Pearson Vue Texas Life and Health Insurance
Test/ 151 Q&A
In comparison to a policy that uses the accidental means definition, a policy that uses the
accidental bodily injury definition would provide coverage that is
A. More limited in duration
B. Broader in duration
C. Broder in general
D. More limited in general - Answer: C. Broader in general
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance
policy with the accelerated benefits rider. Which of the following is true regarding taxation of
the accelerated benefits?
A. The entire living benefits is considered taxable income
B. A portion of the benefits up to a limit is tax-free; the rest is taxable income
C. Principle is tax free, but interest is taxed
D. The entire benefits will be received tax free - Answer: B. B. A portion of the benefits up to a
limit is tax-free; the rest is taxable income
Page 1 of 38
,All of the following are true of an annuity owner EXCEPT
A. The owner has the right to name the beneficiary
B. The owner is the party who may surrender the annuity
C. The owner must be the party to receive benefits
D. The owner pays the premiums on the annuity - Answer: C. The owner must be the party to
receive benefits
Who is obligated to make sure all questions are answered and all necessary signatures are
collected on the application? - Answer: The Agent
An underwriter is reviewing an applicant with an extensive medical history. Which of the
following would give the underwriter a better understanding of how the applicant has been
treated for various illnesses? - Answer: Attending physician's statement
Which of the following would NOT be eligible for coverage under key person? - Answer: The
owner of the shop
With Adjustable Life, the owner can change all of the following EXCEPT - Answer: The insured
Which of the following is provided by skilled medical personnel to those who need occasional
medical assistance or rehabilitative care? - Answer: Intermediate care
Partial disability usually pays what percentage of the total disability benefit? - Answer: 50%
Which of the following long-term care benefits would provide coverage for care for functionally
impaired adults on a less than 24-hour basis?
A. Residential care
B. Assisted living
Page 2 of 38
,C. Home health care
D. Adult day care - Answer: D. Adult day care
An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day.
The long-term care facility only charged $100 per day. How much will the insurance company
pay?
A. 20% of the total cost
B. $120 a day
C. $100 a day
D. 80% of the total cost - Answer: B. $120 a day
How is emergency care covered for a member of an HMO?
A. An HMO emergency specialist will cover the patient
B. A member of an HMO can receive care in or out of the HMO service area, but care is
preferred in the service area
C. A member of an HMO may receive care at any emergency facility, at the same cost as if in his
or her own service area
D. HMOs have salaried member physicians, but they do not cover emergency care - Answer: B.
A member of an HMO can receive care in or out of the HMO service area, but care is preferred
in the service area
Death benefits payable to a beneficiary under a life insurance policy are generally
A. Subject to income taxation by the federal government
B. Exempt from income taxation if under $10,000
C. Exempt from income taxation if over $10,000
D. Not subject to income taxation by the federal government - Answer: D. Not subject to
income taxation by the federal government
Page 3 of 38
, Which of the following best describes the aleatory nature of an insurance contract?
A. Only one of the parties being legally bound by the contract
B. Ambiguities are interpreted in favor of the insured
C. Policies are submitted to the insurer on a take-it-or-leave-it basis
D. Exchange of unequal values - Answer: D. Exchange of unequal values
Which of the following is considered a presumptive disability under a disability income policy
A. Loss of two limbs
B. Loss of an eye
C. Loss of hearing in one ear
D. Loss of one hand or foot - Answer: A. loss of two limbs
An insured purchased a noncancelable health insurance policy 1 year ago. Which of the
following circumstances would NOT be a reason for the insurance company to cancel the policy?
A. The insured reaches the maximum age limit specified in the policy
B. Within two years of the application, the insurer discovers a misrepresentation
C. The insured is an accident and incurs a large claim
D. The insured does not pay the premium - Answer: C. The insured is an accident and incurs a
large claim
When the insured selects the extended term nonforfeiture option, the cash value will be used
to purchase term insurance with what face amount?
A. The same as the original policy minus the cash value
B. Equal to the original policy for as long as the cash values will purchase
C. In lesser amounts for the remaining policy term of age 100
D. Equal to the cash value surrendered from the policy - Answer: B. Equal to the original policy
for as long as the cash values will purchase
*What is the purpose of settlement options?
Page 4 of 38
Test/ 151 Q&A
In comparison to a policy that uses the accidental means definition, a policy that uses the
accidental bodily injury definition would provide coverage that is
A. More limited in duration
B. Broader in duration
C. Broder in general
D. More limited in general - Answer: C. Broader in general
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance
policy with the accelerated benefits rider. Which of the following is true regarding taxation of
the accelerated benefits?
A. The entire living benefits is considered taxable income
B. A portion of the benefits up to a limit is tax-free; the rest is taxable income
C. Principle is tax free, but interest is taxed
D. The entire benefits will be received tax free - Answer: B. B. A portion of the benefits up to a
limit is tax-free; the rest is taxable income
Page 1 of 38
,All of the following are true of an annuity owner EXCEPT
A. The owner has the right to name the beneficiary
B. The owner is the party who may surrender the annuity
C. The owner must be the party to receive benefits
D. The owner pays the premiums on the annuity - Answer: C. The owner must be the party to
receive benefits
Who is obligated to make sure all questions are answered and all necessary signatures are
collected on the application? - Answer: The Agent
An underwriter is reviewing an applicant with an extensive medical history. Which of the
following would give the underwriter a better understanding of how the applicant has been
treated for various illnesses? - Answer: Attending physician's statement
Which of the following would NOT be eligible for coverage under key person? - Answer: The
owner of the shop
With Adjustable Life, the owner can change all of the following EXCEPT - Answer: The insured
Which of the following is provided by skilled medical personnel to those who need occasional
medical assistance or rehabilitative care? - Answer: Intermediate care
Partial disability usually pays what percentage of the total disability benefit? - Answer: 50%
Which of the following long-term care benefits would provide coverage for care for functionally
impaired adults on a less than 24-hour basis?
A. Residential care
B. Assisted living
Page 2 of 38
,C. Home health care
D. Adult day care - Answer: D. Adult day care
An insured's long-tern care policy is scheduled to pay fixed amount of coverage of $120 per day.
The long-term care facility only charged $100 per day. How much will the insurance company
pay?
A. 20% of the total cost
B. $120 a day
C. $100 a day
D. 80% of the total cost - Answer: B. $120 a day
How is emergency care covered for a member of an HMO?
A. An HMO emergency specialist will cover the patient
B. A member of an HMO can receive care in or out of the HMO service area, but care is
preferred in the service area
C. A member of an HMO may receive care at any emergency facility, at the same cost as if in his
or her own service area
D. HMOs have salaried member physicians, but they do not cover emergency care - Answer: B.
A member of an HMO can receive care in or out of the HMO service area, but care is preferred
in the service area
Death benefits payable to a beneficiary under a life insurance policy are generally
A. Subject to income taxation by the federal government
B. Exempt from income taxation if under $10,000
C. Exempt from income taxation if over $10,000
D. Not subject to income taxation by the federal government - Answer: D. Not subject to
income taxation by the federal government
Page 3 of 38
, Which of the following best describes the aleatory nature of an insurance contract?
A. Only one of the parties being legally bound by the contract
B. Ambiguities are interpreted in favor of the insured
C. Policies are submitted to the insurer on a take-it-or-leave-it basis
D. Exchange of unequal values - Answer: D. Exchange of unequal values
Which of the following is considered a presumptive disability under a disability income policy
A. Loss of two limbs
B. Loss of an eye
C. Loss of hearing in one ear
D. Loss of one hand or foot - Answer: A. loss of two limbs
An insured purchased a noncancelable health insurance policy 1 year ago. Which of the
following circumstances would NOT be a reason for the insurance company to cancel the policy?
A. The insured reaches the maximum age limit specified in the policy
B. Within two years of the application, the insurer discovers a misrepresentation
C. The insured is an accident and incurs a large claim
D. The insured does not pay the premium - Answer: C. The insured is an accident and incurs a
large claim
When the insured selects the extended term nonforfeiture option, the cash value will be used
to purchase term insurance with what face amount?
A. The same as the original policy minus the cash value
B. Equal to the original policy for as long as the cash values will purchase
C. In lesser amounts for the remaining policy term of age 100
D. Equal to the cash value surrendered from the policy - Answer: B. Equal to the original policy
for as long as the cash values will purchase
*What is the purpose of settlement options?
Page 4 of 38
