Texas Life and Health Insurance EXAM
2025 QUESTIONS AND ANSWERS
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
Who elects the governing body of a mutual insurance company? - ANS policyholders
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the - ANS Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - ANS 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 - ANS reserves
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
What is the consideration given by an insurer in the Consideration clause of a life policy? -
ANS 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 - ANS insurable interest in the proposed insured
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, Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - ANS representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANS warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANS Principal
The Consideration clause of an insurance contract includes - ANS 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? - ANS 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? - ANS Unilateral
When must insurable interest exist for a life insurance contract to be valid? - ANS Inception
of the contract
Insurance contracts are known as ____ because certain future conditions or acts must occur
before any claims can be paid. - ANS conditional
2
Which of these require an offer, acceptance, and consideration? - ANS Contract
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, 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.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANS negotiating
An agent is an individual that represents whom? - ANS Insurer
Insurable interest must exist at what time? - ANS at the time of application
Which policy requires an agent to register with the National Association of Securities Dealers
(NASD) before selling? - ANS Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an
Adjustable Life policy? - ANS 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? - ANS Conversion provision
What type of life insurance are credit policies issued as? - ANS Term
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2025 QUESTIONS AND ANSWERS
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
Who elects the governing body of a mutual insurance company? - ANS policyholders
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the - ANS Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - ANS 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 - ANS reserves
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
What is the consideration given by an insurer in the Consideration clause of a life policy? -
ANS 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 - ANS insurable interest in the proposed insured
1
Page
@COPYRIGHT BRAINBARTER 2025/2026
, Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - ANS representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANS warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANS Principal
The Consideration clause of an insurance contract includes - ANS 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? - ANS 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? - ANS Unilateral
When must insurable interest exist for a life insurance contract to be valid? - ANS Inception
of the contract
Insurance contracts are known as ____ because certain future conditions or acts must occur
before any claims can be paid. - ANS conditional
2
Which of these require an offer, acceptance, and consideration? - ANS Contract
Page
@COPYRIGHT BRAINBARTER 2025/2026
, 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.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANS negotiating
An agent is an individual that represents whom? - ANS Insurer
Insurable interest must exist at what time? - ANS at the time of application
Which policy requires an agent to register with the National Association of Securities Dealers
(NASD) before selling? - ANS Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an
Adjustable Life policy? - ANS 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? - ANS Conversion provision
What type of life insurance are credit policies issued as? - ANS Term
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