TX General Lines, Life, Accident & Health – Questions ACCURATE TESTED VERSIONS OF THE EXAM FROM 2025 TO 2026 | ACCURATE AND VERIFIED ANSWERS | NEXT GEN FORMAT | GUARANTEED PASS

What happens after all principal in an annuity contract has been paid out? A. Payments stop B. Payments become tax-free C. Payments are partially taxable D. The full amount of future annuity payments is treated as taxable income Rationale: Once the principal is paid out, all additional payments are earnings and therefore fully taxable. A worker with Social Security coverage for disability benefits has what work status? A. Currently Insured B. Fully Insured C. Partially Insured D. Conditionally Insured Rationale: Full insured status is required for disability benefit eligibility under Social Security. Life insurance underwriters are most likely to request a consumer (inspection) report for: A. Young applicants B. Healthy individuals C. Applicants seeking very high amounts of insurance D. Group policies Rationale: Inspection reports are typically ordered for large face amount applications to assess risk. What is the typical annual benefit limit for an individual under a dental plan? A. $500–$1,000 B. $2,000–$3,000 C. $5,000–$6,000 D. Unlimited Rationale: Most dental plans cap annual benefits in the $2,000 to $3,000 range. Which level of government primarily regulates health insurance? A. Federal B. State C. Municipal D. Regional Rationale: State governments regulate most aspects of health insurance. Which of the following is NOT true regarding reinsurance? A. It helps insurers spread risk B. It supports insurer solvency C. It involves multiple insurers D. Claims are paid to the policyowner separately by each reinsurer Rationale: The ceding insurer pays claims; reinsurers reimburse the ceding insurer, not the policyholder. Which annuity product discourages surrenders when interest rates are rising? A. Indexed annuities B. Market Value Adjusted (MVA) annuities C. Fixed immediate annuities D. Straight life annuities Rationale: MVAs penalize withdrawals when rates rise, discouraging transfers to higher-rate annuities. How does the conformity with state statutes provision work in policies? A. Voids illegal provisions B. Requires state license C. Automatically amends the policy to comply with state law D. Cancels the policy Rationale: This provision ensures policies stay compliant with state laws automatically. Which statement is NOT correct about policy loans from a non-MEC life insurance policy? A. Loans reduce death benefits B. Interest is charged C. Loans can be repaid D. Policy loans are fully taxable if not repaid Rationale: Loans are not taxable unless the policy lapses, even if not repaid. After-tax contributions toward group life coverage are treated how? A. Ignored for tax B. Subtracted from imputed income of employer’s contribution C. Taxed separately D. Added to taxable wages Rationale: After-tax contributions offset taxable imputed income dollar for dollar. Which is NOT a way an endowment policy pays its face amount? A. Upon maturity B. On insured's death C. Assignment D. Cash value withdrawal to the beneficiary Rationale: Withdrawals are not the same as endowment payout; cash value must be accessed by the owner. Which statement about HIPAA is incorrect? A. It protects those who lose employer health coverage B. It regulates privacy of health info C. It limits exclusions for preexisting conditions D. It applies to group health plans Rationale: HIPAA offers portability, not guaranteed coverage for the uninsured. Which is NOT true about the fixed amount life insurance settlement option? A. Fixed payments continue until funds run out B. Interest continues to accrue C. Beneficiary can select payment schedule D. Payments must be made monthly Rationale: Payments can be monthly, quarterly, etc.—not only monthly. Who can be a beneficiary of a life insurance policy? A. Only relatives B. Only spouses C. Any person or entity the owner chooses D. Only individuals with insurable interest Rationale: Insurable interest is only required at the time of policy issuance. Who administers Medicaid? A. Federal government B. Joint federal-state committee C. The states D. Medicare Rationale: Though funded jointly, states are responsible for administering Medicaid. Which is NOT a characteristic of a stock insurance company? A. Issues policies B. Has shareholders C. Pays dividends to stockholders D. Owned by policyowners Rationale: Mutual insurers are owned by policyowners, not stock insurers. Which of the following is NOT part of an insurer’s complaint records? A. Nature of complaints B. Time to resolve C. Complaint resolution D. Commissions paid on related policies Rationale: Complaint records do not include commission data. If Jones commits suicide 18 months after a policy is issued, what is paid? A. Full death benefit B. Premiums paid plus interest C. Nothing D. Reduced death benefit Rationale: Suicide within the exclusion period (usually 2 years) returns premiums plus interest. How much of Pam’s $300,000 group life insurance is taxable? A. None B. $50,000 C. $250,000 D. $300,000 Rationale: Coverage over $50,000 in employer-paid plans is subject to income tax. Which is NOT included in HMO evidence of coverage? A. Covered services B. Exclusions C. Grievance procedures D. A list of all network providers Rationale: Provider directories are maintained separately, not in the evidence of coverage. When does a fixed deferred annuity provide a death benefit? A. Any time B. Only after annuitization C. If death occurs during accumulation D. During payout phase Rationale: A death benefit exists only during the accumulation period. Which must NOT be stated in ads for indeterminate premium life in Texas? A. Policy is renewable B. Premiums can change C. Maximum premium is not guaranteed D. That maximum premium can never change Rationale: This is misleading since the maximum premium can change. Which is FALSE about binding receipts? A. They provide immediate coverage B. They end if applicant is uninsurable C. They are the most common type of receipt D. Premiums are refunded if not approved Rationale: Conditional receipts are more common than binding ones. Premiums paid into a variable annuity purchase: A. Units of benefit B. General account credits C. Accumulation units D. Premium credits Rationale: Variable annuities use accumulation units during the savings phase. How long is the Medicare Supplement free-look period? A. 10 days B. 15 days C. 20 days D. 30 days Rationale: Consumers have 30 days to review and cancel for a full refund. Which is NOT a standard type of term life insurance? A. Level term B. Decreasing term C. Renewable term D. Variable term Rationale: Variable term is not a standard term life insurance type. Which policy helps buy out a disabled business partner’s share? A. Key person disability B. Disability buy-out insurance C. Business income insurance D. Overhead expense Rationale: Disability buy-out insurance is designed for this purpose. What is true about waiver of premium riders in DI policies? A. Always optional B. Usually standard provision C. Requires annual renewal D. Not available in most states Rationale: Most DI policies include this rider as standard. Why is there a 4–6 month wait before DI rider payments begin? A. Premium accrual B. Insurer underwriting C. To eliminate short-term claims D. To assess benefit eligibility Rationale: It controls costs by excluding minor or temporary disabilities. How are lump-sum life insurance death benefits taxed? A. Fully taxable B. Income tax-free C. Capital gains tax applies D. Only principal is taxed Rationale: Lump-sum life insurance proceeds are generally tax-free to beneficiaries. What does GINA prohibit insurers from doing? A. Denying Medicare B. Requiring genetic testing C. Using genetic test results to discriminate D. Issuing policies based on family history Rationale: GINA prevents insurers from using genetic information unfairly. Which endowment contracts retain tax-favored life insurance treatment? A. All B. Those issued after 1996 C. Issued before 1986 D. None Rationale: Endowment contracts before 1986 are grandfathered for tax purposes. Who regulates group health insurance? A. State only B. Federal only C. Both state and federal governments D. Local governments Rationale: Both state and federal regulations apply to group health plans. How are expenses reimbursed in basic medical expense policies? A. Based on coinsurance B. Up to 100%, subject to a max limit C. At insurer’s discretion D. Only after a deductible Rationale: These policies reimburse up to a specified limit, often 100%. Which is NOT required under ERISA for claims/appeals? A. Timely appeals B. Written procedures C. Claimant rights D. Claimants may name the plan fiduciary as their rep Rationale: This is not an ERISA requirement. Which is true about the Texas Life Guaranty Association? A. It pays dividends B. It insures group policies only C. Its existence cannot be used to sell insurance D. It licenses producers Rationale: Marketing based on the guaranty association is prohibited. Which is NOT a method for providing accelerated benefits? A. Lump-sum payout B. Percentage of face value C. Percentage of death benefit method D. Chronic illness trigger Rationale: That method isn't recognized for benefit acceleration. What is it called when a producer hides a long-term care policy benefit cap? A. Omission B. Misrepresentation C. Concealment D. Replacement Rationale: Intentionally misleading a buyer is misrepresentation. Which account is funded by employee contributions for uncovered medical expenses? A. HRA B. HSA C. Flexible Spending Account (FSA) D. Roth IRA Rationale: FSAs use pre-tax employee contributions for eligible medical expenses. How does Medicare Part C change service delivery? A. More doctors B. Direct reimbursement C. Uses managed care networks D. Eliminates premiums Rationale: Part C, or Medicare Advantage, uses managed care models