TEXAS LIFE AND HEALTH STUDY GUIDE 2025/2026
QUESTIONS AND SOLUTIONS GRADED A+
✔✔Changes made on an insurance application should be signed or initialed by which of
the following parties - ✔✔The applicant
✔✔If a life policyowner wants to take out a bank loan and the bank insists on collateral,
the insured may - ✔✔assign the policy to the bank
✔✔L purchased a life insurance contract on July 16, 2004. L became severely
depressed and on November 1, 2004 took his own life. Which of the following
statements best describes how the insurance company settled the claim with L's
beneficiaries? - ✔✔The claim was denied under the Suicide clause of the policy
✔✔Investor-Originated Life Insurance (IOLI) is an arrangement in which the death of the
insured benefits the - ✔✔owner
✔✔N takes out a loan against a life insurance policy which is equal to one-half of the
cash value. If N decides not to pay the interest when it is due, the insurance company
will automatically - ✔✔add to the loan balance the amount of interest due
✔✔An insured named his wife beneficiary and his son as contingent beneficiary. If the
insured and his wife are killed in the same accident, the Common Disaster clause
provides for payment to whom? - ✔✔The insured's son
✔✔The Z Company takes out a Key Employee policy on its director of operations.
Several years later the employee leaves Z company, joins A Company and is killed in
an automobile accident while the Key Employee policy is still in force. In this situation,
the insurance company will pay the proceeds to which of the following entities? - ✔✔Z
Company
✔✔If a forty-five year old individual bought an annuity to provide income for life
beginning at age sixty-five, the insured did NOT buy - ✔✔an immediate annuity
✔✔A terminated employee who was covered under a group life policy for $15,000 of
Term Life insurance may convert to a - ✔✔$15,000 Whole Life policy
✔✔Under a group Credit Life policy, the amount of insurance on the life of a debtor is
limited to - ✔✔the total amount of the insured's loan
✔✔M is covered by a group health insurance plan through his employer. M is also
covered as a dependent on his spouse's group health plan. Under the Model Group
, Coordination of Benefits provision, when M files a claim, his employer's plan is
considered the - ✔✔primary carrier
✔✔Long Term Care policies require that in order for an insured to be qualified for
benefits they must be unable to perform a minimum of how many Activities of Daily
Living (ADL)? - ✔✔2
✔✔Group insurance differs from individual insurance in that group insurance usually -
✔✔provides coverage at a lower cost
✔✔Coverage for the cost of a regular physical examination for preventative care would
most likely be provided by a - ✔✔Health Maintenance Organization
✔✔A Probationary Period provision in a health insurance contract becomes effective -
✔✔at the inception of the policy
✔✔A rider on a life insurance policy that guarantees that the premium will be paid if the
insured is disabled for a specified period of time is referred to as - ✔✔Waiver of
Premium
✔✔A life insurance policy that provides protection for the insured's whole life with level
premiums for a limited number of years is - ✔✔Limited Pay Life
✔✔S and W are business partners. Each takes out a $100,000 life insurance policy on
the other, naming himself as primary beneficiary. S and W eventually dissolve their
business, and two months later S dies. Although S was married at the time of death, the
primary beneficiary is still W. However, an insurable interest no longer exists. The
proceeds from S's life insurance policy will go to - ✔✔w
✔✔When an applicant's statements in an insurance application are accepted as true
and accurate to the best of the applicant's belief, the statements are considered -
✔✔representations
✔✔P is both the policyowner and the insured under a $100,000 Whole Life policy. The
beneficiary is P's mother. When P marries, ownership of the policy is transferred to P's
spouse. If P dies without making any other changes, the policy proceeds will be payable
to P's - ✔✔mother only
✔✔A Life annuity offers protection against the risk of - ✔✔living longer than anticipated
✔✔Life insurance written to cover a need for a specified period of time at the lowest
premium is called - ✔✔level term insurance
QUESTIONS AND SOLUTIONS GRADED A+
✔✔Changes made on an insurance application should be signed or initialed by which of
the following parties - ✔✔The applicant
✔✔If a life policyowner wants to take out a bank loan and the bank insists on collateral,
the insured may - ✔✔assign the policy to the bank
✔✔L purchased a life insurance contract on July 16, 2004. L became severely
depressed and on November 1, 2004 took his own life. Which of the following
statements best describes how the insurance company settled the claim with L's
beneficiaries? - ✔✔The claim was denied under the Suicide clause of the policy
✔✔Investor-Originated Life Insurance (IOLI) is an arrangement in which the death of the
insured benefits the - ✔✔owner
✔✔N takes out a loan against a life insurance policy which is equal to one-half of the
cash value. If N decides not to pay the interest when it is due, the insurance company
will automatically - ✔✔add to the loan balance the amount of interest due
✔✔An insured named his wife beneficiary and his son as contingent beneficiary. If the
insured and his wife are killed in the same accident, the Common Disaster clause
provides for payment to whom? - ✔✔The insured's son
✔✔The Z Company takes out a Key Employee policy on its director of operations.
Several years later the employee leaves Z company, joins A Company and is killed in
an automobile accident while the Key Employee policy is still in force. In this situation,
the insurance company will pay the proceeds to which of the following entities? - ✔✔Z
Company
✔✔If a forty-five year old individual bought an annuity to provide income for life
beginning at age sixty-five, the insured did NOT buy - ✔✔an immediate annuity
✔✔A terminated employee who was covered under a group life policy for $15,000 of
Term Life insurance may convert to a - ✔✔$15,000 Whole Life policy
✔✔Under a group Credit Life policy, the amount of insurance on the life of a debtor is
limited to - ✔✔the total amount of the insured's loan
✔✔M is covered by a group health insurance plan through his employer. M is also
covered as a dependent on his spouse's group health plan. Under the Model Group
, Coordination of Benefits provision, when M files a claim, his employer's plan is
considered the - ✔✔primary carrier
✔✔Long Term Care policies require that in order for an insured to be qualified for
benefits they must be unable to perform a minimum of how many Activities of Daily
Living (ADL)? - ✔✔2
✔✔Group insurance differs from individual insurance in that group insurance usually -
✔✔provides coverage at a lower cost
✔✔Coverage for the cost of a regular physical examination for preventative care would
most likely be provided by a - ✔✔Health Maintenance Organization
✔✔A Probationary Period provision in a health insurance contract becomes effective -
✔✔at the inception of the policy
✔✔A rider on a life insurance policy that guarantees that the premium will be paid if the
insured is disabled for a specified period of time is referred to as - ✔✔Waiver of
Premium
✔✔A life insurance policy that provides protection for the insured's whole life with level
premiums for a limited number of years is - ✔✔Limited Pay Life
✔✔S and W are business partners. Each takes out a $100,000 life insurance policy on
the other, naming himself as primary beneficiary. S and W eventually dissolve their
business, and two months later S dies. Although S was married at the time of death, the
primary beneficiary is still W. However, an insurable interest no longer exists. The
proceeds from S's life insurance policy will go to - ✔✔w
✔✔When an applicant's statements in an insurance application are accepted as true
and accurate to the best of the applicant's belief, the statements are considered -
✔✔representations
✔✔P is both the policyowner and the insured under a $100,000 Whole Life policy. The
beneficiary is P's mother. When P marries, ownership of the policy is transferred to P's
spouse. If P dies without making any other changes, the policy proceeds will be payable
to P's - ✔✔mother only
✔✔A Life annuity offers protection against the risk of - ✔✔living longer than anticipated
✔✔Life insurance written to cover a need for a specified period of time at the lowest
premium is called - ✔✔level term insurance
