Texas General Lines Life, Accident and Health Insurance Exam Practice
Questions and Answers Updated 2026 | Complete Texas Insurance
Licensing Study Guide with Verified Questions, Detailed Rationales, Life
Insurance Policies, Health Insurance Coverage, Annuities, Accident
Insurance, Policy Provisions, Texas Insurance Laws, Ethics, Underwriting
Principles & TDI Licensing Exam Prep
Question 1: Which type of life insurance policy provides coverage for a specified
period and pays a death benefit only if the insured dies during that period, with no
cash value accumulation?
A. Whole life insurance
B. Universal life insurance
C. Term life insurance
D. Variable life insurance
CORRECT ANSWER: C. Term life insurance
Rationale: Term life insurance provides pure death benefit protection for a specified
period (the term) without accumulating cash value. If the insured dies during the term,
the death benefit is paid; if the insured outlives the term, the policy expires with no
value. This distinguishes term insurance from permanent policies like whole life or
universal life, which include a savings or investment component that builds cash value
over time.
Question 2: Under Texas law, what is the minimum grace period required for a life
insurance policy with monthly premium payments?
A. 7 days
B. 10 days
C. 15 days
D. 31 days
CORRECT ANSWER: D. 31 days
Rationale: Texas Insurance Code Section 1101.105 requires a minimum grace period of
31 days for life insurance policies with premium payment modes other than weekly or
monthly. For monthly premium policies, Texas law mandates a minimum 31-day grace
period during which the policy remains in force even if the premium is overdue, allowing
the policyowner time to make payment without losing coverage.
Question 3: Which policy rider allows the policyowner to purchase additional
insurance at specified future dates without providing evidence of insurability?
A. Waiver of premium rider
B. Accidental death benefit rider
C. Guaranteed insurability rider
D. Cost of living rider
,CORRECT ANSWER: C. Guaranteed insurability rider
Rationale: The guaranteed insurability rider (also called the guaranteed purchase
option) permits the policyowner to buy additional coverage at predetermined intervals
or life events (such as marriage or birth of a child) without undergoing medical
underwriting. This rider is valuable for individuals who anticipate increased insurance
needs in the future but want to lock in the ability to obtain coverage regardless of future
health changes.
Question 4: What is the primary purpose of the incontestability clause in a life
insurance policy?
A. To allow the insurer to contest claims based on misstatements of age
B. To prevent the insurer from denying a claim after the policy has been in force for a
specified period, typically two years
C. To guarantee that premiums will never increase during the policy term
D. To ensure the policy can be converted to a different type without evidence of
insurability
CORRECT ANSWER: B. To prevent the insurer from denying a claim after the policy
has been in force for a specified period, typically two years
Rationale: The incontestability clause, required by Texas Insurance Code Section
1101.009, states that after a life insurance policy has been in force for two years during
the insured's lifetime, the insurer cannot contest the validity of the policy based on
misrepresentations or concealments in the application, except for nonpayment of
premiums. This provision protects policyowners and beneficiaries from having claims
denied years after policy issuance due to application errors.
Question 5: Which annuity payout option provides income payments for the life of
the annuitant with no further payments to beneficiaries after death?
A. Life income with period certain
B. Joint and survivor annuity
C. Life income only (straight life)
D. Installment refund annuity
CORRECT ANSWER: C. Life income only (straight life)
Rationale: The life income only (or straight life) annuity option provides the highest
monthly payment because payments cease immediately upon the annuitant's death
with no remaining value paid to beneficiaries. This option maximizes income for the
annuitant's lifetime but carries the risk that if the annuitant dies early, the insurance
company retains the remaining funds. Other options provide beneficiary protections but
at the cost of lower monthly payments.
Question 6: In Texas, which document must be provided to a prospective life
insurance buyer at the time of application or policy delivery to help them
understand policy features and costs?
,A. Policy illustration
B. Buyer's Guide and Policy Summary
C. Underwriting questionnaire
D. Replacement notice
CORRECT ANSWER: B. Buyer's Guide and Policy Summary
Rationale: Texas Administrative Code Section 4.2310 requires insurers to provide both a
standardized Buyer's Guide and a Policy Summary to prospective purchasers of
individual life insurance policies. The Buyer's Guide explains general life insurance
concepts, while the Policy Summary provides specific information about the policy
being offered, including costs, benefits, and key provisions, enabling consumers to
make informed purchasing decisions.
Question 7: Which nonforfeiture option allows a policyowner to receive the cash
surrender value of a lapsed permanent life insurance policy as a lump-sum
payment?
A. Extended term insurance
B. Reduced paid-up insurance
C. Cash surrender option
D. Automatic premium loan
CORRECT ANSWER: C. Cash surrender option
Rationale: The cash surrender option is one of the standard nonforfeiture options
required by Texas law (TIC Section 1105.001-.153) for permanent life insurance policies.
When a policy lapses due to nonpayment of premiums, the policyowner may elect to
receive the accumulated cash value as a lump-sum payment, terminating all policy
benefits. The other nonforfeiture options allow continuation of some form of insurance
coverage using the cash value.
Question 8: What is the primary difference between a participating and a non-
participating life insurance policy?
A. Participating policies have lower premiums than non-participating policies
B. Participating policies pay dividends to policyowners; non-participating policies do
not
C. Non-participating policies offer guaranteed cash values; participating policies do not
D. Participating policies cannot be converted; non-participating policies can
CORRECT ANSWER: B. Participating policies pay dividends to policyowners; non-
participating policies do not
Rationale: Participating life insurance policies, typically issued by mutual insurance
companies, allow policyowners to share in the company's favorable experience through
dividends, which are returns of excess premiums. Non-participating policies, often
issued by stock companies, have fixed premiums and benefits with no dividend
, payments. Dividends are not guaranteed and are based on the insurer's actual
mortality, expense, and investment experience.
Question 9: Which type of life insurance policy allows the policyowner to adjust
premium payments and death benefits within certain limits, with cash value
growth based on current interest rates?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
CORRECT ANSWER: C. Universal life insurance
Rationale: Universal life insurance is a flexible premium, adjustable death benefit policy
that credits interest to the cash value based on the insurer's current portfolio yield or a
specified index. Policyowners can vary premium payments (within limits) and adjust the
death benefit, subject to underwriting. This flexibility distinguishes universal life from
traditional whole life, which has fixed premiums and guaranteed cash values.
Question 10: Under Texas replacement regulations, what is the primary duty of a
replacing producer when a new life insurance policy is intended to replace an
existing one?
A. To immediately cancel the existing policy upon application for the new policy
B. To provide the applicant with a completed Notice Regarding Replacement form and
obtain their signature
C. To guarantee that the new policy will have lower premiums than the existing policy
D. To obtain written approval from the Texas Department of Insurance before
proceeding
CORRECT ANSWER: B. To provide the applicant with a completed Notice Regarding
Replacement form and obtain their signature
Rationale: Texas Insurance Code Section 1114.051-057 and related regulations require
producers to provide applicants with a Notice Regarding Replacement form when a new
life insurance policy or annuity is intended to replace existing coverage. The producer
must complete the form, explain the potential consequences of replacement, and
obtain the applicant's signature before submitting the application. This ensures
consumers are fully informed about the financial implications of replacing existing
coverage.
Question 11: Which beneficiary designation allows the policyowner to change the
beneficiary without obtaining consent from the current beneficiary?
A. Irrevocable beneficiary
B. Contingent beneficiary
C. Revocable beneficiary
D. Class beneficiary
Questions and Answers Updated 2026 | Complete Texas Insurance
Licensing Study Guide with Verified Questions, Detailed Rationales, Life
Insurance Policies, Health Insurance Coverage, Annuities, Accident
Insurance, Policy Provisions, Texas Insurance Laws, Ethics, Underwriting
Principles & TDI Licensing Exam Prep
Question 1: Which type of life insurance policy provides coverage for a specified
period and pays a death benefit only if the insured dies during that period, with no
cash value accumulation?
A. Whole life insurance
B. Universal life insurance
C. Term life insurance
D. Variable life insurance
CORRECT ANSWER: C. Term life insurance
Rationale: Term life insurance provides pure death benefit protection for a specified
period (the term) without accumulating cash value. If the insured dies during the term,
the death benefit is paid; if the insured outlives the term, the policy expires with no
value. This distinguishes term insurance from permanent policies like whole life or
universal life, which include a savings or investment component that builds cash value
over time.
Question 2: Under Texas law, what is the minimum grace period required for a life
insurance policy with monthly premium payments?
A. 7 days
B. 10 days
C. 15 days
D. 31 days
CORRECT ANSWER: D. 31 days
Rationale: Texas Insurance Code Section 1101.105 requires a minimum grace period of
31 days for life insurance policies with premium payment modes other than weekly or
monthly. For monthly premium policies, Texas law mandates a minimum 31-day grace
period during which the policy remains in force even if the premium is overdue, allowing
the policyowner time to make payment without losing coverage.
Question 3: Which policy rider allows the policyowner to purchase additional
insurance at specified future dates without providing evidence of insurability?
A. Waiver of premium rider
B. Accidental death benefit rider
C. Guaranteed insurability rider
D. Cost of living rider
,CORRECT ANSWER: C. Guaranteed insurability rider
Rationale: The guaranteed insurability rider (also called the guaranteed purchase
option) permits the policyowner to buy additional coverage at predetermined intervals
or life events (such as marriage or birth of a child) without undergoing medical
underwriting. This rider is valuable for individuals who anticipate increased insurance
needs in the future but want to lock in the ability to obtain coverage regardless of future
health changes.
Question 4: What is the primary purpose of the incontestability clause in a life
insurance policy?
A. To allow the insurer to contest claims based on misstatements of age
B. To prevent the insurer from denying a claim after the policy has been in force for a
specified period, typically two years
C. To guarantee that premiums will never increase during the policy term
D. To ensure the policy can be converted to a different type without evidence of
insurability
CORRECT ANSWER: B. To prevent the insurer from denying a claim after the policy
has been in force for a specified period, typically two years
Rationale: The incontestability clause, required by Texas Insurance Code Section
1101.009, states that after a life insurance policy has been in force for two years during
the insured's lifetime, the insurer cannot contest the validity of the policy based on
misrepresentations or concealments in the application, except for nonpayment of
premiums. This provision protects policyowners and beneficiaries from having claims
denied years after policy issuance due to application errors.
Question 5: Which annuity payout option provides income payments for the life of
the annuitant with no further payments to beneficiaries after death?
A. Life income with period certain
B. Joint and survivor annuity
C. Life income only (straight life)
D. Installment refund annuity
CORRECT ANSWER: C. Life income only (straight life)
Rationale: The life income only (or straight life) annuity option provides the highest
monthly payment because payments cease immediately upon the annuitant's death
with no remaining value paid to beneficiaries. This option maximizes income for the
annuitant's lifetime but carries the risk that if the annuitant dies early, the insurance
company retains the remaining funds. Other options provide beneficiary protections but
at the cost of lower monthly payments.
Question 6: In Texas, which document must be provided to a prospective life
insurance buyer at the time of application or policy delivery to help them
understand policy features and costs?
,A. Policy illustration
B. Buyer's Guide and Policy Summary
C. Underwriting questionnaire
D. Replacement notice
CORRECT ANSWER: B. Buyer's Guide and Policy Summary
Rationale: Texas Administrative Code Section 4.2310 requires insurers to provide both a
standardized Buyer's Guide and a Policy Summary to prospective purchasers of
individual life insurance policies. The Buyer's Guide explains general life insurance
concepts, while the Policy Summary provides specific information about the policy
being offered, including costs, benefits, and key provisions, enabling consumers to
make informed purchasing decisions.
Question 7: Which nonforfeiture option allows a policyowner to receive the cash
surrender value of a lapsed permanent life insurance policy as a lump-sum
payment?
A. Extended term insurance
B. Reduced paid-up insurance
C. Cash surrender option
D. Automatic premium loan
CORRECT ANSWER: C. Cash surrender option
Rationale: The cash surrender option is one of the standard nonforfeiture options
required by Texas law (TIC Section 1105.001-.153) for permanent life insurance policies.
When a policy lapses due to nonpayment of premiums, the policyowner may elect to
receive the accumulated cash value as a lump-sum payment, terminating all policy
benefits. The other nonforfeiture options allow continuation of some form of insurance
coverage using the cash value.
Question 8: What is the primary difference between a participating and a non-
participating life insurance policy?
A. Participating policies have lower premiums than non-participating policies
B. Participating policies pay dividends to policyowners; non-participating policies do
not
C. Non-participating policies offer guaranteed cash values; participating policies do not
D. Participating policies cannot be converted; non-participating policies can
CORRECT ANSWER: B. Participating policies pay dividends to policyowners; non-
participating policies do not
Rationale: Participating life insurance policies, typically issued by mutual insurance
companies, allow policyowners to share in the company's favorable experience through
dividends, which are returns of excess premiums. Non-participating policies, often
issued by stock companies, have fixed premiums and benefits with no dividend
, payments. Dividends are not guaranteed and are based on the insurer's actual
mortality, expense, and investment experience.
Question 9: Which type of life insurance policy allows the policyowner to adjust
premium payments and death benefits within certain limits, with cash value
growth based on current interest rates?
A. Whole life insurance
B. Term life insurance
C. Universal life insurance
D. Variable life insurance
CORRECT ANSWER: C. Universal life insurance
Rationale: Universal life insurance is a flexible premium, adjustable death benefit policy
that credits interest to the cash value based on the insurer's current portfolio yield or a
specified index. Policyowners can vary premium payments (within limits) and adjust the
death benefit, subject to underwriting. This flexibility distinguishes universal life from
traditional whole life, which has fixed premiums and guaranteed cash values.
Question 10: Under Texas replacement regulations, what is the primary duty of a
replacing producer when a new life insurance policy is intended to replace an
existing one?
A. To immediately cancel the existing policy upon application for the new policy
B. To provide the applicant with a completed Notice Regarding Replacement form and
obtain their signature
C. To guarantee that the new policy will have lower premiums than the existing policy
D. To obtain written approval from the Texas Department of Insurance before
proceeding
CORRECT ANSWER: B. To provide the applicant with a completed Notice Regarding
Replacement form and obtain their signature
Rationale: Texas Insurance Code Section 1114.051-057 and related regulations require
producers to provide applicants with a Notice Regarding Replacement form when a new
life insurance policy or annuity is intended to replace existing coverage. The producer
must complete the form, explain the potential consequences of replacement, and
obtain the applicant's signature before submitting the application. This ensures
consumers are fully informed about the financial implications of replacing existing
coverage.
Question 11: Which beneficiary designation allows the policyowner to change the
beneficiary without obtaining consent from the current beneficiary?
A. Irrevocable beneficiary
B. Contingent beneficiary
C. Revocable beneficiary
D. Class beneficiary
