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Texas Life and Health Insurance Exam 150 Questions and Answers
2025
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act?
ANSWER>>Upon completion of the application
Who elects the governing body of a mutual insurance company?
ANSWER>>policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the
ANSWER>>Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure?
ANSWER>>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
ANSWER>>reserves
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated
ANSWER>>1970 Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy?
ANSWER>>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
ANSWER>>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
ANSWER>>Representations
The part of a life insurance policy guaranteed to be true is called a(n)
ANSWER>>Warranty
, 2
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
ANSWER>> Principal
The Consideration clause of an insurance contract includes
ANSWER>>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?
ANSWER>>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?
ANSWER>>Unilateral
When must insurable interest exist for a life insurance contract to be valid?
ANSWER>>Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid.
ANSWER>>Conditional
Which of these require an offer, acceptance, and consideration?
ANSWER>>Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWER>>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
.
, 3
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration
ANSWER>>Negotiating
An agent is an individual that represents whom?
ANSWER>>Insurer
Insurable interest must exist at what time?
ANSWER>>at the time of application
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling?
ANSWER>>Variable Life
Which of the following actions require a policy owner to provide proof of insurability in
an Adjustable Life policy?
ANSWER>>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?
ANSWER>>Conversion provision
What type of life insurance are credit policies issued as?
ANSWER>>Term
How long does the coverage normally remain on a limited-pay life policy?
ANSWER>>age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of return, the cash value
will mirror that of the index
The premiums can be lowered or raised, based on investment performance
Tied to an equity index such as the S&P 500 -
ANSWER>>The premiums can be lowered or raised, based on investment performance
Which of these is an element of a Variable Life policy?
Texas Life and Health Insurance Exam 150 Questions and Answers
2025
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act?
ANSWER>>Upon completion of the application
Who elects the governing body of a mutual insurance company?
ANSWER>>policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the
ANSWER>>Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure?
ANSWER>>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
ANSWER>>reserves
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated
ANSWER>>1970 Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy?
ANSWER>>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
ANSWER>>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
ANSWER>>Representations
The part of a life insurance policy guaranteed to be true is called a(n)
ANSWER>>Warranty
, 2
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
ANSWER>> Principal
The Consideration clause of an insurance contract includes
ANSWER>>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?
ANSWER>>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?
ANSWER>>Unilateral
When must insurable interest exist for a life insurance contract to be valid?
ANSWER>>Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid.
ANSWER>>Conditional
Which of these require an offer, acceptance, and consideration?
ANSWER>>Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWER>>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
.
, 3
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration
ANSWER>>Negotiating
An agent is an individual that represents whom?
ANSWER>>Insurer
Insurable interest must exist at what time?
ANSWER>>at the time of application
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling?
ANSWER>>Variable Life
Which of the following actions require a policy owner to provide proof of insurability in
an Adjustable Life policy?
ANSWER>>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?
ANSWER>>Conversion provision
What type of life insurance are credit policies issued as?
ANSWER>>Term
How long does the coverage normally remain on a limited-pay life policy?
ANSWER>>age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
Cash value has a minimum rate of accumulation
If the gain on the index goes beyond the policy's minimum rate of return, the cash value
will mirror that of the index
The premiums can be lowered or raised, based on investment performance
Tied to an equity index such as the S&P 500 -
ANSWER>>The premiums can be lowered or raised, based on investment performance
Which of these is an element of a Variable Life policy?
