TEXAS LIFE AND HEALTH 2025/2026 QUESTIONS AND
SOLUTIONS GRADED A+
✔✔Which statement is true regarding a minor beneficiary?
Normally, the death proceeds are required to be held in trust until the beneficiary
reaches the age of 21
The minor is entitled to receive the death proceeds immediately
Normally, a guardian is required to be appointed in the Beneficiary clause of the
contract
The minor must pay the debts of the insured's estate before receiving any of the
proceeds - ✔✔C. Normally, a guardian is required to be appointed in the Beneficiary
clause of the contract
✔✔Which is true concerning a Variable Universal Life policy?
Policyowner has no say where the investment will go but can choose the premium
mode
The death benefit can vary but the policyowner has no say in the premium amount paid
Policyowner controls where the investment will go and selects the amount of the
premium payment
The investment vehicle for this type of policy is held in the insurer's general portfolio -
✔✔C. Policyowner controls where the investment will go and selects the amount of the
premium payment
✔✔P is the insured on a participating life policy. Which statement is true if P's premiums
are waived due to a disability?
P cannot assign ownership of the policy while premiums are being waived
P will have to pay income taxes on the amount of premiums waived
P cannot borrow against the policy's cash value while disabled
P will still receive declared dividends - ✔✔D. P will still receive declared dividends
✔✔A comprehensive major medical health insurance policy contains an Eligible
Expenses provision which identifies the types of health care services that are covered.
All of the following health care services are typically covered, EXCEPT for:
physician fees
experimental and investigative services
nursing services
hospital charges - ✔✔B. Experimental and investigative services
✔✔What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if payor becomes disabled
Allows payor to assign ownership in the event payor becomes disabled
Premiums are waived if juvenile becomes disabled
Allows payor to increase face amount without providing evidence of insurability - ✔✔A.
Premiums are waived if payor becomes disabled
,✔✔A provision in a life insurance policy that pays the policyowner an amount that does
not surpass the guaranteed cash value is called the:
Automatic Premium Loan provision
Consideration clause
Policy Loan provision
Accelerated Benefits provision - ✔✔C. Policy Loan Provision
✔✔Under the USA Patriot Act, insurers are required to report receipt of cash payments
in excess of:
$7,500
$10,000
$2,500
$5,000 - ✔✔B. $10,000
✔✔Which of the following is considered an element of a Variable Life Policy?
Guaranteed dividends
Insurer assumes all the risk
Underlying equity investment
Little or no risk to insured - ✔✔C. Underlying equity investment
✔✔A Health Reimbursement Arrangement MUST be established:
by the employer
only during specific open enrollment periods
with employee funding
with other employer-sponsored benefit plans - ✔✔A. By the Employer
✔✔A whole life insurance policyowner does not wish to continue making premium
payments. Which of the following enables the policyowner to sell the policy for more
than its cash value?
Life settlement contract
1031 Exchange
Cash surrender
Buy-sell arrangement - ✔✔A. Life Settlement Contract
✔✔Which of these is an element of a Variable Life policy?
No investment risk to the policyowner
Insurer assumes the investment risk
A fixed, level premium
Rate of returns are guaranteed - ✔✔C. A fixed, level premium
✔✔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?
, $50,000 minus any outstanding policy loans
$100,000 because the cause of death was accidental
Premiums paid plus interest
Nothing. Claim will be denied - ✔✔A. $50,000 minus any outstanding policy loans
✔✔What kind of life insurance policy pays a specified monthly income to a beneficiary
for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
Family Lump Sum Policy
Family Income Policy
Family Survivor Policy - ✔✔A. Family Maintenance Policy
✔✔Which of the following statements about accumulated interest earned on dividends
from an insurance policy is TRUE?
Nontaxable
Taxed as ordinary income
Tax deductible
Partially taxable - ✔✔B. Taxed as ordinary income
✔✔Which of these terms accurately defines an underwriter's assessment of information
on a life insurance application?
Inspection report
Warranty review
Insurable interest
Risk classification - ✔✔D. Risk Classification
✔✔D owns a Whole Life policy that was purchased 10 years ago. If the premium
payments suddenly stop and D takes no additional action, which Nonforfeiture Option
will the insurer likely proceed with?
Cash Surrender
Loan provision
Extended term
Reduced Paid-up - ✔✔C. Extended Term
✔✔T took out a $50,000 life insurance policy with an Accidental Death and
Dismemberment rider. Five years later, T commits suicide. How much will the insurer
pay?
$100,000
The total premiums paid minus any policy loans
Nothing
$50,000 - ✔✔D. $50,000
✔✔Under a Basic Medical Expense policy, what does the hospitalization expense
portion cover?
surgeon's fees
SOLUTIONS GRADED A+
✔✔Which statement is true regarding a minor beneficiary?
Normally, the death proceeds are required to be held in trust until the beneficiary
reaches the age of 21
The minor is entitled to receive the death proceeds immediately
Normally, a guardian is required to be appointed in the Beneficiary clause of the
contract
The minor must pay the debts of the insured's estate before receiving any of the
proceeds - ✔✔C. Normally, a guardian is required to be appointed in the Beneficiary
clause of the contract
✔✔Which is true concerning a Variable Universal Life policy?
Policyowner has no say where the investment will go but can choose the premium
mode
The death benefit can vary but the policyowner has no say in the premium amount paid
Policyowner controls where the investment will go and selects the amount of the
premium payment
The investment vehicle for this type of policy is held in the insurer's general portfolio -
✔✔C. Policyowner controls where the investment will go and selects the amount of the
premium payment
✔✔P is the insured on a participating life policy. Which statement is true if P's premiums
are waived due to a disability?
P cannot assign ownership of the policy while premiums are being waived
P will have to pay income taxes on the amount of premiums waived
P cannot borrow against the policy's cash value while disabled
P will still receive declared dividends - ✔✔D. P will still receive declared dividends
✔✔A comprehensive major medical health insurance policy contains an Eligible
Expenses provision which identifies the types of health care services that are covered.
All of the following health care services are typically covered, EXCEPT for:
physician fees
experimental and investigative services
nursing services
hospital charges - ✔✔B. Experimental and investigative services
✔✔What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if payor becomes disabled
Allows payor to assign ownership in the event payor becomes disabled
Premiums are waived if juvenile becomes disabled
Allows payor to increase face amount without providing evidence of insurability - ✔✔A.
Premiums are waived if payor becomes disabled
,✔✔A provision in a life insurance policy that pays the policyowner an amount that does
not surpass the guaranteed cash value is called the:
Automatic Premium Loan provision
Consideration clause
Policy Loan provision
Accelerated Benefits provision - ✔✔C. Policy Loan Provision
✔✔Under the USA Patriot Act, insurers are required to report receipt of cash payments
in excess of:
$7,500
$10,000
$2,500
$5,000 - ✔✔B. $10,000
✔✔Which of the following is considered an element of a Variable Life Policy?
Guaranteed dividends
Insurer assumes all the risk
Underlying equity investment
Little or no risk to insured - ✔✔C. Underlying equity investment
✔✔A Health Reimbursement Arrangement MUST be established:
by the employer
only during specific open enrollment periods
with employee funding
with other employer-sponsored benefit plans - ✔✔A. By the Employer
✔✔A whole life insurance policyowner does not wish to continue making premium
payments. Which of the following enables the policyowner to sell the policy for more
than its cash value?
Life settlement contract
1031 Exchange
Cash surrender
Buy-sell arrangement - ✔✔A. Life Settlement Contract
✔✔Which of these is an element of a Variable Life policy?
No investment risk to the policyowner
Insurer assumes the investment risk
A fixed, level premium
Rate of returns are guaranteed - ✔✔C. A fixed, level premium
✔✔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?
, $50,000 minus any outstanding policy loans
$100,000 because the cause of death was accidental
Premiums paid plus interest
Nothing. Claim will be denied - ✔✔A. $50,000 minus any outstanding policy loans
✔✔What kind of life insurance policy pays a specified monthly income to a beneficiary
for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
Family Lump Sum Policy
Family Income Policy
Family Survivor Policy - ✔✔A. Family Maintenance Policy
✔✔Which of the following statements about accumulated interest earned on dividends
from an insurance policy is TRUE?
Nontaxable
Taxed as ordinary income
Tax deductible
Partially taxable - ✔✔B. Taxed as ordinary income
✔✔Which of these terms accurately defines an underwriter's assessment of information
on a life insurance application?
Inspection report
Warranty review
Insurable interest
Risk classification - ✔✔D. Risk Classification
✔✔D owns a Whole Life policy that was purchased 10 years ago. If the premium
payments suddenly stop and D takes no additional action, which Nonforfeiture Option
will the insurer likely proceed with?
Cash Surrender
Loan provision
Extended term
Reduced Paid-up - ✔✔C. Extended Term
✔✔T took out a $50,000 life insurance policy with an Accidental Death and
Dismemberment rider. Five years later, T commits suicide. How much will the insurer
pay?
$100,000
The total premiums paid minus any policy loans
Nothing
$50,000 - ✔✔D. $50,000
✔✔Under a Basic Medical Expense policy, what does the hospitalization expense
portion cover?
surgeon's fees
