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Pearson VUE Texas Life and Health Insurance Exam – Texas Department of Insurance (TDI) General Lines Agent – 2026/2027 Edition – Questions with Evidence-Based Verified Answers (100% correct solutions)

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Pearson VUE Texas Life and Health Insurance Exam – Texas Department of Insurance (TDI) General Lines Agent – 2026/2027 Edition – Questions with Evidence-Based Verified Answers (100% correct solutions) Q: Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application? Answer The Agent Q: An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? Answer Attending physician's statement Q: Which of the following would NOT be eligible for coverage under key person? Answer The owner of the shop Q: With Adjustable Life, the owner can change all of the following EXCEPT Answer The insured Q: Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care? Answer Intermediate care Q: Partial disability usually pays what percentage of the total disability benefit? Answer 50% Q: Which of the following long-term care benefits would provide coverage for care 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 Q: An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay? A. 20% of the total cost B. $120 a day C. $100 a day D. 80% of the total cost Answer B. $120 a day Q: In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide coverage that is A. More limited in duration B. Broader in duration C. Broder in general D. More limited in general Answer C. Broader in general Q: An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A. The entire living benefits is considered taxable income B. A portion of the benefits up to a limit is tax-free; the rest is taxable income C. Principle is tax free, but interest is taxed D. The entire benefits will be received tax free Answer B. B. A portion of the benefits up to a limit is tax-free; the rest is taxable income Q: All of the following are true of an annuity owner EXCEPT A. The owner has the right to name the beneficiary B. The owner is the party who may surrender the annuity C. The owner must be the party to receive benefits D. The owner pays the premiums on the annuity Answer C. The owner must be the party to receive benefits Q: How is emergency care covered for a member of an HMO? A. An HMO emergency specialist will cover the patient B. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area C. A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area D. HMOs have salaried member physicians, but they do not cover emergency care Answer B. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area Q: Death benefits payable to a beneficiary under a life insurance policy are generally A. Subject to income taxation by the federal government B. Exempt from income taxation if under $10,000 C. Exempt from income taxation if over $10,000 D. Not subject to income taxation by the federal government Answer D. Not subject to income taxation by the federal government Q: Which of the following best describes the aleatory nature of an insurance contract? A. Only one of the parties being legally bound by the contract B. Ambiguities are interpreted in favor of the insured C. Policies are submitted to the insurer on a take-it-or-leave-it basis D. Exchange of unequal values Answer D. Exchange of unequal values Q: Which of the following is considered a presumptive disability under a disability income policy A. Loss of two limbs B. Loss of an eye C. Loss of hearing in one ear D. Loss of one hand or foot Answer A. loss of two limbs Q: An insured purchased a noncancelable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? A. The insured reaches the maximum age limit specified in the policy B. Within two years of the application, the insurer discovers a misrepresentation C. The insured is an accident and incurs a large claim D. The insured does not pay the premium Answer C. The insured is an accident and incurs a large claim Q: When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. The same as the original policy minus the cash value B. Equal to the original policy for as long as the cash values will purchase C. In lesser amounts for the remaining policy term of age 100 D. Equal to the cash value surrendered from the policy Answer B. Equal to the original policy for as long as the cash values will purchase Q: *What is the purpose of settlement options? A. They are guarantees built into the policy B. They guarantee a return of excess premiums C. they provide the beneficiary the income he/she cannot outlive D. Determines how the death benefit will be paid to the beneficiary Answer D. Determines how the death benefit will be paid to the beneficiary Q: The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Assumed age B. Average age C. Issue age D. Attained age Answer D. Attained age Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? A. The insured must first pay a deductible B. The insurer covers the first claim on the policy C. Deductibles and coinsurance are taxed first D. The insured is not required to pay a deductible Answer D. The insured is not required to pay a deductible Which of the following determines the cash value of a variable life policy? A. The performance of the policy portfolio B. The company's general account C. The policy's guarantees D. The premium mode Answer D. The premium mode An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date of the application B. The date of the medical exam C. The date of policy delivery D. The date of issue B. The date of the medical exam An applicant who receives a preferred risk classification qualifies for A. Higher premiums than a person who receives a sub-standard risk B. Higher premiums than a person who receives a standard risk C. Lower premiums than a person who receives a standard risk D. Dividends payable for lack of claims C. Lower premiums than a person who receives a standard risk All of the following statements about Medicare Part B are correct EXCEPT A. It is a compulsory program B. It covers services and supplies not covered by Part A C. It is financed by monthly premium D. It is financed by tax revenues A. It is a compulsory program With respect to the consideration clause, which of the following would be considered consideration on the part of the applicant for insurance? A. Providing warranties on the application B. Notice of policy cancellation C. Payment of premium D. Promise to renew the policy at the end of the policy period C. Payment of premium The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A. Waiver of premium B. Guaranteed insurability C. Waiver of cost of insurance D. Payor benefit A. Waiver of premium Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A. It is life contingency option B. The beneficiary receives the remainder of the principal amount upon the annuitant's death C. Payments can be made in installments and as a single cash refund D. It does not guarantee that the entire principal amount will be paid out D. It does not guarantee that the entire principal amount will be paid out An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes a short list of benefits and approximate rates. The end of the advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true? A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice B. The advertisement must also include the contact information of the association C. The advertisement must also include the contact information of the Commissioner of Insurance D. Mentioning the Guaranty Association is mandatory when advertising in the state of Texas A. Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B.14 C. 30 D.60 C.30 What is the purpose of the Life Insurance Guaranty Association? A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company B. To encourage life insurance to write substandard business C. To allow agents to continue to solicit insurance, even if the company they represent is financially impaired D. To protect the reputation of the insurance Department if they issue a Certificate of Authority to a company that becomes insolvent A. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company Which of the following is a feature of a variable annuity? A. Interest rate is guarantee B. Securities license is not required C. Benefit payment amounts are not guaranteed D. Payments into the annuity are kept in the company's general account C. Benefit payment amounts are not guaranteed Which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it? A. Elimination period B. Probationary period C. Free Look period D. Grace period C. Free look period Which of the following is true about the requirement regarding HIV exams? A. Prior informed oral consent is required from be used the applicant B. HIV exams may not be used as a basis for underwriting C. The applicant must give prior informed written consent D. Results may be disclosed to the agent and the underwriter C. The applicant must give prior informed written consent Another term used to describe "no deductible" is A. Total coverage B. Immediate cooperative C. First-dollar basis D. Comprehensive C. First-dollar basis An insured pays $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? A. Good health B. Adhesion C. Conditional D. Aleatory D. Aleatory Which is TRUE about the cash surrender nonforfeiture option? A. After the cash surrender, the insured is covered for a grace period of one month B. The policy remains active for some time after the policyholder opts for cash surrender C. The policyholder receives the original cash value of the policy D. Funds exceeding the premium paid are taxable as ordinary income. D. Funds exceeding the premium paid are taxable as ordinary income. A father purchases a life insurance policy on his teenage daughter and adds the Payor benefits rider. In which of the following scenarios will the rider waive the payment of premium? A. If the father is disabled for at least a year B. If the daughter is disabled for more than 3 months C. If the daughter is disabled for any length of time D. If the father is disabled for more than 6 months D. If the father is disabled for more than 6 months Which of the following is a risk classification used by underwriters for life insurance? A. Normal B. Excellent C. Standard D. Poor C. Standard Which of the following explains the policyowner's right to change beneficiaries, choose options, and receives proceeds of a policy? A. The entire contract provision B. The consideration clause C. Assignment rights D. owner's right D. owner's right A key person insurance policy can pay for which of the following? A. Cost of training a replacement B. Loss of personal income C. Workers compensation D. Hospital bills of the key person Cost of training a replacement An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Adhesion B. Consideration C. Good faith D. Representation Consideration A guaranteed renewable disability insurance policy A. Is renewable at the insured's option to a specified age B. Is renewable at the option of the insurer to a specified age of the insured C. Is guaranteed to have a level premium for the life of the policy D. Cannot be cancelled by the insured before age 65 Is renewable at the insured's option to a specified age All of the following are true of key person insurance EXCEPT A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plans in force at any time C. The employer is the owner, payor and beneficiary of the policy D. The key employee is insured the plan is funded by permanent insurance only Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned , will be paid to A. Beneficiary of the death benefit B. The spouse of the insured C. The insured D. Creditors C. The insured When delivering a policy, which of the following is an agent's responsibility? A. Issue the policy if the applicant is present B. Approve or decline C. Collect medical statement from physician D. Collect payment at time of delivery Collect payment at time of delivery Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray? A. 50/50 B.75/75 C.80/20 D. 90/10 50/50 On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The spouse of the policyowner B. The proposed insured C. The policyowner D. The agent The spouse of the policyowner Which of the following is NOT true regarding a flexible spending account? A. It is cafeteria plan B. It does not have limits on contributions C. It operates on "use-or-use" basis D. It provides an opportunity to receive benefits on pretax basis It does not have limits on contributions A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a A. split-dollar plan B. Stock reduction plan C. Cross-purchase plan D. Key person plan Cross-purchase plan An insured purchase a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefits. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receives as a settlement? A. 0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums $200,000 The premium charged for exercising the guaranteed insurability Rider is based upon the insured's A. Average age B. Issue age C. Attained age D. Assumed age Attained age all of the following statements concerning Medicaid are correct EXCEPT A. Individual states design and administer the Medicaid program under broad guidelines established by the federal government B. Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care C. Persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for Medicaid Nursing Home benefits D. Medicaid is a state funded program that provides health care to persons over age 65, only Medicaid is a state funded program that provides health care to persons over age 65, only When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A. consideration B. Legal purpose C. Contract of adhesion D. Acceptance Consideration An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options Guaranteed insurability option An individual purchased a $100,000 Joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? A. nothing B. $50,000 C. $100,000 D. $200,000 $100,000 Most policies will pay the accidental death benefits as long as the death is caused by the caused by the accident and occurs within A. 30 days B. 60 days C. 90 days D. 120 days 90 days Which of the following includes information regarding a person's credit, character, reputation, and habits? A. Consumer history B. Insurability report C. Agent's report D. Consumer report Consumer report When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid A. Return of premium B. cost of living C. decreasing term D. Accidental death return of premium Which of the following is true regarding elimination periods and the cost of coverage? A. The longer the elimination period, the higher the cost of coverage B. Elimination periods have no effect on the cost of coverage C. The longer the elimination period, the lower the cost of coverage D. The shorter the elimination period, the lower the cost of coverage The longer the elimination period, the lower the cost of coverage Most LTC plans have which of the following features? A. Open enrollment B. Guarantee renewability C. NO elimination period D. Variable premiums guarantee renewability A straight life policy has what type of premium? A. A decreasing annual premium for the life of the insured B. A variable annual premium for the life of the insured C. A level annual premium for the life of the insured D. An increasing annual premium for the life of the insured A level annual premium for the life of the insured Who is the owner and who is the beneficiary on a key person life insurance policy? A. The key employee is the owner and beneficiary B. The key employee is the owner and the employer is the beneficiary C. The employer is the owner and beneficiary D. The employer is the owner and the key employee is the beneficiary The employer is the owner and beneficiary What is the purpose of coinsurance provisions? A. To share liability among different insurance companies B. To help the insurance company to prevent overutilization of the policy C. To have the insured pay premiums to more than one company D. To guarantee payment to the doctors and hospitals To help the insurance company to prevent overutilization of the policy Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and dismemberment coverage? A. Specified disease policy B. Credit disability C. Special risk policy D. Limited risk policy special risk policy Which of the following best defines the "owner" as it pertains to life settlement contracts? A. A financial entity that sponsors the transaction B. A fiduciary for the contract C. The insurance provider D. The policyowner of the life insurance policy The policyowner of the life insurance policy This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled A. Business overhead expense B. Key-person insurance C. Employee benefit plan D. Disability buyout Disability buyout Why is an equity indexed annuity considered to be fixed annuity? A. It has modest investment potential B. It has a fixed rate of return C. It is not tied to an index like the S&P 500 D. It has a guaranteed minimum interest rate It has a guaranteed minimum interest rate In the event of a divorce, which of the following would allow a divorce to continue receiving group health coverage under a insured spouse's plan for an additional 36 months? A. Social security B. Routine dental care C. Coverage for dependents D. Military duty Coverage for dependents The insurance policy, together with the policy application and any added riders from what is known as a(n) A. Certificate of coverage B. Contract of adhesion C. Blanket policy D. Entire contract Entire contract To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested A. At the time of application B. When the applicant's credit is checked C. When the policy is delivered D. At the initial interviewer At the time of application The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A. One-year option B. Paid-up option C. Accelerated endowment D. Paid-up additions One-year option If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? A. The examiner B. The applicant C. The insurer D. The cost of the examination will be waived The insurer The premium of a survivorship life policy compared with that of a joint life policy would be A. Half the amount B. Lower C. Higher D. As high Lower What license or licenses are required to sell variable annuities? A. No license is required B. Both a life insurance license and a securities license C. Only a life insurance license D. Only a securities license Both a life insurance license and a securities license If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A. Policyowner B. The insured and the policyowner C. Beneficiary D. Insured policyowner Which of following is a feature of a disability buy out plan? A. A lump-sum benefit payment option B. Tax deductible premiums C. Taxable benefits D. A short elimination period A lump-sum benefit payment option Children's rider attached to whole life policies are usually issued as what type of insurance? A. Term B. Variable life C. Adjustable life D. Whole life term L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? A. $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] B. $500 (amount of deductible) C.$1,000 (deductible + 20% of the entire bill) D. $2,500 ( the entire bill) $900 (deductible + 20% of the bill after the deductible [ 20% of 2,000] Which of the following entities can legally bind coverage? A. Insurer B. The insured C. Federal insurance board D. Agent insurer Which is true regarding obtaining underwriting sources? A. It is illegal to obtain information from outside sources contacted and how the information is being gathered B. The applicant must be informed of the sources contacted and how the information is being gathered C. The insurer does not need to inform the applicant of the information is gathered; informing only of the source is sufficient D. The insurer only needs to inform the applicant of how the information is gathered; it is not necessary to disclose the sources The applicant must be informed of the sources contacted and how the information is being gathered Which is NOT true about beneficiary designations? A. The beneficiary must have insurable interest in the insured B. The beneficiary may be a natural person C. The policy does not have to have beneficiary named in order to be valid D. Trusts can be valid beneficiaries The beneficiary must have insurable interest in the insured Group health insurance is characterized by all of the following EXCEPT A. A Master contract B. Lower administrative costs C. Conversion privilege D. Adverse selection Adverse selection After a back injury, an insurer is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? A. Payment for life B. Yearly premium waiver and monthly income C. Monthly premium waiver and monthly income D. Percentage of medical costs paid by the insurer Monthly premium waiver and monthly income Which of the following is NOT covered under Plan A in Medicap insurance? A. The first three pints of blood each year B. The Medicare Part A deductible C. Approved hospital costs for 365 additional days after Medicare benefits end D. The 20% Part B coinsurance amounts for Medicare approved services The Medicare Part A deductible All of the following are true regarding a decreasing term policy EXCEPT A. The death benefits $0 at the end of the policy term B. The contract pays only in the event of death during the term and there is no cash value C. The face amount steadily declines throughout the duration of the contract D. The payable premium amount steadily declines throughout the duration of the contract The payable premium amount steadily declines throughout the duration of the contract A guaranteed renewable health insurance policy allows the A. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class B. Policyholder to renew the policy to a stated age and guarantees the premiums for the same period C. Policy to renewed at time of expiration, but the policy can canceled for cause during the policy term' D. Insurer to renew the policy to specified age Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A. 90 days after the effective policy date B. 6 months after the effective policy date C. 1 year after the effective policy date D. As long as the policy is in force As long as the policy is in force The gatekeeper of an HMO helps A. Determine who will be allowed to enroll in HMO program B. Prevent double coverage C. Determine which doctors can participate in an HMO plan D. Control specialist costs Control specialist costs Workers Compensation benefits are regulated by which entity? A. Insurer B. Federal Government C. State government D. Employer State government Annually renewable term policies provide a level death benefit for a premium that A. Decreases annually B. Remains Level C. Fluctuates D. Increases annually Increases annually Under which of the following organizations are the practicing provides compensated on a fee for-service basis? A. Open panel B. PPO C.HMO D. Blue cross/ Blue shield PPO Following an injury, a policyowner covered under Medicare Parts A&B was treated by her physician on an outpatient basis. How much of her doctor's bill will she be required to pay-out of-pocket? A. 20% of covered charges above the deductible B. 80% of covered charges above the deductible C. All reasonable charges above the deductible according to Medicare standards D. A per office visit deductible 20% of covered charges above the deductible Which of the following product requires a securities license? A. Fixed annuity B. Equity Indexed annuity C. Deferred annuity D. Variable annuity Variable annuity Who must pay for the cost of a medical examination required in the process of underwriting? A. Department of Insurance B. Insurer C. Applicant D. Underwriters Insurer Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A. Ordinary life B. Joint life C. Decreasing Term D. Whole life Joint life Regarding long-term care coverage, as the elimination period gets shorter, the premium A. Remains constant B. Premiums are not based on elimination periods C. Decreases D. Increases Increases All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A. The payments are not guaranteed for life B. The insurer determines the amount for each payment C. It is a life contingency option D. It will pay the benefit only for a designated period of time It is a life contingency option Which of the following best describes annually renewable term insurance? A. Neither the premium nor the death benefit is affected by the insured's age B. It provides an annually increasing death benefit C. It is level insurance D. It requires proof of insurability at each renewable It is level insurance When a reduced paid -up nonforfeiture option is chosen, what happens to the face amount of the policy? A. It is increased when extra premiums are paid B. It decreases over the term of the policy C. It remains the same as the original policy, regardless of any differences in value D. It is reduced to the amount of what the cash value would buy as a single premium It is reduced to the amount of what the cash value would buy as a single premium When is the earliest a policy may go into effect? A. When the insurer approves the application B. After the underwriter reviews the policy C. When the application is signed and a check is given to the agent D. When the first premium is paid and the policy has been delivered When the application is signed and a check is given to the agent Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within A. 60 days of a loss B. 90 days of a loss C. 20 days of a loss D. 3o days of a loss 90 days of a loss Social Security disability definition includes all of the following EXCEPT A. A physical impairment expected to result in death B. Disability expected to last for at least 6 months C. The inability to engage in any gainful work D. Disability resulting from a medically determinable mental impairment Disability expected to last for at least 6 months An agent makes a mistake on the application and then corrects his mistakes by physically entering the necessary information. Who must then initial that charge? A. Executive officer of the company B. Insured C. Agent D. Applicant Applicant The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called A. Life income with period certain B. Life income with refund C. Joint and survivorship D. Joint life annuity Life income with period certain All of the following long-term care coverages would allow an insured to receive care at home EXCEPT A. Skilled care B. Custodial care in insured's house C. Respite care D. Home health care Skilled care An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? A. Send the applicant to a doctor for a physical. Nothing can happen until they get the results B. Offer the supplement policy on a guaranteed issue basis C. Exclude pre-existing conditions from coverage under the supplement policies D. Look at the applicant's medical history to decide what premium to charge Offer the supplement policy on a guaranteed issue basis A provision found in insurance which prevents the insured from collecting twice for the same loss is called A. Consent to settle loss B. Right of salvage C. Appraisal D. Subrogation Subrogation All of the following statement concerning Accidental Death and Dismemberment coverage are correct EXCEPT A. Accidental death and dismemberment insurance is considered to be limited coverage B. Death benefits are paid only if death occurs within 24 hours of an accident C. Accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy D. Dismemberment benefits are paid for certain disabilities that are presumed to be total and permanent Death benefits are paid only if death occurs within 24 hours of an accident Which of the following is an example of liquidity in a life insurance contract? A. The flexible premium B. The money in a saving account B. The cash value available to the policyowner C. The death benefit paid to the beneficiary The cash value available to the policyowner In a survivorship life policy, when does the insurer pay the death benefit? A. Half at the first death, and half at the second death B. If the insured survives to age 100 C. Upon the last death D. Upon the first death Upon the last death The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called A. Occupational B. Workers compensation C. Nonoccupational coverage D. Unemployment coverage Nonoccupational coverage Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses? A. First-dollar coverage B. Corridor deductible C. Stop-loss limit D. Probationary limit Stop-loss limit Which of the following would qualify as a competent party in an insurance contract? A. The applicant is under the influence of a mind-impairing medication at the time of application B. The applicant has a prior felony conviction C. The applicant is intoxicated at the time of application D. The applicant is a 12-year-old student The applicant has a prior felony conviction A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. The premiums will become tax deductible until the insured's 18th birthday B. Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected C. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums D. The insured's premiums will be waived until she is 21 The insured's premiums will be waived until she is 21 An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date of application B. The date of medical exam C. The date of policy delivery D. The date of issue The date of medical exam Which of the following is an example of a limited-pay life policy? A. Level Term Life B. Straight life C. Life Paid-up at age 65 D. Renewable term to age 70 Life Paid-up at age 65 The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principle will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? A. Interest only option B. Life income with period certain C. Joint and survivor D. Fixed amount option Interest only option All of the following are examples of third-party ownership of a life insurance policy EXCEPT A. When insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company B. An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan C. An insured couple purchases a life insurance policy insuring the life of their grandson D. A company purchases a life insurance policy on their manager, who is important part of the operation An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan The mode of premium payment A. Is the method used to compute the cash surrender value of the policy B. Does not affect the amount of premium payment C. Is defined as the frequency and the amount of the premium payment D. Is the factor that determines the amount of dividends in a policy Is defined as the frequency and the amount of the premium payment What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating? A. $10 B. $15 C. $25 D. $100 $25 Which of the following individuals will be eligible coverage on the Health Insurance Marketplace? A. A permanent resident lawfully present in the U.S. B. Someone who has Medicare coverage C. A U.S. citizen who is incarcerated D. A U.S. citizen living abroad A permanent resident lawfully present in the U.S. Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A. Underwriting or rating classification upon which the illustration is based B. The name of the primary and secondary beneficiaries C. Generic name of policy D. Name of insurer The name of the primary and secondary beneficiaries If the insured has the right to keep a long-term care insurance policy in force by making timely premium payments, and the insurer may not make any chances to the policy or decline to renew it, the policy is A. Permanent B. Conditonal C. Guaranteed renewable D. Irrevocable Guaranteed renewable An agent receives an Emergency Cease and Desist Order for chronically misrepresenting his insurance policies. The agent knows that he did not commit the violation stated in the Emergency Cease and Desist Order. He wants to contest the charges in a court hearing. Which of the following is true? A. The judge will determine when the hearing will be held B. The hearing date can be set for any time within the next year, unless both parties agree to a later date C. The hearing must be set for exactly 30 days after the request is made D. The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date The hearing must be held within 30 days of receiving a request, unless both parties agree to a later date The insurers are allowed to disclose the HIV-related test result to all of the following EXCEPT A. Another insurer B. The insured's doctor C. A reinsurer involved in the underwriting process D. The Texas Department of Health Another insurer An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A. Twisting B. Defamation C. False advertising D. Unfair claims False advertising On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Concealment B. Unfair claim practice C. Rebating D. Misrepresentation Misrepresentation What is the major difference between a stock company and a mutual company? A. Types of policies issued B. Ownership C. Amount of benefits D. Number of producers Ownership How long most producer maintain records of continuing education course completion? A. 1 year B. 3 years C. 4 years D. 5 years 4 years All of the following information must be included in the evidence of coverage for an HMO plan EXCEPT A. HMO's toll-free telephone number B. The insurance agent's name and license number C. A schedule of benefits D. Examples of information to appear in the blanks The insurance agent's name and license number The classification "Small Employer" means any person or firm that during the preceding year employed how many employees? A. Between 1 and 25 B. At least 2 and not more than 50 C. At least 10 and not more than 100 D. No more than 10 At least 2 and not more than 50 The insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every A. Year B. 2 years C. 3 years D. 5 years 5 years What is a foreign insurer? A. An insurer with a home office in another country B. An insurer with licensed agents doing business in other country C. An insurer with licensed agents who are citizens in more than one country D. An insurer with a home office in another state An insurer with a home office in another state HMOs that contract with outside physicians to provide health care service to their subscribers compensate those providers on a A. Capitation basis B. Medicare allowable basis C. Sliding scale determined by the subscriber's occupation D. More expensive basis Capitation basis An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT A. Variable universal life B. Whole life C. Level term D. Universal life Level term An insured's premium increases as a result of her age. Which type of policy does she have? A. Age-oriented B. Increasing Term C. Age-based D. Attained Age Attained Age If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? A. Commissioned advertisement B. Paid endorsement C. Insurer is not responsible for the contents of the testimonial D. The author is the employee of the insurer Paid endorsement The patient protection and affordable care act mandates that insurers provide coverage for dependent children up to age of A. 18 B. 19 C. 21 D. 26 26 What is the minimum renewability standard for long-term care policies issued in this state? A. Cancellable B. Permanent C. Conditionally renewable D. Guaranteed renewable Guaranteed renewable What rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A. Reinstatement rule B. Conversion rule C. Disclosure rule D. Replacement rule Replacement rule The commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within how many days must the hearing be held? A. 10 B. 14 C. 30 D. 60 30 When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A. Alien B. Nonadmitted C. Foreign D. Domestic Foreign Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? A. 14 days B. 28 days C. 30 days D. 31 days 31 days If a policyowner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay A. nothing B. The death benefit C. A cash surrender value D. A paid-up nonforfeiture benefit A cash surrender value All of the following statements are correct regarding credit life insurance EXCEPT A. Benefits are paid to the borrower's beneficiary B. The amount of insurance permissible is limited per borrower C. Premiums are usually paid by the borrower D. Benefits are paid to the creditor Benefits are paid to the borrower's beneficiary An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A. Unfair Discrimination B. Defamation C. Illegal D. A legal advertising strategy Illegal How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer? A. 7 days B. 10 days C. 30 days D. 60 days 60 days How many hours of continuing education can be carried over from one licensing period to the next? A. 2 B.5 C. Any excess hours D. 0 0 Which of the following is correct about a group health insurance policy? A. It cannot provide coverage for handicapped children B. It cannot exclude coverage from an occupational accident C. It cannot exclude newborn children from coverage D. It cannot exclude coverage for VA hospital treatment It cannot exclude newborn children from coverage An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A. Alien B. Domestic C.Unauthorized D. Foreign Foreign Which of the following is NOT a possible penalty for a violation of the Insurance Code? A. An administrative penalty B. Payment of restitution C. A cease and desist order D. A fine up to $100,000 A fine up to $100,000

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Institution
Pearson VUE Texas Life And Health Insurance
Course
Pearson VUE Texas Life and Health Insurance

Content preview

Pearson VUE Texas Life and Health Insurance
Exam – Texas Department of Insurance (TDI)
General Lines Agent – 2026/2027 Edition –
Questions with Evidence-Based Verified Answers
(100% correct solutions)


Q: Who is obligated to make sure all questions are answered and all necessary signatures are
collected on the application?

Answer

The Agent




Q: An underwriter is reviewing an applicant with an extensive medical history. Which of the
following would give the underwriter a better understanding of how the applicant has been
treated for various illnesses?

Answer
Attending physician's statement




Q: Which of the following would NOT be eligible for coverage under key person?
Answer

The owner of the shop




Q: With Adjustable Life, the owner can change all of the following EXCEPT
Answer

,The insured




Q: Which of the following is provided by skilled medical personnel to those who need
occasional medical assistance or rehabilitative care?
Answer

Intermediate care




Q: Partial disability usually pays what percentage of the total disability benefit?
Answer
50%




Q: Which of the following long-term care benefits would provide coverage for care 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

,Q: An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120
per day. The long-term care facility only charged $100 per day. How much will the insurance
company pay?

A. 20% of the total cost

B. $120 a day
C. $100 a day

D. 80% of the total cost

Answer

B. $120 a day




Q: In comparison to a policy that uses the accidental means definition, a policy that uses the
accidental bodily injury definition would provide coverage that is
A. More limited in duration

B. Broader in duration

C. Broder in general

D. More limited in general

Answer
C. Broader in general




Q: An individual has been diagnosed with Alzheimer's disease. He is insured under a life
insurance policy with the accelerated benefits rider. Which of the following is true regarding
taxation of the accelerated benefits?
A. The entire living benefits is considered taxable income
B. A portion of the benefits up to a limit is tax-free; the rest is taxable income

, C. Principle is tax free, but interest is taxed

D. The entire benefits will be received tax free

Answer

B. B. A portion of the benefits up to a limit is tax-free; the rest is taxable income




Q: All of the following are true of an annuity owner EXCEPT
A. The owner has the right to name the beneficiary

B. The owner is the party who may surrender the annuity

C. The owner must be the party to receive benefits
D. The owner pays the premiums on the annuity

Answer

C. The owner must be the party to receive benefits




Q: How is emergency care covered for a member of an HMO?
A. An HMO emergency specialist will cover the patient

B. A member of an HMO can receive care in or out of the HMO service area, but care is
preferred in the service area

C. A member of an HMO may receive care at any emergency facility, at the same cost as if in his
or her own service area
D. HMOs have salaried member physicians, but they do not cover emergency care

Answer

B. A member of an HMO can receive care in or out of the HMO service area, but care is
preferred in the service area

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Institution
Pearson VUE Texas Life and Health Insurance
Course
Pearson VUE Texas Life and Health Insurance

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