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Texas Life and Health Insurance Exam
Questions and Correct Answers/ Latest
Update / Already Graded
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act?
Ans: Upon completion of the application
Who elects the governing body of a mutual insurance company?
Ans: policyholders
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Ans: Fair Credit Reporting Act
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
Ans: 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
All rights reserved © 2025/ 2026 |
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Ans: reserves
Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Ans: 1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration
clause of a life policy?
Ans: 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
Ans: 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
Ans: representations
The part of a life insurance policy guaranteed to be true is called a(n)
Ans: warranty
All rights reserved © 2025/ 2026 |
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Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Ans: Principal
The Consideration clause of an insurance contract includes
Ans: 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?
Ans: In this situation, the proceeds from E's life insurance
policy will go to F.
All rights reserved © 2025/ 2026 |
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Which of the following terms defines the legally enforceable promise in
an insurance contract by the insurer?
Ans: Unilateral
When must insurable interest exist for a life insurance contract to be
valid?
Ans: Inception of the contract
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
Ans: conditional
Which of these require an offer, acceptance, and consideration?
Ans: Contract
Which of these arrangements allows one to bypass insurable interest
laws?
Ans: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to
All rights reserved © 2025/ 2026 |
Texas Life and Health Insurance Exam
Questions and Correct Answers/ Latest
Update / Already Graded
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act?
Ans: Upon completion of the application
Who elects the governing body of a mutual insurance company?
Ans: policyholders
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Ans: Fair Credit Reporting Act
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
Ans: 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
All rights reserved © 2025/ 2026 |
, Page |2
Ans: reserves
Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Ans: 1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration
clause of a life policy?
Ans: 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
Ans: 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
Ans: representations
The part of a life insurance policy guaranteed to be true is called a(n)
Ans: warranty
All rights reserved © 2025/ 2026 |
, Page |3
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Ans: Principal
The Consideration clause of an insurance contract includes
Ans: 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?
Ans: In this situation, the proceeds from E's life insurance
policy will go to F.
All rights reserved © 2025/ 2026 |
, Page |4
Which of the following terms defines the legally enforceable promise in
an insurance contract by the insurer?
Ans: Unilateral
When must insurable interest exist for a life insurance contract to be
valid?
Ans: Inception of the contract
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
Ans: conditional
Which of these require an offer, acceptance, and consideration?
Ans: Contract
Which of these arrangements allows one to bypass insurable interest
laws?
Ans: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to
All rights reserved © 2025/ 2026 |
