TEXAS HEALTH AND LIFE INSURANCE
(BASIC PRINCIPLES) EXAM QUESTIONS
AND ANSWERS
Reserve - answer-funds held by the company to help fulfill future claims
Stock companies - answer-insurance companies owned and controlled by a group of
stockholders whose investment in the company provides a safety margin necessary in
issuance of guaranteed, fixed premium, nonparticipating policies
Nonparticipating plan - answer-insurance under which the policy owner receives shares
(dividends) of the divisible surplus of the company
Reinsurer - answer-a company that provides financial protection to insurance
companies
Handle risks that are too large for insurance companies to handle on their own
Fraternal benefit society - answer-a nonprofit or benevolent organization that provides
insurance to its members
Agents who sell within their society do not receive commission & stay under a specific
premium threshold often have less stringent licensing requirements
Fair credit reporting act - answer-law requiring an individual to be informed if she is
being investigated by an inspection company
Law outlines the sharing & impact of such information & requires individuals to be
notified prior to being investigated
Buyers guide - answer-explains insurance policies and concepts
Many states require these to be given to applicants when considering types of coverage
Used with life insurance, long-term care insurance & annuities
Policy summary - answer-summary of terms for an insurance policy including:
conditions, coverage limitations & premiums
Used with life insurance, long-term care insurance & annuities
, National associated of insurance commissioners (naic) - answer-association of state
insurance commissioners active in insurance regulatory problems &
forming/recommending model legislations & requirements
Suggest standards for states to adopt
Stae guaranty association - answer-established by each state to support insurers &
protect customers in case or insurer insolvency
Funded by insurers through assessments which are
All insurers are required to participate in any state they conduct business
Life insurance - answer-insurance paid to named beneficiaries when the insured person
dies
Term life insurance - answer-insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole life insurance - answer-insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be.
Group life insurance - answer-life insurance that provides a master policy for a group;
each eligible group member receives a certificate of insurance
Group employer owns and controls the policy
Consideration - answer-part of insurance contract setting forth the amount of initial &
renewal premiums as well as the frequency of future payments
Includes the initial premium & completed application for insurance
Insuring agreement - answer-portion or section of an insurance policy that details what
is covered by the contract for causes of loss
Section describing coverages under a policy
Health insurance - answer-insurance against loss through sickness or accidental bodily
injury
Disability insurance - answer-insurance paid to an individual if he/she is injured and is
unable to work for a specified length of time.
Medical expense insurance - answer-insurance that pays benefits for medical, surgical
& hospital costs
(BASIC PRINCIPLES) EXAM QUESTIONS
AND ANSWERS
Reserve - answer-funds held by the company to help fulfill future claims
Stock companies - answer-insurance companies owned and controlled by a group of
stockholders whose investment in the company provides a safety margin necessary in
issuance of guaranteed, fixed premium, nonparticipating policies
Nonparticipating plan - answer-insurance under which the policy owner receives shares
(dividends) of the divisible surplus of the company
Reinsurer - answer-a company that provides financial protection to insurance
companies
Handle risks that are too large for insurance companies to handle on their own
Fraternal benefit society - answer-a nonprofit or benevolent organization that provides
insurance to its members
Agents who sell within their society do not receive commission & stay under a specific
premium threshold often have less stringent licensing requirements
Fair credit reporting act - answer-law requiring an individual to be informed if she is
being investigated by an inspection company
Law outlines the sharing & impact of such information & requires individuals to be
notified prior to being investigated
Buyers guide - answer-explains insurance policies and concepts
Many states require these to be given to applicants when considering types of coverage
Used with life insurance, long-term care insurance & annuities
Policy summary - answer-summary of terms for an insurance policy including:
conditions, coverage limitations & premiums
Used with life insurance, long-term care insurance & annuities
, National associated of insurance commissioners (naic) - answer-association of state
insurance commissioners active in insurance regulatory problems &
forming/recommending model legislations & requirements
Suggest standards for states to adopt
Stae guaranty association - answer-established by each state to support insurers &
protect customers in case or insurer insolvency
Funded by insurers through assessments which are
All insurers are required to participate in any state they conduct business
Life insurance - answer-insurance paid to named beneficiaries when the insured person
dies
Term life insurance - answer-insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole life insurance - answer-insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be.
Group life insurance - answer-life insurance that provides a master policy for a group;
each eligible group member receives a certificate of insurance
Group employer owns and controls the policy
Consideration - answer-part of insurance contract setting forth the amount of initial &
renewal premiums as well as the frequency of future payments
Includes the initial premium & completed application for insurance
Insuring agreement - answer-portion or section of an insurance policy that details what
is covered by the contract for causes of loss
Section describing coverages under a policy
Health insurance - answer-insurance against loss through sickness or accidental bodily
injury
Disability insurance - answer-insurance paid to an individual if he/she is injured and is
unable to work for a specified length of time.
Medical expense insurance - answer-insurance that pays benefits for medical, surgical
& hospital costs
