TEXAS LIFE AND HEALTH UPDATED EXAM MANUAL
QUESTIONS AND ANSWERS GRADED A+
✔✔Incontestable Clause - ✔✔Your insurance company is entitled, usually during the
first TWO YEARS of the policy, to challenge the validity of your policy on the basis that
you held back material information. If you are found guilty of concealment, your insurer
will void the policy and return the premiums. If you conceal important facts in order to
get a lower premium, your insurance provider will not pay the claim on your death if it
occurs during the first TWO YEARS of the policy. This is the most important clause of
your life insurance policy and, therefore, you should make sure that this clause is
included in your policy and that you are familiar with the specified time limit.
✔✔Spendthrift Clause - ✔✔If you have named your gambler son as a beneficiary, there
is a chance that upon your death, your son's creditor may pounce on your life insurance
proceeds. The spendthrift clause gives the insurer the right to hold back the proceeds
and protect them from creditors. In this case, your insurer may prefer to pay the
insurance money in INSTALLMENTS to your son.
✔✔Suicide Clause - ✔✔The suicide clause in your policy specifies that the insurance
company will not pay the money if the insured attempts or commits suicide within a
specified period from the beginning of the coverage. If the insured's death is a result of
suicide, an insurer will only return previously paid premiums to the family.
✔✔War Clause - ✔✔Normally, insurance companies do not compensate for death due
to war or war-related developments. As per this clause, if you are a victim of war, your
insurer will not pay out the benefits to you. In its place, your insurer will reimburse the
previously paid premiums to your family.
✔✔Aviation Clause - ✔✔According to this clause, your insurer will not pay
compensation to your surviving family due to death on an airplane.
However, if you are an airline employee, you can buy aviation insurance by paying
higher premiums.
✔✔Free Look Period/Free Examination Period - ✔✔If you are not satisfied with the
terms and conditions of the policy, you can return the policy within a specified period
after receiving it and your premiums will be fully refunded. Here, the time frame will vary
depending your insurer.
✔✔Grace Period Clause . - ✔✔There are times when you cannot pay the premiums as
a result of financial troubles. In these circumstances, the "grace period" provision works
in your favor. Your insurance company will provide a grace period within which you can
make the necessary monetary arrangements and pay your premiums. During this time,
you will continue to be covered by your insurance policy. If you still do not pay your
premiums, your policy may be cancelled.
, If you die within the grace period, your insurer will pay the insurance money after
subtracting the unpaid premium from that money
✔✔Reinstatement Clause - ✔✔If your policy has lapsed due to non-payment of
premium, you can revive it by paying all the past outstanding premiums along with
interest. However, you need to prove to your insurer that you continue to enjoy good
health to qualify for this provision.
✔✔What is GROUP TERM life insurance? - ✔✔Insurance coverage offered to a group
by an employer, association, or organization. Coverage provides a benefit to
beneficiaries if a covered individual dies during the covered period.
✔✔Exclusion - ✔✔Insurer refuses to cover certain risks, acts, property, types of
damages, or locations. Takes away coverage for risks they are unwilling to insure.
✔✔What kind of insurance provides coverage for a limited amount of time but has the
lowest premiums? - ✔✔Level Term: offers a level face-value of coverage amount and
low-level premiums; coverage last a short time.
✔✔When is the face amount of a whole life policy paid? - ✔✔When the insured dies or
at the age of 100, or at the policy's maturity date, which ever happens first.
✔✔How long is the grace period for life insurance policies? - ✔✔31 days
✔✔What is the grace period for an insured person who pays the premiums annually? -
✔✔31 days
✔✔What policies allow a 31 day grace period? - ✔✔Health insurance paid annually
Life insurance policies
Health insurance paid less frequently than monthly
✔✔Life insurance that COVERS an insured's WHOLE LIFE with LEVEL PREMIUMS
paid over a LIMITED TIME is called: - ✔✔Limited pay life (whole life)
✔✔What kind of premium does a whole life policy have? - ✔✔Level
✔✔_____ is the amount of time insurance coverage will remain in effect after the
premium payment is missed. - ✔✔Grace period
✔✔What is the maturity date of most whole life insurance policies? - ✔✔100
✔✔What kind of life insurance starts out as temporary coverage but can later be
modified to permanent coverage without proof of good health? - ✔✔Convertible term
QUESTIONS AND ANSWERS GRADED A+
✔✔Incontestable Clause - ✔✔Your insurance company is entitled, usually during the
first TWO YEARS of the policy, to challenge the validity of your policy on the basis that
you held back material information. If you are found guilty of concealment, your insurer
will void the policy and return the premiums. If you conceal important facts in order to
get a lower premium, your insurance provider will not pay the claim on your death if it
occurs during the first TWO YEARS of the policy. This is the most important clause of
your life insurance policy and, therefore, you should make sure that this clause is
included in your policy and that you are familiar with the specified time limit.
✔✔Spendthrift Clause - ✔✔If you have named your gambler son as a beneficiary, there
is a chance that upon your death, your son's creditor may pounce on your life insurance
proceeds. The spendthrift clause gives the insurer the right to hold back the proceeds
and protect them from creditors. In this case, your insurer may prefer to pay the
insurance money in INSTALLMENTS to your son.
✔✔Suicide Clause - ✔✔The suicide clause in your policy specifies that the insurance
company will not pay the money if the insured attempts or commits suicide within a
specified period from the beginning of the coverage. If the insured's death is a result of
suicide, an insurer will only return previously paid premiums to the family.
✔✔War Clause - ✔✔Normally, insurance companies do not compensate for death due
to war or war-related developments. As per this clause, if you are a victim of war, your
insurer will not pay out the benefits to you. In its place, your insurer will reimburse the
previously paid premiums to your family.
✔✔Aviation Clause - ✔✔According to this clause, your insurer will not pay
compensation to your surviving family due to death on an airplane.
However, if you are an airline employee, you can buy aviation insurance by paying
higher premiums.
✔✔Free Look Period/Free Examination Period - ✔✔If you are not satisfied with the
terms and conditions of the policy, you can return the policy within a specified period
after receiving it and your premiums will be fully refunded. Here, the time frame will vary
depending your insurer.
✔✔Grace Period Clause . - ✔✔There are times when you cannot pay the premiums as
a result of financial troubles. In these circumstances, the "grace period" provision works
in your favor. Your insurance company will provide a grace period within which you can
make the necessary monetary arrangements and pay your premiums. During this time,
you will continue to be covered by your insurance policy. If you still do not pay your
premiums, your policy may be cancelled.
, If you die within the grace period, your insurer will pay the insurance money after
subtracting the unpaid premium from that money
✔✔Reinstatement Clause - ✔✔If your policy has lapsed due to non-payment of
premium, you can revive it by paying all the past outstanding premiums along with
interest. However, you need to prove to your insurer that you continue to enjoy good
health to qualify for this provision.
✔✔What is GROUP TERM life insurance? - ✔✔Insurance coverage offered to a group
by an employer, association, or organization. Coverage provides a benefit to
beneficiaries if a covered individual dies during the covered period.
✔✔Exclusion - ✔✔Insurer refuses to cover certain risks, acts, property, types of
damages, or locations. Takes away coverage for risks they are unwilling to insure.
✔✔What kind of insurance provides coverage for a limited amount of time but has the
lowest premiums? - ✔✔Level Term: offers a level face-value of coverage amount and
low-level premiums; coverage last a short time.
✔✔When is the face amount of a whole life policy paid? - ✔✔When the insured dies or
at the age of 100, or at the policy's maturity date, which ever happens first.
✔✔How long is the grace period for life insurance policies? - ✔✔31 days
✔✔What is the grace period for an insured person who pays the premiums annually? -
✔✔31 days
✔✔What policies allow a 31 day grace period? - ✔✔Health insurance paid annually
Life insurance policies
Health insurance paid less frequently than monthly
✔✔Life insurance that COVERS an insured's WHOLE LIFE with LEVEL PREMIUMS
paid over a LIMITED TIME is called: - ✔✔Limited pay life (whole life)
✔✔What kind of premium does a whole life policy have? - ✔✔Level
✔✔_____ is the amount of time insurance coverage will remain in effect after the
premium payment is missed. - ✔✔Grace period
✔✔What is the maturity date of most whole life insurance policies? - ✔✔100
✔✔What kind of life insurance starts out as temporary coverage but can later be
modified to permanent coverage without proof of good health? - ✔✔Convertible term
