TEXAS HEALTH AND LIFE INSURANCE
EXAM FX QUESTIONS AND ANSWERS
What is the purpose of the buyer's guide?
A.To Allow the consumer to compare the costs of different policies
B. To provide the name and address of the agent.
C. to list all policy riders.
D. To provide information about the policy. - Answer-A.To Allow the consumer to
compare the costs of different policies
Which of the following best describes the concept that the insured pays a small amount
of premium for a large amount of risk on the part of the insurance company?
A Adhesion
B Subrogation
C Warranty
D Aleatory - Answer-D. Aleatory
What is the purpose of a conditional receipt?
AIt is given by the agent only to applicants who fully prepay all scheduled premiums in
advance of policy issue.
BIt is intended to provide coverage on a date earlier than the date of the issuance of the
policy.
CIt guarantees the applicant that a policy will be issued in the amount applied for in the
application.
DIt serves as proof that the agent has determined the applicant to be fully insurable for
coverage by the insurance company. - Answer-BIt is intended to provide coverage on a
date earlier than the date of the issuance of the policy.
Which of the following is NOT the consideration in a policy?
AThe promise to pay covered losses
BThe application given to a prospective insured
CSomething of value exchanged between parties
DThe premium amount paid at the time of application - Answer-B. The application given
to a prospective insured.
An insurer receives a report regarding a potential insured that includes the insured's
financial status, hobbies and habits. What type of a report is that?
AAgent's Report
BUnderwriter's Report
CInspection Report
DMedical Information Bureau's report - Answer-C. Inspection Report
,The full premium was submitted with the application for life insurance, and the policy
was issued two weeks later as requested. When does the policy coverage become
effective?
AAs of the policy delivery date
BAs of the first of the month after the policy issue
CAs of the policy issue date
DAs of the application date - Answer-D As of the application date.
In terms of parties to a contract, which of the following does NOT describe a competent
party?
AThe person must be mentally competent to understand the contract.
BThe person must have at least completed secondary education.
CThe person must not be under the influence of drugs or alcohol.
DThe person must be of legal age. - Answer-B. The person must have at least
completed secondary education.
Which of the following is NOT an example of insurable interest?
AEmployer in employee
BChild in parent
CDebtor in creditor
DBusiness partners in each other - Answer-C. Debtor in creditor
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following insurance principles has the insurer violated?
ARepresentation
BAdhesion
CConsideration
DGood faith - Answer-C. Consideration
Which of the following includes information regarding a person's credit, character,
reputation, and habits?
AConsumer history
BInsurability report
CAgent's report
DConsumer report - Answer-D. Consumer Report
Because an insurance policy is a legal contract, it must conform to the state laws
governing contracts which require all of the following elements EXCEPT
AConsideration.
BLegal purpose.
COffer and acceptance.
DConditions. - Answer-D. Conditions
The Federal Fair Credit Reporting Act
ARegulates telemarketing.
,BPrevents money laundering.
CRegulates consumer reports.
DProtects customer privacy. - Answer-C. Regulates consumer reports
If an applicant for a life insurance policy and person to be insured by the policy are two
different people, the underwriter would be concerned about
AWhich individual will pay the premium.
BWhether an insurable interest exists between the individuals.
CThe gender of the applicant.
DThe type of policy requested. - Answer-B. Whether an insurable interest exist between
the individuals.
All of the following are duties and responsibilities of producers at the time of application
EXCEPT
AChange any incorrect statement on the application by personally initialing next to the
corrected statement.
BExplain the nature and type of any receipt the producer is giving to the applicant.
CProbe beyond the stated questions if the producer feels the applicant is
misrepresenting or concealing information.
DCheck to make sure that there are no unanswered questions on the application. -
Answer-A. Change any incorrect statement on the application by personally initialing
next to the corrected statement.
Which of the following would be considered a nonmedical insurance application?
AAn application that does not ask any questions about the applicant's medical history
BAn application submitted with the Agent's Report
CAny application for life insurance
DAn application on which the medical information is completed by the applicant and the
agent only. - Answer-D. An application on which the medical info is completed by the
applicant and agent alone.
Which of the following products requires a securities license?
A. Equity Indexed Annuity
B. Deferred Annuity
C. Variable Annuity
D. Fixed Annuity - Answer-C. Variable Annuity
Which of the following products will protect an individual from outliving his or her
money?
AAdjustable life policy
BPermanent life insurance
CAnnuity
DJoint and survivor policy - Answer-C. Annuity
Which Universal Life option has a gradually increasing cash value and a level death
benefit?
, AOption A
BJuvenile life
CTerm insurance
DOption B - Answer-A Option A
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
ADeath benefit
BGuaranteed rate of interest
CEqual annuity payments
DAmount and length of payments - Answer-A. Death Benefit
If the annuitant dies during the accumulation period, who will receive the annuity
benefits?
AInsurance company
BEstate
CBeneficiary
DOwner - Answer-C. Beneficiary
An annuity owner is funding an annuity that will supplement her retirement. Because
she does not know what effect inflation may have on her retirement dollars, she would
like a return that will equal the performance of the Standard and Poor's 500 Index. She
would likely purchase a(n)
AEquity Indexed Annuity.
BVariable Annuity.
CFlexible Annuity.
DImmediate Annuity. - Answer-A Equity Indexed Annuity
Which of the following determines the cash value of a variable life policy?
AThe policy's guarantees.
BThe premium mode
CThe performance of the policy portfolio
DThe company's general account - Answer-C. The performance of the policy portfolio.
Which of the following is NOT true regarding the annuitant?
AThe annuitant receives the annuity benefits.
BThe annuitant must be a natural person.
CThe annuitant cannot be the same person as the annuity owner.
DThe annuitant's life expectancy is taken into consideration for the annuity. - Answer-C.
The annuitant cannot be the same person as the annuity owner.
All of the following are TRUE regarding the convertibility option under a term life
insurance policy EXCEPT
AMost term policies contain a convertibility option.
BUpon conversion, the premium for the permanent policy will be based upon attained
age.
CUpon conversion, the death benefit of the permanent policy will be reduced by 50%.
EXAM FX QUESTIONS AND ANSWERS
What is the purpose of the buyer's guide?
A.To Allow the consumer to compare the costs of different policies
B. To provide the name and address of the agent.
C. to list all policy riders.
D. To provide information about the policy. - Answer-A.To Allow the consumer to
compare the costs of different policies
Which of the following best describes the concept that the insured pays a small amount
of premium for a large amount of risk on the part of the insurance company?
A Adhesion
B Subrogation
C Warranty
D Aleatory - Answer-D. Aleatory
What is the purpose of a conditional receipt?
AIt is given by the agent only to applicants who fully prepay all scheduled premiums in
advance of policy issue.
BIt is intended to provide coverage on a date earlier than the date of the issuance of the
policy.
CIt guarantees the applicant that a policy will be issued in the amount applied for in the
application.
DIt serves as proof that the agent has determined the applicant to be fully insurable for
coverage by the insurance company. - Answer-BIt is intended to provide coverage on a
date earlier than the date of the issuance of the policy.
Which of the following is NOT the consideration in a policy?
AThe promise to pay covered losses
BThe application given to a prospective insured
CSomething of value exchanged between parties
DThe premium amount paid at the time of application - Answer-B. The application given
to a prospective insured.
An insurer receives a report regarding a potential insured that includes the insured's
financial status, hobbies and habits. What type of a report is that?
AAgent's Report
BUnderwriter's Report
CInspection Report
DMedical Information Bureau's report - Answer-C. Inspection Report
,The full premium was submitted with the application for life insurance, and the policy
was issued two weeks later as requested. When does the policy coverage become
effective?
AAs of the policy delivery date
BAs of the first of the month after the policy issue
CAs of the policy issue date
DAs of the application date - Answer-D As of the application date.
In terms of parties to a contract, which of the following does NOT describe a competent
party?
AThe person must be mentally competent to understand the contract.
BThe person must have at least completed secondary education.
CThe person must not be under the influence of drugs or alcohol.
DThe person must be of legal age. - Answer-B. The person must have at least
completed secondary education.
Which of the following is NOT an example of insurable interest?
AEmployer in employee
BChild in parent
CDebtor in creditor
DBusiness partners in each other - Answer-C. Debtor in creditor
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following insurance principles has the insurer violated?
ARepresentation
BAdhesion
CConsideration
DGood faith - Answer-C. Consideration
Which of the following includes information regarding a person's credit, character,
reputation, and habits?
AConsumer history
BInsurability report
CAgent's report
DConsumer report - Answer-D. Consumer Report
Because an insurance policy is a legal contract, it must conform to the state laws
governing contracts which require all of the following elements EXCEPT
AConsideration.
BLegal purpose.
COffer and acceptance.
DConditions. - Answer-D. Conditions
The Federal Fair Credit Reporting Act
ARegulates telemarketing.
,BPrevents money laundering.
CRegulates consumer reports.
DProtects customer privacy. - Answer-C. Regulates consumer reports
If an applicant for a life insurance policy and person to be insured by the policy are two
different people, the underwriter would be concerned about
AWhich individual will pay the premium.
BWhether an insurable interest exists between the individuals.
CThe gender of the applicant.
DThe type of policy requested. - Answer-B. Whether an insurable interest exist between
the individuals.
All of the following are duties and responsibilities of producers at the time of application
EXCEPT
AChange any incorrect statement on the application by personally initialing next to the
corrected statement.
BExplain the nature and type of any receipt the producer is giving to the applicant.
CProbe beyond the stated questions if the producer feels the applicant is
misrepresenting or concealing information.
DCheck to make sure that there are no unanswered questions on the application. -
Answer-A. Change any incorrect statement on the application by personally initialing
next to the corrected statement.
Which of the following would be considered a nonmedical insurance application?
AAn application that does not ask any questions about the applicant's medical history
BAn application submitted with the Agent's Report
CAny application for life insurance
DAn application on which the medical information is completed by the applicant and the
agent only. - Answer-D. An application on which the medical info is completed by the
applicant and agent alone.
Which of the following products requires a securities license?
A. Equity Indexed Annuity
B. Deferred Annuity
C. Variable Annuity
D. Fixed Annuity - Answer-C. Variable Annuity
Which of the following products will protect an individual from outliving his or her
money?
AAdjustable life policy
BPermanent life insurance
CAnnuity
DJoint and survivor policy - Answer-C. Annuity
Which Universal Life option has a gradually increasing cash value and a level death
benefit?
, AOption A
BJuvenile life
CTerm insurance
DOption B - Answer-A Option A
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
ADeath benefit
BGuaranteed rate of interest
CEqual annuity payments
DAmount and length of payments - Answer-A. Death Benefit
If the annuitant dies during the accumulation period, who will receive the annuity
benefits?
AInsurance company
BEstate
CBeneficiary
DOwner - Answer-C. Beneficiary
An annuity owner is funding an annuity that will supplement her retirement. Because
she does not know what effect inflation may have on her retirement dollars, she would
like a return that will equal the performance of the Standard and Poor's 500 Index. She
would likely purchase a(n)
AEquity Indexed Annuity.
BVariable Annuity.
CFlexible Annuity.
DImmediate Annuity. - Answer-A Equity Indexed Annuity
Which of the following determines the cash value of a variable life policy?
AThe policy's guarantees.
BThe premium mode
CThe performance of the policy portfolio
DThe company's general account - Answer-C. The performance of the policy portfolio.
Which of the following is NOT true regarding the annuitant?
AThe annuitant receives the annuity benefits.
BThe annuitant must be a natural person.
CThe annuitant cannot be the same person as the annuity owner.
DThe annuitant's life expectancy is taken into consideration for the annuity. - Answer-C.
The annuitant cannot be the same person as the annuity owner.
All of the following are TRUE regarding the convertibility option under a term life
insurance policy EXCEPT
AMost term policies contain a convertibility option.
BUpon conversion, the premium for the permanent policy will be based upon attained
age.
CUpon conversion, the death benefit of the permanent policy will be reduced by 50%.
