance companies' financial reserves
Who can purchase a plan through the Marketplace? - Answer-Any legal resident except
those incarcerated
Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are
prohibited under the Texas Insurance Code covering - Answer-unfair methods of
competition
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - Answer-Upon completion of the application
Who elects the governing body of a mutual insurance company? - Answer-policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - Answer-Fair Credit Reporting Act
,What type of reinsurance contract involves two companies automatically sharing their
risk exposure? - Answer-Treaty
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 - Answer-reserves
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated - Answer-1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - Answer-Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - Answer-insurable interest in the proposed
insured
Statements made on an insurance application that are believed to be true to the best of
the applicant's knowledge are called - Answer-representations
The part of a life insurance policy guaranteed to be true is called a(n) - Answer-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - Answer-Principal
The Consideration clause of an insurance contract includes - Answer-the schedule and
amount of premium payments
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? -
Answer-In this situation, the proceeds from E's life insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an insurance
contract by the insurer? - Answer-Unilateral
When must insurable interest exist for a life insurance contract to be valid? - Answer-
Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. - Answer-conditional
, Which of these require an offer, acceptance, and consideration? - Answer-Contract
Which of these arrangements allows one to bypass insurable interest laws? - Answer-
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.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - Answer-negotiating
An agent is an individual that represents whom? - Answer-Insurer
Insurable interest must exist at what time? - Answer-at the time of application
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling? - Answer-Variable Life
Which of the following actions require a policy owner to provide proof of insurability in
an Adjustable Life policy? - Answer-increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing
proof of good health, which of these apply? - Answer-Conversion provision
What type of life insurance are credit policies issued as? - Answer-Term
How long does the coverage normally remain on a limited-pay life policy? - Answer-age
100
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 - Answer-The premiums can be lowered
or raised, based on investment performance
Which of these is an element of a Variable Life policy? - Answer-A fixed, level premium
QUESTIONS AND ANSWERS
An applicant for an agent's license must meet which of the following requirements? -
Answer-Be honest, trustworthy, and reliable
After the initial enrollment period, an HMO must hold an open enrollment period of how
many days at LEAST once in every 12-month period? - Answer-31
A Health Maintenance Organization (HMO) may issue an Evidence of Coverage form
after it has been approved by the - Answer-Commissioner of Insurance
A Long-Term Care policy must offer a MINIMUM benefit period of how many months? -
Answer-12
A foreign insurance company is one that is incorporated - Answer-under the laws of
another state
Under an individual life insurance policy, an insured may assign a MAXIMUM of what
percentage of policy ownership? - Answer-100%
The Commissioner of Insurance has the power and duty to take all of the following
actions EXCEPT - Answer-activate insurance companies' financial reserves
Who can purchase a plan through the Marketplace? - Answer-Any legal resident except
those incarcerated
Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are
prohibited under the Texas Insurance Code covering - Answer-unfair methods of
competition
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - Answer-Upon completion of the application
Who elects the governing body of a mutual insurance company? - Answer-policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - Answer-Fair Credit Reporting Act
,What type of reinsurance contract involves two companies automatically sharing their
risk exposure? - Answer-Treaty
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 - Answer-reserves
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated - Answer-1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - Answer-Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - Answer-insurable interest in the proposed
insured
Statements made on an insurance application that are believed to be true to the best of
the applicant's knowledge are called - Answer-representations
The part of a life insurance policy guaranteed to be true is called a(n) - Answer-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - Answer-Principal
The Consideration clause of an insurance contract includes - Answer-the schedule and
amount of premium payments
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? -
Answer-In this situation, the proceeds from E's life insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an insurance
contract by the insurer? - Answer-Unilateral
When must insurable interest exist for a life insurance contract to be valid? - Answer-
Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. - Answer-conditional
, Which of these require an offer, acceptance, and consideration? - Answer-Contract
Which of these arrangements allows one to bypass insurable interest laws? - Answer-
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.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - Answer-negotiating
An agent is an individual that represents whom? - Answer-Insurer
Insurable interest must exist at what time? - Answer-at the time of application
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling? - Answer-Variable Life
Which of the following actions require a policy owner to provide proof of insurability in
an Adjustable Life policy? - Answer-increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing
proof of good health, which of these apply? - Answer-Conversion provision
What type of life insurance are credit policies issued as? - Answer-Term
How long does the coverage normally remain on a limited-pay life policy? - Answer-age
100
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 - Answer-The premiums can be lowered
or raised, based on investment performance
Which of these is an element of a Variable Life policy? - Answer-A fixed, level premium
