Texas Life and Health Insurance Final Exam 2026 -
Complete Updated Test Bank with Actual
Questions, Correct Answers & Detailed
Explanations | State-Specific Rules, Life, Health &
Disability - Graded A+
Question 1
If, at the time of an insured's death, the insurance company discovers that the
insured's age was misstated on the application for life insurance, the company will
most likely:
A) Deny the claim entirely
B) Pay the policy proceeds in the amount the premiums would have purchased
at the insured's actual age
C) Pay the full face amount
D) Return the premiums paid
Rationale: When an insured's age is misstated on a life insurance application, the
insurer adjusts the death benefit to the amount the premiums paid would have
purchased at the correct age. This is the standard treatment under the
misstatement of age provision found in most life insurance policies .
Question 2
The agreement in a life insurance contract that states a specific sum of money will
be paid to a designated person upon an insured's death is called a(n):
A) Consideration clause
B) Insuring agreement
C) Exclusions clause
D) Policy summary
,Rationale: The insuring agreement is the clause in a life insurance contract that
states the insurer's promise to pay a specific sum (the death benefit) to a
designated beneficiary upon the insured's death. It is the core promise of the life
insurance policy .
Question 3
What is the consideration given by an insurer in the Consideration clause of a life
policy?
A) The initial premium payment
B) The promise to pay a death benefit to a named beneficiary
C) The policy's cash value
D) The application itself
Rationale: The insurer's consideration is the promise to pay a death benefit to a
named beneficiary. The applicant's consideration includes the initial premium
payment and the statements made on the application .
Question 4
Which of the following is a valid reason for an enrollee to be canceled by a Health
Maintenance Organization (HMO) plan?
A) Nonpayment of coverage
B) Filing a claim
C) Change of employment
D) Moving to a different county
Rationale: An HMO may cancel an enrollee for nonpayment of coverage.
Cancellation based on filing claims or health status is prohibited .
, Question 5
Which type of life insurance policy allows the policyowner to have level premiums
and also choose from a selection of investment options?
A) Whole life
B) Variable life
C) Universal life
D) Term life
Rationale: Variable life insurance allows the policyowner to have level premiums
while also choosing from a selection of investment options for the cash value. The
death benefit and cash value fluctuate with investment performance .
Question 6
D is an architect receiving Disability Income benefits who is not able to return to
work full time, but can work on a part-time basis. Which feature would allow D to
continue receiving benefits?
A) Residual Benefit clause
B) Waiver Benefit clause
C) Concurrent Benefit clause
D) Guaranteed Benefit clause
Rationale: A Residual Benefit clause allows an insured who can work part-time but
not full-time to receive partial disability benefits based on the percentage of
income lost .
Question 7
Variable Whole Life Insurance can be described as:
A) Purely an insurance product
B) Both an insurance and securities product
C) Purely a securities product
D) A savings account with insurance features
Complete Updated Test Bank with Actual
Questions, Correct Answers & Detailed
Explanations | State-Specific Rules, Life, Health &
Disability - Graded A+
Question 1
If, at the time of an insured's death, the insurance company discovers that the
insured's age was misstated on the application for life insurance, the company will
most likely:
A) Deny the claim entirely
B) Pay the policy proceeds in the amount the premiums would have purchased
at the insured's actual age
C) Pay the full face amount
D) Return the premiums paid
Rationale: When an insured's age is misstated on a life insurance application, the
insurer adjusts the death benefit to the amount the premiums paid would have
purchased at the correct age. This is the standard treatment under the
misstatement of age provision found in most life insurance policies .
Question 2
The agreement in a life insurance contract that states a specific sum of money will
be paid to a designated person upon an insured's death is called a(n):
A) Consideration clause
B) Insuring agreement
C) Exclusions clause
D) Policy summary
,Rationale: The insuring agreement is the clause in a life insurance contract that
states the insurer's promise to pay a specific sum (the death benefit) to a
designated beneficiary upon the insured's death. It is the core promise of the life
insurance policy .
Question 3
What is the consideration given by an insurer in the Consideration clause of a life
policy?
A) The initial premium payment
B) The promise to pay a death benefit to a named beneficiary
C) The policy's cash value
D) The application itself
Rationale: The insurer's consideration is the promise to pay a death benefit to a
named beneficiary. The applicant's consideration includes the initial premium
payment and the statements made on the application .
Question 4
Which of the following is a valid reason for an enrollee to be canceled by a Health
Maintenance Organization (HMO) plan?
A) Nonpayment of coverage
B) Filing a claim
C) Change of employment
D) Moving to a different county
Rationale: An HMO may cancel an enrollee for nonpayment of coverage.
Cancellation based on filing claims or health status is prohibited .
, Question 5
Which type of life insurance policy allows the policyowner to have level premiums
and also choose from a selection of investment options?
A) Whole life
B) Variable life
C) Universal life
D) Term life
Rationale: Variable life insurance allows the policyowner to have level premiums
while also choosing from a selection of investment options for the cash value. The
death benefit and cash value fluctuate with investment performance .
Question 6
D is an architect receiving Disability Income benefits who is not able to return to
work full time, but can work on a part-time basis. Which feature would allow D to
continue receiving benefits?
A) Residual Benefit clause
B) Waiver Benefit clause
C) Concurrent Benefit clause
D) Guaranteed Benefit clause
Rationale: A Residual Benefit clause allows an insured who can work part-time but
not full-time to receive partial disability benefits based on the percentage of
income lost .
Question 7
Variable Whole Life Insurance can be described as:
A) Purely an insurance product
B) Both an insurance and securities product
C) Purely a securities product
D) A savings account with insurance features
