✅Insurance License Practice Xcel
Solutions Final Exam #12 - Texas Life Only
2025/2026 | Actual Exam with Complete
Questions & Correct Detailed Answers
Texas Life Insurance Practice Exam – Questions 1–25
(Original)
1. Which of the following best describes the primary purpose of life
insurance?
A. To replace the insured’s job income
B. To create immediate financial support for beneficiaries upon death
C. To pay for retirement expenses
D. To invest in the stock market
Answer: B
Explanation: Life insurance provides financial protection for dependents or beneficiaries after
the insured’s death.
2. Term life insurance differs from whole life insurance because:
A. Term builds cash value
B. Term covers the insured only for a specific period
C. Term has fixed premiums for life
D. Term allows policy loans
Answer: B
Explanation: Term insurance provides coverage for a limited time. Whole life provides lifetime
coverage with cash value.
3. Which rider allows the insured to waive premiums if they become
disabled?
,A. Accidental death rider
B. Waiver of premium rider
C. Guaranteed insurability rider
D. Accelerated death benefit
Answer: B
Explanation: The waiver of premium rider suspends premium payments during total
disability.
4. In a life insurance contract, the insurer’s promise to pay is called:
A. Consideration
B. Offer
C. Acceptance
D. Insurable interest
Answer: C
Explanation: The insurer accepts the risk and promises to pay the death benefit if the insured
dies.
5. The “free-look” period allows the policyowner to:
A. Cancel the policy for a full refund
B. Increase the death benefit
C. Change beneficiaries
D. Postpone premiums
Answer: A
Explanation: The free-look period (typically 10 days in Texas) allows cancellation for a full
refund.
6. Which of the following is NOT required for a valid life insurance
contract?
A. Offer and acceptance
B. Consideration
C. Insurable interest
D. Beneficiary approval
, Answer: D
Explanation: Beneficiaries do not need to approve the policy. Only the insured’s consent and
insurable interest are required.
7. Who must have insurable interest in a life insurance policy?
A. Beneficiary
B. Policyowner
C. Insurer
D. Agent
Answer: B
Explanation: Insurable interest ensures the policyowner would suffer financial loss if the
insured dies.
8. If a policyowner takes a loan from a whole life policy, what happens?
A. Cash value decreases and interest is charged
B. Death benefit is increased
C. Policy is canceled
D. Premiums are waived
Answer: A
Explanation: Loans reduce the cash value and accrue interest; unpaid loans reduce the death
benefit.
9. Which policy type provides lifetime coverage with level premiums?
A. Term life
B. Whole life
C. Universal life
D. Variable annuity
Answer: B
Explanation: Whole life guarantees coverage for life with fixed premiums and cash value
accumulation.
Solutions Final Exam #12 - Texas Life Only
2025/2026 | Actual Exam with Complete
Questions & Correct Detailed Answers
Texas Life Insurance Practice Exam – Questions 1–25
(Original)
1. Which of the following best describes the primary purpose of life
insurance?
A. To replace the insured’s job income
B. To create immediate financial support for beneficiaries upon death
C. To pay for retirement expenses
D. To invest in the stock market
Answer: B
Explanation: Life insurance provides financial protection for dependents or beneficiaries after
the insured’s death.
2. Term life insurance differs from whole life insurance because:
A. Term builds cash value
B. Term covers the insured only for a specific period
C. Term has fixed premiums for life
D. Term allows policy loans
Answer: B
Explanation: Term insurance provides coverage for a limited time. Whole life provides lifetime
coverage with cash value.
3. Which rider allows the insured to waive premiums if they become
disabled?
,A. Accidental death rider
B. Waiver of premium rider
C. Guaranteed insurability rider
D. Accelerated death benefit
Answer: B
Explanation: The waiver of premium rider suspends premium payments during total
disability.
4. In a life insurance contract, the insurer’s promise to pay is called:
A. Consideration
B. Offer
C. Acceptance
D. Insurable interest
Answer: C
Explanation: The insurer accepts the risk and promises to pay the death benefit if the insured
dies.
5. The “free-look” period allows the policyowner to:
A. Cancel the policy for a full refund
B. Increase the death benefit
C. Change beneficiaries
D. Postpone premiums
Answer: A
Explanation: The free-look period (typically 10 days in Texas) allows cancellation for a full
refund.
6. Which of the following is NOT required for a valid life insurance
contract?
A. Offer and acceptance
B. Consideration
C. Insurable interest
D. Beneficiary approval
, Answer: D
Explanation: Beneficiaries do not need to approve the policy. Only the insured’s consent and
insurable interest are required.
7. Who must have insurable interest in a life insurance policy?
A. Beneficiary
B. Policyowner
C. Insurer
D. Agent
Answer: B
Explanation: Insurable interest ensures the policyowner would suffer financial loss if the
insured dies.
8. If a policyowner takes a loan from a whole life policy, what happens?
A. Cash value decreases and interest is charged
B. Death benefit is increased
C. Policy is canceled
D. Premiums are waived
Answer: A
Explanation: Loans reduce the cash value and accrue interest; unpaid loans reduce the death
benefit.
9. Which policy type provides lifetime coverage with level premiums?
A. Term life
B. Whole life
C. Universal life
D. Variable annuity
Answer: B
Explanation: Whole life guarantees coverage for life with fixed premiums and cash value
accumulation.
