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TEXAS LIFE AND HEALTH INSURANCE LAWS EXAM|| ACCURATE AND
FREQUENTLY TESTED QUESTIONS AND 100% CORRECT ANSWERS
WITH RATIONALES|| LATEST AND COMPLETE UPDATE WITH EXPERT
VERIFIED SOLUTIONS
A father who dies within 3 years after purchasing a life insurance policy on his
infant daughter can have the policy premiums waived under which provision? -
ANSWER: payor provision
What type of life insurance gives the greatest amount of coverage for a limited
period of time? - ANSWER: term life
A 42-year-old executive wants to purchase life insurance that will allow for increases
or decreases to coverage as his/her needs change. Which of the following policies will
best meet this need? - ANSWER: universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - ANSWER: level
term
How does a typical Variable Life Policy investment account grow? - ANSWER:
Through mutual funds, stocks, bonds
A policy that becomes a Modified Endowment Contract (MEC) - ANSWER: will lose many
of its tax advantages
Life insurance that covers an insured's whole life with level premiums paid over a
limited time is called - ANSWER: limited pay life
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Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
- ANSWER: policyowner
Which of the following statements is CORRECT about the period in which a Term Policy
can be converted? - ANSWER: it varies according to contract
A life policy with a death benefit that can fluctuate according to the performance of its
underlying investment portfolio is referred to as - ANSWER: variable life
What type of policy would offer a 40-year old the quickest accumulation of cash value?
Paid-up at 65
20-pay life
30-pay life
Straight whole life - ANSWER: 20 pay life
A Limited-Pay Life policy has - ANSWER: premium payments limited to a specified
number of years
Which of these is an element of a Variable Life policy? - ANSWER: a fixed, level premium
A Whole Life Insurance Policy endows when the - ANSWER: Cash value equals the death
benefit
Credit life insurance is typically issued with which of the following types of coverage? -
ANSWER: decreasing term
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A variable insurance policy - ANSWER: does not guarantee a return on its investment
accounts
Which statement about a whole life policy is correct? - ANSWER: Cash value may be
borrowed against
All of these are characteristics of an Adjustable Life policy EXCEPT - ANSWER:
face amount can be adjusted using policy dividends
What type of life insurance incorporates flexible premiums and an adjustable death
benefit? - ANSWER: universal life
Which of the following actions is NOT possible with a Universal Life policy? - ANSWER:
Premiums may be applied as a credit against income tax
What type of life policy covers 2 lives and pays the face amount after the first one dies? -
ANSWER: Joint life policy
A Renewable Term Policy is renewable at the option of the - ANSWER: insured
J is 35-years old and looking to purchase a whole life insurance policy. Which of the
following types of policies will provide the most rapid growth of cash value? - ANSWER:
20 pay life
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of
these statements made by the producer would be correct? - ANSWER: 20-Pay Life
accumulates cash value faster than Straight Life
, 4|Page
T would like to be assured $10,000 is available in 10 years to replace a roof on his
house. What kind of $10,000 policy should T purchase? - ANSWER: Ten-Year
Endowment
S is close to retiring and would like to purchase a policy that will yield greater gains
than bonds, but will still protect the principal with a minimum level or risk. Which
product would S be advised to purchase? - ANSWER: Equity index insurance
Under a Renewable Term policy, - ANSWER: the renewal premium is calculated on the
basis of the insured's attained age
Which of these types of policies may NOT have the Automatic Premium Loan provision
attached to it? - ANSWER: Decreasing Term
Which of the following types of policies pays a benefit if the insured goes blind? -
ANSWER: AD&D
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called - ANSWER: whole life
Which type of policy is considered to be overfunded, as stated by IRS guidelines? -
ANSWER: Modified Endowment Contract
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a
life insurance policy with level premiums, permanent protection, and be paid-up at
retirement. Which of these should N purchase? - ANSWER: 30 pay life
TEXAS LIFE AND HEALTH INSURANCE LAWS EXAM|| ACCURATE AND
FREQUENTLY TESTED QUESTIONS AND 100% CORRECT ANSWERS
WITH RATIONALES|| LATEST AND COMPLETE UPDATE WITH EXPERT
VERIFIED SOLUTIONS
A father who dies within 3 years after purchasing a life insurance policy on his
infant daughter can have the policy premiums waived under which provision? -
ANSWER: payor provision
What type of life insurance gives the greatest amount of coverage for a limited
period of time? - ANSWER: term life
A 42-year-old executive wants to purchase life insurance that will allow for increases
or decreases to coverage as his/her needs change. Which of the following policies will
best meet this need? - ANSWER: universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - ANSWER: level
term
How does a typical Variable Life Policy investment account grow? - ANSWER:
Through mutual funds, stocks, bonds
A policy that becomes a Modified Endowment Contract (MEC) - ANSWER: will lose many
of its tax advantages
Life insurance that covers an insured's whole life with level premiums paid over a
limited time is called - ANSWER: limited pay life
,2|Page
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
- ANSWER: policyowner
Which of the following statements is CORRECT about the period in which a Term Policy
can be converted? - ANSWER: it varies according to contract
A life policy with a death benefit that can fluctuate according to the performance of its
underlying investment portfolio is referred to as - ANSWER: variable life
What type of policy would offer a 40-year old the quickest accumulation of cash value?
Paid-up at 65
20-pay life
30-pay life
Straight whole life - ANSWER: 20 pay life
A Limited-Pay Life policy has - ANSWER: premium payments limited to a specified
number of years
Which of these is an element of a Variable Life policy? - ANSWER: a fixed, level premium
A Whole Life Insurance Policy endows when the - ANSWER: Cash value equals the death
benefit
Credit life insurance is typically issued with which of the following types of coverage? -
ANSWER: decreasing term
,3|Page
A variable insurance policy - ANSWER: does not guarantee a return on its investment
accounts
Which statement about a whole life policy is correct? - ANSWER: Cash value may be
borrowed against
All of these are characteristics of an Adjustable Life policy EXCEPT - ANSWER:
face amount can be adjusted using policy dividends
What type of life insurance incorporates flexible premiums and an adjustable death
benefit? - ANSWER: universal life
Which of the following actions is NOT possible with a Universal Life policy? - ANSWER:
Premiums may be applied as a credit against income tax
What type of life policy covers 2 lives and pays the face amount after the first one dies? -
ANSWER: Joint life policy
A Renewable Term Policy is renewable at the option of the - ANSWER: insured
J is 35-years old and looking to purchase a whole life insurance policy. Which of the
following types of policies will provide the most rapid growth of cash value? - ANSWER:
20 pay life
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of
these statements made by the producer would be correct? - ANSWER: 20-Pay Life
accumulates cash value faster than Straight Life
, 4|Page
T would like to be assured $10,000 is available in 10 years to replace a roof on his
house. What kind of $10,000 policy should T purchase? - ANSWER: Ten-Year
Endowment
S is close to retiring and would like to purchase a policy that will yield greater gains
than bonds, but will still protect the principal with a minimum level or risk. Which
product would S be advised to purchase? - ANSWER: Equity index insurance
Under a Renewable Term policy, - ANSWER: the renewal premium is calculated on the
basis of the insured's attained age
Which of these types of policies may NOT have the Automatic Premium Loan provision
attached to it? - ANSWER: Decreasing Term
Which of the following types of policies pays a benefit if the insured goes blind? -
ANSWER: AD&D
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called - ANSWER: whole life
Which type of policy is considered to be overfunded, as stated by IRS guidelines? -
ANSWER: Modified Endowment Contract
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a
life insurance policy with level premiums, permanent protection, and be paid-up at
retirement. Which of these should N purchase? - ANSWER: 30 pay life
