Texas Life and Health Insurance Final Exam Questions With Answers 2023/2024 | 100% Correct

Texas Life and Health Insurance Final Exam Questions With Answers 2023/2024 | 100% Correct. Which of the following statements is NOT CORRECT about the Commissioner of Insurance? The Commissioner must be elected in a general election The Commissioner is authorized to conduct the activities of the Texas Department of Insurance (TDI) The Commissioner may be a former employee of the Texas Department of Insurance (TDI) The Commissioner must serve as chief executive and administrator officer of the Texas Department of Insurance - Correct Answer-The Commissioner must be elected in a general election The guarantee of insurability option provides a long-term care policyowner the ability to: buy additional coverage at a later date add the insured's spouse at a later date pay the same premium for life cancel the policy at anytime - Correct Answer-buy additional coverage at a later date A Health Maintenance Organization (HMO) may issue an Evidence of Coverage form after it has been approved by the State Board of Health HMO's Board of Directors Commissioner of Insurance State HMO Association - Correct Answer-Commissioner of Insurance An applicant for an agent's license must meet which of the following requirements? Be honest, trustworthy, and reliable Be at least 17 years of age Have been a resident of Texas for at least 6 months Post a $100,000 Performance Bond - Correct Answer-Be honest, trustworthy, and reliable An insured's inability to perform two or more activities of daily living may trigger which type of policy rider? Waiver of premium Long term care Accelerated death benefit Accidental - Correct Answer-Long term care Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? Modified Whole Life 20-Pay Life Decreasing Term Endowment - Correct Answer-Decreasing Term A Medical Information Report (MIB) report may disclose which of the following: Prior preferred rating Prior use of marjuana Prior lapsing of policy Prior bankruptcy judgement - Correct Answer-Prior use of marjuana Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? Modified Whole Life Variable Life Universal Life Adjustable Life - Correct Answer-Variable Life K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? Binding Initial Premium Conditional Contingent - Correct Answer-Conditional Under the Texas insurance code, which of the following statements about the Suicide clause is CORRECT? The Commissioner of Insurance must review insurance companies' Suicide clauses every five years for discrimination A Suicide clause must apply equally to Life and Accidental Death and Dismemberment (AD&D) policies An insurance company must actuarially justify any suicide limitation Suicide may not be a defense against payment after the second year - Correct AnswerSuicide may not be a defense against payment after the second year A Long-Term Care policy must offer a MINIMUM benefit period of how many months? 12 18 24 30 - Correct Answer-12 Which of these life insurance riders allows the applicant to have excess coverage? Automatic Premium Loan rider Waiver of Premium rider Guarantee Insurability rider Term rider - Correct Answer-Term rider Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors? Universal Life Endowment Life Modified Whole Life Graded Premium Whole Life - Correct Answer-Universal Life What type of renewability guarantees premium rates and renewability? Optionally renewable Conditionally renewable Noncancellable Guaranteed renewable - Correct Answer-Noncancellable When must insurable interest be present in order for a life insurance policy to be valid? When the insured dies Within the incontestability period When the application is made Before the insured dies - Correct Answer-When the application is made Which of the following circumstances would cause a Medicare Supplement policy to be cancelled? A claim greatly exceeds the benefits payable The insured fails to pay the premium The attending physician dies before the claim is settled The insured is no longer in good health - Correct Answer-The insured fails to pay the premium If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely deny the claim for policy proceeds on the basis of fraud collect the correct premiums and pay the claim pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age pay the policy proceeds less a penalty not to exceed 12% of those proceeds - Correct Answer-pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? Renewable Increasing Level Decreasing - Correct Answer-Renewable An insurance company must do which of the following to terminate an agent's appointment? Send notice of the termination to the Texas Department of Insurance Request that the Texas Department of Insurance cancel the agent's license Notify the agent of the termination at least 30 days before the effective date of termination Request a hearing before the Commissioner of Insurance - Correct Answer-Send notice of the termination to the Texas Department of Insurance An agent who tells a client that dividends are guaranteed may be guilty of fraud rebating misrepresentation slander - Correct Answer-misrepresentation In Texas, a domestic insurance company is defined as a company that employs Texas residents agents only maintains a full service branch office in Texas is incorporated and formed in Texas is licensed to issue Homeowners policies only - Correct Answer-is incorporated and formed in Texas Which of these is NOT a reason for purchasing life insurance on the life of a minor? If both parents were to die, it would provide death benefits to the child Provides funds for final expenses if the child were to die Provides living benefits for the child's college education Provides child with insurance now, in case the child becomes uninsurable later - Correct Answer-If both parents were to die, it would provide death benefits to the child A group life insurance policy may NOT insure groups consisting exclusively of persons who are salaried, clerical, or administrative employees hourly paid laborers or their supervisors administrative, managerial, or sales personnel related by marriage, blood or legal adoption - Correct Answer-related by marriage, blood or legal adoption Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? The 403(b) custodian The financial institution The employer The employee - Correct Answer-The employee Insurance company agent appointments remain in force for which of the following maximum periods of time, if any? One year Two years Three years Until terminated or withdrawn - Correct Answer-Until terminated or withdrawn Which of these statements concerning an individual Disability Income policy is TRUE? Premiums are normally tax-deductible Age of the insured determines the amount of the benefits Normally includes an Elimination period Benefits are normally taxable - Correct Answer-Normally includes an Elimination period If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called: noncancellable conditionally renewable cancellable guaranteed renewable - Correct Answer-noncancellable 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? Straight life accumulates faster than Limited-pay Life 20-Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20-Pay Life and Straight Life accumulate cash value at the same rate - Correct Answer20-Pay Life accumulates cash value faster than Straight Life Under the Nonforfeiture Law, a cash surrender value payment may be deferred by the insurance company for NO LONGER than how many months? 1 3 6 12 - Correct Answer-6 J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take? The insurer will pay the original benefit stated in the policy The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age The insurer will pay the original face amount minus any premium deficiencies owed The insurer will deny the claim and refund premiums paid - Correct Answer-The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age After the initial enrollment period, an HMO must hold an open enrollment period of how many days at LEAST once in every 12-month period? 15 31 45 90 - Correct Answer-31 Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition? Double indemnity Benefits are taxable More restrictive Less restrictive - Correct Answer-Less restrictive T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? Income for a fixed period stated in the contract Income that cannot be outlived by the owner Inflation protection Tax-free income - Correct Answer-Income that cannot be outlived by the owner 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? Limited-pay life Graded Premium Level term Endowment - Correct Answer-Level term K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? Proceeds will be paid to P's estate Proceeds will be divided equally between K's and P's estate Proceeds will be payable to K's estate if P dies within a specified time The courts will decide who will receive death benefits - Correct Answer-Proceeds will be payable to K's estate if P dies within a specified time Which of the following health insurance coverages is BEST suited for meeting the expenses of catastrophic illness? Major Medical Hospital Expense Surgical Expense Hospital Income - Correct Answer-Major Medical In an individual retirement account (IRA), rollover contributions are: subject to capital gains tax subject to ordinary income tax partially limited by dollar amount not limited by dollar amount - Correct Answer-not limited by dollar amount Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? *Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company *Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company *Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company *Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company - Correct Answer-Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company Which of the following types of policies pays a benefit if the insured goes blind? Universal life AD&D Endowment Adjustable life - Correct Answer-AD&D Which of these is NOT considered to be a cost connected with an individual's death? Funeral expense Tax liability Business expenses Probate costs - Correct Answer-Business expenses Group life policies MUST include all of the following provisions EXCEPT Ownership Beneficiary Designation Conversion Privilege Right to Loan Proceeds - Correct Answer-Right to Loan Proceeds With a Basic Medical Expense policy, what does the hospitalization expense cover? hospital room and board hospital administration expenses surgeon's fees physician fees - Correct Answer-hospital room and board M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT: policy is delivered free-look period has expired insurance company issues policy initial premium is collected - Correct Answer-free-look period has expired P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when: