TEXAS LIFE ONLY FINAL EXAM
QUESTIONS AND ANSWERS
The advantage of reinstating an original life policy is - Answer-the premiums are based
on a younger age
In TX, which of these statements regarding the Suicide clause is TRUE? - Answer-An
insurer may not use suicide as a defense against payment after the second year
Which of the following is NOT included in a life insurance illustration?
Underwriting classification upon which the illustration is based
Insurer's name
Amount of death benefit
Company's mortality table - Answer-Company's mortality table
An employee is covered under a company group life plan with a $50,000 death benefit.
What is the MAXIMUM amount a spouse may be insured for under this program? -
Answer-$25,000
Which of these is an element of a Single Premium annuity? - Answer-Lump-sum
payment
What is the monetary penalty for willfully violating a cease-and-desist order?
- fine of up to $500
- fine of up to $250
- fine of up to $50
- fine of up to $100 - Answer-A fine of up to $500
A new general property and casualty licensee must complete at LEAST ____ hours of
continuing education within 24 months of initial licensure. - Answer-24
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
- Answer-Evidence of insurability is required when the option is exercised
When a policyowner cash surrenders a Universal Life insurance policy in its early years,
this may be considered a red flag for an - Answer-Anti-Money Laundering violation
The phrase "transacting business" includes - Answer-collecting premiums
What type of life insurance gives the greatest amount of coverage for a limited period of
time? - Answer-Term life
,The agreement in a life insurance contract that states a specific sum of money will be
paid to a designated person upon an insured's death is called an - Answer-Insuring
agreement
ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that
results in the unreasonable restraint of trade. ABC is committing a prohibited act under
TX insurance laws covering - Answer-unfair methods of competition
J let her life insurance policy lapse 8 months ago due to nonpayment. She can
reestablish coverage under which of the following provisions? - Answer-Reinstatement
provision
Which of the following is NOT a required provision in group life policies? - Answer-Right
to loan
The Consideration clause in a life insurance policy indicates that a policyowner's
consideration consists of a completed application and - Answer-the initial premium
Which of the following is a requirement for obtaining a TX insurance agent's license? -
Answer-Be honest, trustworthy, and reliable
A certificate of _____ permits an insurance company to transact business in TX -
Answer-authority
An example of false advertising would be - Answer-an insurer exaggerating its
dividends in a magazine advertisement
K is shopping for a permanent life insurance policy that will offer her the MOST
protection per dollar of annual premium. Which of these policies best fits her needs? -
Answer-Straight Life
An architecture firm would stand to lose a lot of money in the event of the death of its
project manager. Which type of policy should the firm purchase on its project manager?
- Answer-Key Person insurance
What kind of premium does a Whole Life policy have? - Answer-level
Q is severely injured in an automobile accident and becomes totally disabled. How
many months must Q be disabled before being able to apply for Social Security
disability benefits? - Answer-5
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 - Answer-free-look
period has expired
, Which of the following statements is CORRECT regarding the tax treatment of a lump-
sum payment paid to a life insurance policy's primary beneficiary? - Answer-All
proceeds are income tax free in the year they are received
How often must an insurance agent license normally be renewed - Answer-every two
years
K has a life insurance policy where her husband is beneficiary and her daughter is
contingent beneficiary. Under the Common Disaster clause, if K and her husband are
both killed in an automobile accident, where would the death proceeds be directed? -
Answer-Daughter
B, an insurance agent, tells his clients that their rights may be impaired if they fail to
complete a release form within a given period of time. B may be found guilty of -
Answer-coercion
The Automatic Premium Loan provision is designed to: - Answer-avoid a policy lapse
Taking receipt of premiums and holding them for the insurance company is an example
of: - Answer-fiduciary responsibility
A ____ _____ Life policy combines investment choices with a form of Term coverage -
Answer-Variable universal
An insured may assign up to ____ of policy ownership under an individual life insurance
policy - Answer-100%
A promotional advertising item is not considered a rebate unless it has a value equal to
or less than what amount? - Answer-$25
P is the insured on a participating life policy. Which statement is true if P's premiums are
waived due to a disability? - Answer-P will still receive declared dividends
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do
not take the required minimum distributions from their qualified retirement plan? -
Answer-50%
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the
application asks if P engages in scuba diving, to which P answers "No". The policy is
then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a
scuba-related accident in 2011. What will the insurer pay to P's beneficiary? - Answer-
$50,000 minus any outstanding policy loans
A non-contributory plan requires ____ participation of all eligible employees - Answer-
100%
QUESTIONS AND ANSWERS
The advantage of reinstating an original life policy is - Answer-the premiums are based
on a younger age
In TX, which of these statements regarding the Suicide clause is TRUE? - Answer-An
insurer may not use suicide as a defense against payment after the second year
Which of the following is NOT included in a life insurance illustration?
Underwriting classification upon which the illustration is based
Insurer's name
Amount of death benefit
Company's mortality table - Answer-Company's mortality table
An employee is covered under a company group life plan with a $50,000 death benefit.
What is the MAXIMUM amount a spouse may be insured for under this program? -
Answer-$25,000
Which of these is an element of a Single Premium annuity? - Answer-Lump-sum
payment
What is the monetary penalty for willfully violating a cease-and-desist order?
- fine of up to $500
- fine of up to $250
- fine of up to $50
- fine of up to $100 - Answer-A fine of up to $500
A new general property and casualty licensee must complete at LEAST ____ hours of
continuing education within 24 months of initial licensure. - Answer-24
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
- Answer-Evidence of insurability is required when the option is exercised
When a policyowner cash surrenders a Universal Life insurance policy in its early years,
this may be considered a red flag for an - Answer-Anti-Money Laundering violation
The phrase "transacting business" includes - Answer-collecting premiums
What type of life insurance gives the greatest amount of coverage for a limited period of
time? - Answer-Term life
,The agreement in a life insurance contract that states a specific sum of money will be
paid to a designated person upon an insured's death is called an - Answer-Insuring
agreement
ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that
results in the unreasonable restraint of trade. ABC is committing a prohibited act under
TX insurance laws covering - Answer-unfair methods of competition
J let her life insurance policy lapse 8 months ago due to nonpayment. She can
reestablish coverage under which of the following provisions? - Answer-Reinstatement
provision
Which of the following is NOT a required provision in group life policies? - Answer-Right
to loan
The Consideration clause in a life insurance policy indicates that a policyowner's
consideration consists of a completed application and - Answer-the initial premium
Which of the following is a requirement for obtaining a TX insurance agent's license? -
Answer-Be honest, trustworthy, and reliable
A certificate of _____ permits an insurance company to transact business in TX -
Answer-authority
An example of false advertising would be - Answer-an insurer exaggerating its
dividends in a magazine advertisement
K is shopping for a permanent life insurance policy that will offer her the MOST
protection per dollar of annual premium. Which of these policies best fits her needs? -
Answer-Straight Life
An architecture firm would stand to lose a lot of money in the event of the death of its
project manager. Which type of policy should the firm purchase on its project manager?
- Answer-Key Person insurance
What kind of premium does a Whole Life policy have? - Answer-level
Q is severely injured in an automobile accident and becomes totally disabled. How
many months must Q be disabled before being able to apply for Social Security
disability benefits? - Answer-5
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 - Answer-free-look
period has expired
, Which of the following statements is CORRECT regarding the tax treatment of a lump-
sum payment paid to a life insurance policy's primary beneficiary? - Answer-All
proceeds are income tax free in the year they are received
How often must an insurance agent license normally be renewed - Answer-every two
years
K has a life insurance policy where her husband is beneficiary and her daughter is
contingent beneficiary. Under the Common Disaster clause, if K and her husband are
both killed in an automobile accident, where would the death proceeds be directed? -
Answer-Daughter
B, an insurance agent, tells his clients that their rights may be impaired if they fail to
complete a release form within a given period of time. B may be found guilty of -
Answer-coercion
The Automatic Premium Loan provision is designed to: - Answer-avoid a policy lapse
Taking receipt of premiums and holding them for the insurance company is an example
of: - Answer-fiduciary responsibility
A ____ _____ Life policy combines investment choices with a form of Term coverage -
Answer-Variable universal
An insured may assign up to ____ of policy ownership under an individual life insurance
policy - Answer-100%
A promotional advertising item is not considered a rebate unless it has a value equal to
or less than what amount? - Answer-$25
P is the insured on a participating life policy. Which statement is true if P's premiums are
waived due to a disability? - Answer-P will still receive declared dividends
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do
not take the required minimum distributions from their qualified retirement plan? -
Answer-50%
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the
application asks if P engages in scuba diving, to which P answers "No". The policy is
then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a
scuba-related accident in 2011. What will the insurer pay to P's beneficiary? - Answer-
$50,000 minus any outstanding policy loans
A non-contributory plan requires ____ participation of all eligible employees - Answer-
100%
