Texas Funeral Prearrangement License Exam Success Guide
2026 | Verified Questions & Answers | Graded A+
1. Describe the significance of the guaranteed minimum interest rate in fixed
annuities.
The guaranteed minimum interest rate is the same for all types of
annuities.
The guaranteed minimum interest rate provides a safety net for
investors, ensuring that their investment will earn at least a specified
return.
The guaranteed minimum interest rate is irrelevant to the performance
of the annuity.
The guaranteed minimum interest rate is only applicable to variable
annuities.
2. If a funeral home fails to provide the General Price List at the beginning of a
sales presentation, what potential consequences could arise?
Legal repercussions and loss of consumer trust
Increased sales due to lack of transparency
No consequences as it is optional
Enhanced reputation for the funeral home
3. Describe why insurable interest is important in life insurance contracts.
Insurable interest is irrelevant to the underwriting process.
Insurable interest ensures that the policyholder has a legitimate
reason to insure the life of the insured, preventing moral hazard.
Insurable interest is only required for term life insurance.
, Insurable interest allows for unlimited coverage amounts.
4. What term describes the authority of an agent to collect premiums if it is not
explicitly stated in their contract?
Implied authority
Limited authority
Apparent authority
Express authority
5. Interpret the implications of choosing 'dividend only' as a method of
receiving death proceeds from a life insurance policy.
Choosing 'dividend only' means the beneficiary will receive
dividends rather than a lump sum or other payment methods.
Choosing 'dividend only' allows for a fixed amount to be paid
periodically.
Choosing 'dividend only' provides a life income for the beneficiary.
Choosing 'dividend only' results in no payment to the beneficiary.
6. Describe the conditions under which a beneficiary can receive a payment
from a deferred annuity.
A beneficiary receives a payment at the end of the annuity term
regardless of the annuitant's status.
A beneficiary receives a payment only if the annuity is converted to a
life insurance policy.
A beneficiary receives a payment when the annuitant passes away
or when the annuity is surrendered.
A beneficiary receives a payment only if the annuitant is alive.
,7. What is the primary responsibility of the insurer in the context of agency law
in insurance?
To provide training for all agents.
To manage funeral service providers.
To independently verify all claims.
To honor the contracts made by its agents.
8. If an annuity owner wishes to assign their deferred annuity to a family
member, what steps must they take to ensure the assignment is valid?
They need to wait for the insurance policy to mature before assigning
it.
They can verbally inform the insurance agent of their decision.
They must submit a written request to the insurance company and
complete any required forms.
They must obtain approval from the beneficiary before proceeding.
9. Who is typically allowed to assign a deferred annuity to another individual?
The insurance agent
The owner of the annuity
The state government
The beneficiary
10. What must be specified on the application for a life insurance policy
concerning the use of the policy proceeds?
The agent's commission
The policy term
, The intended beneficiary
The premium amount
11. Describe how the cash payment received upon surrendering a whole life
insurance policy is determined.
It is determined by the accumulated cash value, which includes
premiums paid and interest earned over time.
It is based solely on the age of the policyowner.
It is a fixed amount set at the time of policy issuance.
It is calculated based on the insurance company's profits.
12. What is the primary condition under which the waiver of premium rider
activates in a life insurance policy?
The insured fails to make a payment.
The insured reaches retirement age.
The insured passes away.
The insured becomes disabled.
13. What is the guaranteed minimum interest rate typically associated with fixed
annuities?
It is fixed at 5%.
It is determined by the Federal Reserve.
It is always 3%.
It varies by contract, but it is usually specified in the annuity
agreement.
2026 | Verified Questions & Answers | Graded A+
1. Describe the significance of the guaranteed minimum interest rate in fixed
annuities.
The guaranteed minimum interest rate is the same for all types of
annuities.
The guaranteed minimum interest rate provides a safety net for
investors, ensuring that their investment will earn at least a specified
return.
The guaranteed minimum interest rate is irrelevant to the performance
of the annuity.
The guaranteed minimum interest rate is only applicable to variable
annuities.
2. If a funeral home fails to provide the General Price List at the beginning of a
sales presentation, what potential consequences could arise?
Legal repercussions and loss of consumer trust
Increased sales due to lack of transparency
No consequences as it is optional
Enhanced reputation for the funeral home
3. Describe why insurable interest is important in life insurance contracts.
Insurable interest is irrelevant to the underwriting process.
Insurable interest ensures that the policyholder has a legitimate
reason to insure the life of the insured, preventing moral hazard.
Insurable interest is only required for term life insurance.
, Insurable interest allows for unlimited coverage amounts.
4. What term describes the authority of an agent to collect premiums if it is not
explicitly stated in their contract?
Implied authority
Limited authority
Apparent authority
Express authority
5. Interpret the implications of choosing 'dividend only' as a method of
receiving death proceeds from a life insurance policy.
Choosing 'dividend only' means the beneficiary will receive
dividends rather than a lump sum or other payment methods.
Choosing 'dividend only' allows for a fixed amount to be paid
periodically.
Choosing 'dividend only' provides a life income for the beneficiary.
Choosing 'dividend only' results in no payment to the beneficiary.
6. Describe the conditions under which a beneficiary can receive a payment
from a deferred annuity.
A beneficiary receives a payment at the end of the annuity term
regardless of the annuitant's status.
A beneficiary receives a payment only if the annuity is converted to a
life insurance policy.
A beneficiary receives a payment when the annuitant passes away
or when the annuity is surrendered.
A beneficiary receives a payment only if the annuitant is alive.
,7. What is the primary responsibility of the insurer in the context of agency law
in insurance?
To provide training for all agents.
To manage funeral service providers.
To independently verify all claims.
To honor the contracts made by its agents.
8. If an annuity owner wishes to assign their deferred annuity to a family
member, what steps must they take to ensure the assignment is valid?
They need to wait for the insurance policy to mature before assigning
it.
They can verbally inform the insurance agent of their decision.
They must submit a written request to the insurance company and
complete any required forms.
They must obtain approval from the beneficiary before proceeding.
9. Who is typically allowed to assign a deferred annuity to another individual?
The insurance agent
The owner of the annuity
The state government
The beneficiary
10. What must be specified on the application for a life insurance policy
concerning the use of the policy proceeds?
The agent's commission
The policy term
, The intended beneficiary
The premium amount
11. Describe how the cash payment received upon surrendering a whole life
insurance policy is determined.
It is determined by the accumulated cash value, which includes
premiums paid and interest earned over time.
It is based solely on the age of the policyowner.
It is a fixed amount set at the time of policy issuance.
It is calculated based on the insurance company's profits.
12. What is the primary condition under which the waiver of premium rider
activates in a life insurance policy?
The insured fails to make a payment.
The insured reaches retirement age.
The insured passes away.
The insured becomes disabled.
13. What is the guaranteed minimum interest rate typically associated with fixed
annuities?
It is fixed at 5%.
It is determined by the Federal Reserve.
It is always 3%.
It varies by contract, but it is usually specified in the annuity
agreement.
