TEXAS LIFE AND HEALTH EXAMINATION TEST 2025/2026
QUESTIONS AND SOLUTIONS GRADED A+
✔✔What if a life insurance policy owner dies during the grace period, before making the
premium payment? - ✔✔The insurance company will subtract the past-due premium
from the benefit (face-value) BEFORE paying the beneficiary.
✔✔Whole life (straight life/ordinary life) is guaranteed to remain in force for... - ✔✔the
insured' ENTIRE lifetime, provided required premiums are paid, or to the maturity date.
✔✔What happens to money borrowed from the cash value of a whole life policy if the
borrower dies before paying it back? - ✔✔The amount owed (borrowed) will be
subtracted from the face value prior to the beneficiary being paid.
✔✔What is a level premium? - ✔✔Same payment for the duration of contract. i.e. If you
take out a whole life insurance policy and agree to pay $50/month, your monthly
premium of $50 will always remain the same.
✔✔Insuring Clause - ✔✔Also known as the insuring agreement; the foundation of a
contract. It states the scope and limits of the coverage and the amounts of coverage (if
premiums are being paid on time).
✔✔Beneficiary Clause - ✔✔The main aim of life insurance is to transfer wealth to your
heirs or to provide liquidity to your family. For that reason, you need to name a
beneficiary who will receive the life insurance proceeds after your death. This
beneficiary can be your spouse, children or relatives. You also can change the recipient
anytime during the term of the policy. However, if you still have not nominated a
beneficiary, then your family is going to be in some trouble. The insurance money will
go to your estate and the probate fees needed to settle your estate can dig a big hole in
your surviving family's liquid assets. Therefore, it is always practical to have a primary
and a contingent (secondary) beneficiary in your policy. For example, you can choose
your wife as a primary beneficiary and your children as contingent beneficiaries. That
way, in case your spouse also dies, your children will qualify for the insurance money.
✔✔Preference Beneficiary Clause - ✔✔If you have not nominated a beneficiary in your
policy, your insurance company will disburse the life insurance money to the individuals
listed in your policy. Presume that the order of priority in your policy is: 1) your spouse,
2) your children, 3) your parentts. If the proceeds are distributed, they will go the first
living individual which, in most cases, will be your spouse.
✔✔Survivorship Clause - ✔✔According to this clause, after your death, the policy
proceeds will go to the beneficiary - for example your wife - but only if the beneficiary
survives you by a stated number of days.
, ✔✔Misstatement of Age Clause - ✔✔Your age plays an important role in determining
adequate life insurance coverage. The older you are, the higher the premium that is
charged. Therefore, if you lie about your real age to reduce your premiums you may to
pay a huge price for it. In this situation, your insurer may choose to cancel your policy
entirely, increase your premiums or adjust your policy amount.
✔✔Incontestable Clause - ✔✔Your insurance company is entitled, usually during the
first TWO YEARS of the policy, to challenge the validity of your policy on the basis that
you held back material information. If you are found guilty of concealment, your insurer
will void the policy and return the premiums. If you conceal important facts in order to
get a lower premium, your insurance provider will not pay the claim on your death if it
occurs during the first TWO YEARS of the policy. This is the most important clause of
your life insurance policy and, therefore, you should make sure that this clause is
included in your policy and that you are familiar with the specified time limit.
✔✔Spendthrift Clause - ✔✔If you have named your gambler son as a beneficiary, there
is a chance that upon your death, your son's creditor may pounce on your life insurance
proceeds. The spendthrift clause gives the insurer the right to hold back the proceeds
and protect them from creditors. In this case, your insurer may prefer to pay the
insurance money in INSTALLMENTS to your son.
✔✔Suicide Clause - ✔✔The suicide clause in your policy specifies that the insurance
company will not pay the money if the insured attempts or commits suicide within a
specified period from the beginning of the coverage. If the insured's death is a result of
suicide, an insurer will only return previously paid premiums to the family.
✔✔War Clause - ✔✔Normally, insurance companies do not compensate for death due
to war or war-related developments. As per this clause, if you are a victim of war, your
insurer will not pay out the benefits to you. In its place, your insurer will reimburse the
previously paid premiums to your family.
✔✔Aviation Clause - ✔✔According to this clause, your insurer will not pay
compensation to your surviving family due to death on an airplane.
However, if you are an airline employee, you can buy aviation insurance by paying
higher premiums.
✔✔Free Look Period/Free Examination Period - ✔✔If you are not satisfied with the
terms and conditions of the policy, you can return the policy within a specified period
after receiving it and your premiums will be fully refunded. Here, the time frame will vary
depending your insurer.
✔✔Grace Period Clause . - ✔✔There are times when you cannot pay the premiums as
a result of financial troubles. In these circumstances, the "grace period" provision works
in your favor. Your insurance company will provide a grace period within which you can
make the necessary monetary arrangements and pay your premiums. During this time,
QUESTIONS AND SOLUTIONS GRADED A+
✔✔What if a life insurance policy owner dies during the grace period, before making the
premium payment? - ✔✔The insurance company will subtract the past-due premium
from the benefit (face-value) BEFORE paying the beneficiary.
✔✔Whole life (straight life/ordinary life) is guaranteed to remain in force for... - ✔✔the
insured' ENTIRE lifetime, provided required premiums are paid, or to the maturity date.
✔✔What happens to money borrowed from the cash value of a whole life policy if the
borrower dies before paying it back? - ✔✔The amount owed (borrowed) will be
subtracted from the face value prior to the beneficiary being paid.
✔✔What is a level premium? - ✔✔Same payment for the duration of contract. i.e. If you
take out a whole life insurance policy and agree to pay $50/month, your monthly
premium of $50 will always remain the same.
✔✔Insuring Clause - ✔✔Also known as the insuring agreement; the foundation of a
contract. It states the scope and limits of the coverage and the amounts of coverage (if
premiums are being paid on time).
✔✔Beneficiary Clause - ✔✔The main aim of life insurance is to transfer wealth to your
heirs or to provide liquidity to your family. For that reason, you need to name a
beneficiary who will receive the life insurance proceeds after your death. This
beneficiary can be your spouse, children or relatives. You also can change the recipient
anytime during the term of the policy. However, if you still have not nominated a
beneficiary, then your family is going to be in some trouble. The insurance money will
go to your estate and the probate fees needed to settle your estate can dig a big hole in
your surviving family's liquid assets. Therefore, it is always practical to have a primary
and a contingent (secondary) beneficiary in your policy. For example, you can choose
your wife as a primary beneficiary and your children as contingent beneficiaries. That
way, in case your spouse also dies, your children will qualify for the insurance money.
✔✔Preference Beneficiary Clause - ✔✔If you have not nominated a beneficiary in your
policy, your insurance company will disburse the life insurance money to the individuals
listed in your policy. Presume that the order of priority in your policy is: 1) your spouse,
2) your children, 3) your parentts. If the proceeds are distributed, they will go the first
living individual which, in most cases, will be your spouse.
✔✔Survivorship Clause - ✔✔According to this clause, after your death, the policy
proceeds will go to the beneficiary - for example your wife - but only if the beneficiary
survives you by a stated number of days.
, ✔✔Misstatement of Age Clause - ✔✔Your age plays an important role in determining
adequate life insurance coverage. The older you are, the higher the premium that is
charged. Therefore, if you lie about your real age to reduce your premiums you may to
pay a huge price for it. In this situation, your insurer may choose to cancel your policy
entirely, increase your premiums or adjust your policy amount.
✔✔Incontestable Clause - ✔✔Your insurance company is entitled, usually during the
first TWO YEARS of the policy, to challenge the validity of your policy on the basis that
you held back material information. If you are found guilty of concealment, your insurer
will void the policy and return the premiums. If you conceal important facts in order to
get a lower premium, your insurance provider will not pay the claim on your death if it
occurs during the first TWO YEARS of the policy. This is the most important clause of
your life insurance policy and, therefore, you should make sure that this clause is
included in your policy and that you are familiar with the specified time limit.
✔✔Spendthrift Clause - ✔✔If you have named your gambler son as a beneficiary, there
is a chance that upon your death, your son's creditor may pounce on your life insurance
proceeds. The spendthrift clause gives the insurer the right to hold back the proceeds
and protect them from creditors. In this case, your insurer may prefer to pay the
insurance money in INSTALLMENTS to your son.
✔✔Suicide Clause - ✔✔The suicide clause in your policy specifies that the insurance
company will not pay the money if the insured attempts or commits suicide within a
specified period from the beginning of the coverage. If the insured's death is a result of
suicide, an insurer will only return previously paid premiums to the family.
✔✔War Clause - ✔✔Normally, insurance companies do not compensate for death due
to war or war-related developments. As per this clause, if you are a victim of war, your
insurer will not pay out the benefits to you. In its place, your insurer will reimburse the
previously paid premiums to your family.
✔✔Aviation Clause - ✔✔According to this clause, your insurer will not pay
compensation to your surviving family due to death on an airplane.
However, if you are an airline employee, you can buy aviation insurance by paying
higher premiums.
✔✔Free Look Period/Free Examination Period - ✔✔If you are not satisfied with the
terms and conditions of the policy, you can return the policy within a specified period
after receiving it and your premiums will be fully refunded. Here, the time frame will vary
depending your insurer.
✔✔Grace Period Clause . - ✔✔There are times when you cannot pay the premiums as
a result of financial troubles. In these circumstances, the "grace period" provision works
in your favor. Your insurance company will provide a grace period within which you can
make the necessary monetary arrangements and pay your premiums. During this time,
