TEXAS LIFE INSURANCE EXAM STUDY
GUIDE EXEM QUESTIONS AND
ANSWERS
Which of the following is NOT true about a joint and survivor annuity benefit option ? -
Answer-Payments stop after the first death among the annuitants
A prospective insured receives a conditional receipt but dies before the policy is issued.
The insurer will... - Answer-Pay the policy proceeds only if it would have issued the
policy
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy . Which of the following insurance principles has the insurer violated ? - Answer-
Consideration
What is the purpose of a conditional receipt ? - Answer-It is intended to provide
coverage on a date prior to the policy issue.
A father purchases a life insurance policy on his teenage daughter and adds the Payor
Benefit rider . In which of the following scenarios will the rider waive the payment of
premium ? - Answer-If the father is disabled for more than 6 months
Which of the following riders is often used in business life insurance policies when the
policyowner needs to change the insured under the policy ? - Answer-Substitute insured
rider
An individual has just borrowed $ 10,000 from his bank on a 5 - year installment loan
requiring monthly payments . What type of life insurance policy would be best suited to
this situation ? - Answer-Decreasing term
The policyowner of an adjustable life policy wants to increase the death benefit . Which
of the following statements is correct regarding this change ? - Answer-The death
benefit can be increased by providing evidence of insurability
According to the Entire Contract provision , a policy must contain - Answer-A copy of
the original application for insurance .
If an insurer issued a policy based on the application that had unanswered questions ,
which of the following with be TRUE ? - Answer-The policy will be interpreted as if the
insurer waived its right to have an answer on the application .
Which of the following is TRUE of a qualified plan ? - Answer-It has a tax benefit for
both employer and employee.
,Which of the following is NOT the consideration in a policy ? - Answer-The application
given to a prospective insured
Variable Whole Life insurance is based on what type of premium ? - Answer-Level fixed
What is the other term for the cash payment settlement option ? - Answer-Lump sum
A life insurance policy has a legal purpose if both of which of the following elements
exist? - Answer-Insurable interest and consent
Which of the following insurance arrangements will be appropriate for a parent buying a
life insurance policy on a child where the parent is the policyowner ? - Answer-Third -
party ownership
The policyowner wants to make sure that upon his death , the life policy will pay a
portion of the proceeds annually to his spouse , but that the principal will be paid to their
children when they reach a certain age . Which settlement option should the
policyowner choose ? - Answer-Interest only option
A domestic insurer issuing variable contracts must establish one or more - Answer-
Separate accounts .
The paid - up addition option uses the dividend - Answer-To purchase a smaller amount
of the same type of insurance as the original policy .
Which of the following statements about the reinstatement provision is true ? - Answer-It
requires the policyowner to pay all overdue premiums with interest before the policy is
reinstated .
The policyowner pays for her life insurance annually . Until now , she has collected a
nontaxable dividend check each year . She has decided that she would rather use the
dividends to help pay for her next premium . What option would allow her to do this ? -
Answer-Reduction of premium
If a settlement option is not chosen by the policyowner or the beneficiary , which option
will be used ? - Answer-Lump sum
A man decided to purchase a $ 100,000 Annually Renewable Term Life policy to
provide additional protection until his children finished college . He discovered that his
policy - Answer-Required a premium increase each renewal .
A policyowner who is also the insured wants to name her husband as the beneficiary of
her life policy . She also wishes to retain all of the rights of ownership The policyowner
should have her husband named as the - Answer-Revocable beneficiary
, A couple owns a life insurance policy with a Children's Term rider . Their daughter is
reaching the maximum age of dependent coverage , so she will have to convert to
permanent insurance in the near future . Which of the following will she need to provide
for proof of insurability ? - Answer-Proof of insurability is not required .
Upon policy delivery , the producer may be required to obtain any of the following
EXCEPT - Answer-Signed waiver of premium
Which type of life insurance policy generates immediate cash value ? - Answer-Single
Premium
An individual applies for a life policy . Two years ago he suffered a head injury from an
accident , so he cannot remember parts of his past , but is otherwise competent . He
has also been hospitalized for drug abuse , but does not remember this when applying
for insurance . The insurer issues the policy and learns of his history one year later .
What will probably happen ? - Answer-The policy will not be affected
All of the following statements are correct regarding credit life insurance EXCEPT -
Answer-Benefits are paid to the borrower's beneficiary .
Theregulations regarding replacement apply to which of the following ? - Answer-
Renewable term
Any inducement offered to the insured in the sale of an insurance policy that is not
specified in the policy is an unlawful practice known as - Answer-Rebating
On a participating insurance policy issued by a mutual insurance company dividends
paid to policyholders are - Answer-Not taxable since the IRS treats them as a return of a
portion of the premium paid .
Which of the following best describes a misrepresentation ? - Answer-Issuing sales
material with exaggerated statements about policy benefits
All of the following are mandatory life insurance policy provisions EXCEPT - Answer-
Policy backdating .
Which of the following CANNOT be included along with illustrations used to sell life
insurance ? - Answer-Vanishing premium information
Which of the following occupations would NOT directly help to qualify someone for the
office of Commissioner of Insurance ? - Answer-Insurance agent
The Commissioner of Insurance issues a Cease and Desist Order to an agent . If the
agent wishes to contest the charges in court , how many days after the order was
issued does the agent have to make the request ? - Answer-60 days
GUIDE EXEM QUESTIONS AND
ANSWERS
Which of the following is NOT true about a joint and survivor annuity benefit option ? -
Answer-Payments stop after the first death among the annuitants
A prospective insured receives a conditional receipt but dies before the policy is issued.
The insurer will... - Answer-Pay the policy proceeds only if it would have issued the
policy
An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy . Which of the following insurance principles has the insurer violated ? - Answer-
Consideration
What is the purpose of a conditional receipt ? - Answer-It is intended to provide
coverage on a date prior to the policy issue.
A father purchases a life insurance policy on his teenage daughter and adds the Payor
Benefit rider . In which of the following scenarios will the rider waive the payment of
premium ? - Answer-If the father is disabled for more than 6 months
Which of the following riders is often used in business life insurance policies when the
policyowner needs to change the insured under the policy ? - Answer-Substitute insured
rider
An individual has just borrowed $ 10,000 from his bank on a 5 - year installment loan
requiring monthly payments . What type of life insurance policy would be best suited to
this situation ? - Answer-Decreasing term
The policyowner of an adjustable life policy wants to increase the death benefit . Which
of the following statements is correct regarding this change ? - Answer-The death
benefit can be increased by providing evidence of insurability
According to the Entire Contract provision , a policy must contain - Answer-A copy of
the original application for insurance .
If an insurer issued a policy based on the application that had unanswered questions ,
which of the following with be TRUE ? - Answer-The policy will be interpreted as if the
insurer waived its right to have an answer on the application .
Which of the following is TRUE of a qualified plan ? - Answer-It has a tax benefit for
both employer and employee.
,Which of the following is NOT the consideration in a policy ? - Answer-The application
given to a prospective insured
Variable Whole Life insurance is based on what type of premium ? - Answer-Level fixed
What is the other term for the cash payment settlement option ? - Answer-Lump sum
A life insurance policy has a legal purpose if both of which of the following elements
exist? - Answer-Insurable interest and consent
Which of the following insurance arrangements will be appropriate for a parent buying a
life insurance policy on a child where the parent is the policyowner ? - Answer-Third -
party ownership
The policyowner wants to make sure that upon his death , the life policy will pay a
portion of the proceeds annually to his spouse , but that the principal will be paid to their
children when they reach a certain age . Which settlement option should the
policyowner choose ? - Answer-Interest only option
A domestic insurer issuing variable contracts must establish one or more - Answer-
Separate accounts .
The paid - up addition option uses the dividend - Answer-To purchase a smaller amount
of the same type of insurance as the original policy .
Which of the following statements about the reinstatement provision is true ? - Answer-It
requires the policyowner to pay all overdue premiums with interest before the policy is
reinstated .
The policyowner pays for her life insurance annually . Until now , she has collected a
nontaxable dividend check each year . She has decided that she would rather use the
dividends to help pay for her next premium . What option would allow her to do this ? -
Answer-Reduction of premium
If a settlement option is not chosen by the policyowner or the beneficiary , which option
will be used ? - Answer-Lump sum
A man decided to purchase a $ 100,000 Annually Renewable Term Life policy to
provide additional protection until his children finished college . He discovered that his
policy - Answer-Required a premium increase each renewal .
A policyowner who is also the insured wants to name her husband as the beneficiary of
her life policy . She also wishes to retain all of the rights of ownership The policyowner
should have her husband named as the - Answer-Revocable beneficiary
, A couple owns a life insurance policy with a Children's Term rider . Their daughter is
reaching the maximum age of dependent coverage , so she will have to convert to
permanent insurance in the near future . Which of the following will she need to provide
for proof of insurability ? - Answer-Proof of insurability is not required .
Upon policy delivery , the producer may be required to obtain any of the following
EXCEPT - Answer-Signed waiver of premium
Which type of life insurance policy generates immediate cash value ? - Answer-Single
Premium
An individual applies for a life policy . Two years ago he suffered a head injury from an
accident , so he cannot remember parts of his past , but is otherwise competent . He
has also been hospitalized for drug abuse , but does not remember this when applying
for insurance . The insurer issues the policy and learns of his history one year later .
What will probably happen ? - Answer-The policy will not be affected
All of the following statements are correct regarding credit life insurance EXCEPT -
Answer-Benefits are paid to the borrower's beneficiary .
Theregulations regarding replacement apply to which of the following ? - Answer-
Renewable term
Any inducement offered to the insured in the sale of an insurance policy that is not
specified in the policy is an unlawful practice known as - Answer-Rebating
On a participating insurance policy issued by a mutual insurance company dividends
paid to policyholders are - Answer-Not taxable since the IRS treats them as a return of a
portion of the premium paid .
Which of the following best describes a misrepresentation ? - Answer-Issuing sales
material with exaggerated statements about policy benefits
All of the following are mandatory life insurance policy provisions EXCEPT - Answer-
Policy backdating .
Which of the following CANNOT be included along with illustrations used to sell life
insurance ? - Answer-Vanishing premium information
Which of the following occupations would NOT directly help to qualify someone for the
office of Commissioner of Insurance ? - Answer-Insurance agent
The Commissioner of Insurance issues a Cease and Desist Order to an agent . If the
agent wishes to contest the charges in court , how many days after the order was
issued does the agent have to make the request ? - Answer-60 days
