Pearson Vue Texas State
Life and Health Insurance
Exam
Who is obligated to make sure all questions are answered and all necessary
signatures are collected on the application?
A. The insurer
B. The agent
C. The applicant
D. The underwriter
Answer: B. The agent
An underwriter is reviewing an applicant with an extensive medical history. Which of
the following would give the underwriter the best insight into how the applicant has
been treated for illnesses?
A. Physical examination
B. Medical Information Bureau (MIB) report
C. Attending Physician’s Statement
D. Statement of good health
Answer: C. Attending Physician’s Statement
Which of the following would NOT be eligible for coverage under a key person
insurance policy?
A. Chief executive officer
B. Lead salesperson
C. Head of R&D
,D. Owner of a sole proprietorship who already owns the business
Answer: D. Owner of the business (in many cases, the owner is not insurable as a
“key person” if the business is his own)
With Adjustable Life insurance, the owner can change all of the following EXCEPT:
A. The premium
B. The face amount
C. The period for paying premiums
D. The insured
Answer: D. The insured
Which level of care is provided by skilled medical personnel to those needing
occasional medical assistance or rehabilitative care?
A. Custodial care
B. Intermediate care
C. Home health care
D. Assisted living
Answer: B. Intermediate care
Partial disability benefit payments are commonly expressed as what percentage of
the full disability benefit?
A. 25%
B. 50%
C. 75%
D. 100%
Answer: B. 50%
Which of the following long-term care benefits provides coverage for functionally
impaired adults on a less than 24-hour basis?
A. Residential care
B. Assisted living
C. Home health care
,D. Adult day care
Answer: D. Adult day care
If a long-term care policy promises to pay a fixed $120 per day but the facility only
charges $100 per day, how much will the insurer pay under the policy?
A. 80% of the total cost
B. $120 per day
C. $100 per day
D. 20% of the total cost
Answer: B. $120 per day
Compared to a policy using an “accidental means” definition, a policy using the
“accidental bodily injury” definition is:
A. More limited in duration
B. Broader in duration
C. Broader in general (less restrictive)
D. More restrictive in general
Answer: C. Broader in general (less restrictive)
If an insured is diagnosed with Alzheimer’s disease and uses an accelerated benefits
rider on their life policy, which of the following is true regarding taxation of those
accelerated benefits?
A. The entire benefit is taxable
B. A portion up to a limit is tax-free, the rest is taxable
C. Principal is tax-free, interest is taxed
D. The entire benefit is received tax-free
Answer: B. A portion up to a limit is tax-free, the rest is taxable
All of the following are true of an annuity owner EXCEPT:
A. The owner may name the beneficiary
B. The owner may surrender the annuity
C. The owner must receive the benefits
, D. The owner pays the premiums
Answer: C. The owner must receive the benefits (this is false; the owner may
designate someone else to receive benefits)
Under what circumstances can emergency care be covered for a Health Maintenance
Organization (HMO) member?
A. Only if the member stays within the HMO’s service area
B. Care is preferred in the service area, but out-of-area emergency care is covered
C. Only if the member uses an HMO‐employed physician
D. HMOs do not cover emergency care
Answer: B. Care is preferred in the service area, but out-of-area emergency care is
covered
Death benefits paid to a beneficiary under a life insurance policy are generally:
A. Subject to federal income tax
B. Exempt from income tax if under $10,000
C. Exempt from income tax if over $10,000
D. Not subject to income tax
Answer: D. Not subject to income tax
Which of the following best describes the “aleatory” nature of an insurance
contract?
A. Only one party is legally bound
B. Ambiguities are interpreted in favor of the insured
C. Policies are take-it-or-leave-it contracts
D. The exchange of unequal values (premium small, benefit large)
Answer: D. Exchange of unequal values
Which of the following is considered a presumptive disability under a disability
income policy?
A. Loss of hearing in one ear
B. Loss of vision in one eye
Life and Health Insurance
Exam
Who is obligated to make sure all questions are answered and all necessary
signatures are collected on the application?
A. The insurer
B. The agent
C. The applicant
D. The underwriter
Answer: B. The agent
An underwriter is reviewing an applicant with an extensive medical history. Which of
the following would give the underwriter the best insight into how the applicant has
been treated for illnesses?
A. Physical examination
B. Medical Information Bureau (MIB) report
C. Attending Physician’s Statement
D. Statement of good health
Answer: C. Attending Physician’s Statement
Which of the following would NOT be eligible for coverage under a key person
insurance policy?
A. Chief executive officer
B. Lead salesperson
C. Head of R&D
,D. Owner of a sole proprietorship who already owns the business
Answer: D. Owner of the business (in many cases, the owner is not insurable as a
“key person” if the business is his own)
With Adjustable Life insurance, the owner can change all of the following EXCEPT:
A. The premium
B. The face amount
C. The period for paying premiums
D. The insured
Answer: D. The insured
Which level of care is provided by skilled medical personnel to those needing
occasional medical assistance or rehabilitative care?
A. Custodial care
B. Intermediate care
C. Home health care
D. Assisted living
Answer: B. Intermediate care
Partial disability benefit payments are commonly expressed as what percentage of
the full disability benefit?
A. 25%
B. 50%
C. 75%
D. 100%
Answer: B. 50%
Which of the following long-term care benefits provides coverage for functionally
impaired adults on a less than 24-hour basis?
A. Residential care
B. Assisted living
C. Home health care
,D. Adult day care
Answer: D. Adult day care
If a long-term care policy promises to pay a fixed $120 per day but the facility only
charges $100 per day, how much will the insurer pay under the policy?
A. 80% of the total cost
B. $120 per day
C. $100 per day
D. 20% of the total cost
Answer: B. $120 per day
Compared to a policy using an “accidental means” definition, a policy using the
“accidental bodily injury” definition is:
A. More limited in duration
B. Broader in duration
C. Broader in general (less restrictive)
D. More restrictive in general
Answer: C. Broader in general (less restrictive)
If an insured is diagnosed with Alzheimer’s disease and uses an accelerated benefits
rider on their life policy, which of the following is true regarding taxation of those
accelerated benefits?
A. The entire benefit is taxable
B. A portion up to a limit is tax-free, the rest is taxable
C. Principal is tax-free, interest is taxed
D. The entire benefit is received tax-free
Answer: B. A portion up to a limit is tax-free, the rest is taxable
All of the following are true of an annuity owner EXCEPT:
A. The owner may name the beneficiary
B. The owner may surrender the annuity
C. The owner must receive the benefits
, D. The owner pays the premiums
Answer: C. The owner must receive the benefits (this is false; the owner may
designate someone else to receive benefits)
Under what circumstances can emergency care be covered for a Health Maintenance
Organization (HMO) member?
A. Only if the member stays within the HMO’s service area
B. Care is preferred in the service area, but out-of-area emergency care is covered
C. Only if the member uses an HMO‐employed physician
D. HMOs do not cover emergency care
Answer: B. Care is preferred in the service area, but out-of-area emergency care is
covered
Death benefits paid to a beneficiary under a life insurance policy are generally:
A. Subject to federal income tax
B. Exempt from income tax if under $10,000
C. Exempt from income tax if over $10,000
D. Not subject to income tax
Answer: D. Not subject to income tax
Which of the following best describes the “aleatory” nature of an insurance
contract?
A. Only one party is legally bound
B. Ambiguities are interpreted in favor of the insured
C. Policies are take-it-or-leave-it contracts
D. The exchange of unequal values (premium small, benefit large)
Answer: D. Exchange of unequal values
Which of the following is considered a presumptive disability under a disability
income policy?
A. Loss of hearing in one ear
B. Loss of vision in one eye
