TEXAS LIFE AND HEALTH INSURANCE ACTUAL
EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS LATEST UPDATES 2026-2027 (VERIFIED
ANSWERS) ALREADY GRADED A+
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - ANSWERS-Upon completion of the
application
Who elects the governing body of a mutual insurance company? - ANSWERS-
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - ANSWERS-Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically
sharing their risk exposure? - ANSWERS-Treaty
The stated amount or percent of liquid assets that an insurer must have on hand
that will satisfy future obligations to its policyholders is called - ANSWERS-
reserves
,Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated - ANSWERS-1970 - Fair Credit
Reporting Act
What is the consideration given by an insurer in the Consideration clause of a
life policy? - ANSWERS-Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have - ANSWERS-insurable interest in
the proposed insured
Statements made on an insurance application that are believed to be true to the
best of the applicant's knowledge are called - ANSWERS-representations
The part of a life insurance policy guaranteed to be true is called a(n) -
ANSWERS-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANSWERS-Principal
The Consideration clause of an insurance contract includes - ANSWERS-the
schedule and amount of premium payments
,E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life
insurance policy be directed to? - ANSWERS-In this situation, the proceeds from
E's life insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an
insurance contract by the insurer? - ANSWERS-Unilateral
When must insurable interest exist for a life insurance contract to be valid? -
ANSWERS-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - ANSWERS-conditional
Which of these require an offer, acceptance, and consideration? - ANSWERS-
Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWERS-Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out
, life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the
death benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANSWERS-negotiating
An agent is an individual that represents whom? - ANSWERS-Insurer
Insurable interest must exist at what time? - ANSWERS-at the time of application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling? - ANSWERS-Variable Life
Which of the following actions require a policy owner to provide proof of
insurability in an Adjustable Life policy? - ANSWERS-increase face amount
When a policy owner exchanges a term policy for a whole life policy without
providing proof of good health, which of these apply? - ANSWERS-Conversion
provision
What type of life insurance are credit policies issued as? - ANSWERS-Term
EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS LATEST UPDATES 2026-2027 (VERIFIED
ANSWERS) ALREADY GRADED A+
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - ANSWERS-Upon completion of the
application
Who elects the governing body of a mutual insurance company? - ANSWERS-
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - ANSWERS-Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically
sharing their risk exposure? - ANSWERS-Treaty
The stated amount or percent of liquid assets that an insurer must have on hand
that will satisfy future obligations to its policyholders is called - ANSWERS-
reserves
,Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated - ANSWERS-1970 - Fair Credit
Reporting Act
What is the consideration given by an insurer in the Consideration clause of a
life policy? - ANSWERS-Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have - ANSWERS-insurable interest in
the proposed insured
Statements made on an insurance application that are believed to be true to the
best of the applicant's knowledge are called - ANSWERS-representations
The part of a life insurance policy guaranteed to be true is called a(n) -
ANSWERS-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANSWERS-Principal
The Consideration clause of an insurance contract includes - ANSWERS-the
schedule and amount of premium payments
,E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life
insurance policy be directed to? - ANSWERS-In this situation, the proceeds from
E's life insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an
insurance contract by the insurer? - ANSWERS-Unilateral
When must insurable interest exist for a life insurance contract to be valid? -
ANSWERS-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - ANSWERS-conditional
Which of these require an offer, acceptance, and consideration? - ANSWERS-
Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWERS-Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out
, life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the
death benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANSWERS-negotiating
An agent is an individual that represents whom? - ANSWERS-Insurer
Insurable interest must exist at what time? - ANSWERS-at the time of application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling? - ANSWERS-Variable Life
Which of the following actions require a policy owner to provide proof of
insurability in an Adjustable Life policy? - ANSWERS-increase face amount
When a policy owner exchanges a term policy for a whole life policy without
providing proof of good health, which of these apply? - ANSWERS-Conversion
provision
What type of life insurance are credit policies issued as? - ANSWERS-Term
