Texas Life and Health Insurance
Exam Questions and Answers
100% PASS
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - CORRECT ANSWER-Upon completion
of the application
Who elects the governing body of a mutual insurance company? - CORRECT
ANSWER-policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - CORRECT ANSWER-Fair Credit
Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure? - CORRECT 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 - CORRECT
ANSWER-reserves
,Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated - CORRECT ANSWER-1970 - Fair Credit
Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - CORRECT 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 - CORRECT 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 - CORRECT ANSWER-
representations
The part of a life insurance policy guaranteed to be true is called a(n) - CORRECT
ANSWER-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - CORRECT ANSWER-Principal
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
,The Consideration clause of an insurance contract includes - CORRECT
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? - CORRECT 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? - CORRECT ANSWER-Unilateral
When must insurable interest exist for a life insurance contract to be valid? -
CORRECT ANSWER-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - CORRECT ANSWER-conditional
Which of these require an offer, acceptance, and consideration? - CORRECT
ANSWER-Contract
Which of these arrangements allows one to bypass insurable interest laws? -
CORRECT 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 - CORRECT ANSWER-negotiating
An agent is an individual that represents whom? - CORRECT ANSWER-Insurer
Insurable interest must exist at what time? - CORRECT ANSWER-at the time of
application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling? - CORRECT ANSWER-Variable Life
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
Exam Questions and Answers
100% PASS
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - CORRECT ANSWER-Upon completion
of the application
Who elects the governing body of a mutual insurance company? - CORRECT
ANSWER-policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - CORRECT ANSWER-Fair Credit
Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure? - CORRECT 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 - CORRECT
ANSWER-reserves
,Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated - CORRECT ANSWER-1970 - Fair Credit
Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - CORRECT 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 - CORRECT 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 - CORRECT ANSWER-
representations
The part of a life insurance policy guaranteed to be true is called a(n) - CORRECT
ANSWER-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - CORRECT ANSWER-Principal
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
,The Consideration clause of an insurance contract includes - CORRECT
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? - CORRECT 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? - CORRECT ANSWER-Unilateral
When must insurable interest exist for a life insurance contract to be valid? -
CORRECT ANSWER-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - CORRECT ANSWER-conditional
Which of these require an offer, acceptance, and consideration? - CORRECT
ANSWER-Contract
Which of these arrangements allows one to bypass insurable interest laws? -
CORRECT 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 - CORRECT ANSWER-negotiating
An agent is an individual that represents whom? - CORRECT ANSWER-Insurer
Insurable interest must exist at what time? - CORRECT ANSWER-at the time of
application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling? - CORRECT ANSWER-Variable Life
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
