TEXAS LIFE AND HEALTH INSURANCE
EXAM 2025 QUESTIONS AND ANSWERS
AT WHAT POINT MUST A LIFE INSURANCE APPLICANT BE INFORMED OF THEIR RIGHTS THAT
FALL UNDER THE FAIR CREDIT REPORTING ACT? - ANS UPON COMPLETION OF THE
APPLICATION
WHO ELECTS THE GOVERNING BODY OF A MUTUAL INSURANCE COMPANY? -
ANS POLICYHOLDERS
AN INSURANCE APPLICANT MUST BE INFORMED OF AN INVESTIGATION REGARDING HIS/HER
REPUTATION AND CHARACTER ACCORDING TO THE - ANS FAIR CREDIT REPORTING ACT
WHAT TYPE OF REINSURANCE CONTRACT INVOLVES TWO COMPANIES AUTOMATICALLY
SHARING THEIR RISK EXPOSURE? - ANS 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 -
ANS RESERVES
WHICH OF THE FOLLOWING REQUIRES INSURERS TO DISCLOSE WHEN AN APPLICANT'S
CONSUMER OR CREDIT HISTORY IS BEING INVESTIGATED - ANS 1970 - FAIR CREDIT
REPORTING ACT
1
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
, WHAT IS THE CONSIDERATION GIVEN BY AN INSURER IN THE CONSIDERATION CLAUSE OF A
LIFE POLICY? - ANS 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 - ANS 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 - ANS REPRESENTATIONS
THE PART OF A LIFE INSURANCE POLICY GUARANTEED TO BE TRUE IS CALLED A(N) -
ANS WARRANTY
WHICH OF THESE IS NOT A TYPE OF AGENT AUTHORITY?
EXPRESS
IMPLIED
PRINCIPAL
APPARENT - ANS PRINCIPAL
THE CONSIDERATION CLAUSE OF AN INSURANCE CONTRACT INCLUDES - ANS 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? - ANS IN THIS SITUATION, THE PROCEEDS FROM E'S
LIFE INSURANCE POLICY WILL GO TO F.
2
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
, WHICH OF THE FOLLOWING TERMS DEFINES THE LEGALLY ENFORCEABLE PROMISE IN AN
INSURANCE CONTRACT BY THE INSURER? - ANS UNILATERAL
WHEN MUST INSURABLE INTEREST EXIST FOR A LIFE INSURANCE CONTRACT TO BE VALID? -
ANS INCEPTION OF THE CONTRACT
INSURANCE CONTRACTS ARE KNOWN AS ____ BECAUSE CERTAIN FUTURE CONDITIONS OR
ACTS MUST OCCUR BEFORE ANY CLAIMS CAN BE PAID. - ANS CONDITIONAL
WHICH OF THESE REQUIRE AN OFFER, ACCEPTANCE, AND CONSIDERATION? -
ANS CONTRACT
WHICH OF THESE ARRANGEMENTS ALLOWS ONE TO BYPASS INSURABLE INTEREST LAWS? -
ANS 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 - ANS NEGOTIATING
AN AGENT IS AN INDIVIDUAL THAT REPRESENTS WHOM? - ANS INSURER
3
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
EXAM 2025 QUESTIONS AND ANSWERS
AT WHAT POINT MUST A LIFE INSURANCE APPLICANT BE INFORMED OF THEIR RIGHTS THAT
FALL UNDER THE FAIR CREDIT REPORTING ACT? - ANS UPON COMPLETION OF THE
APPLICATION
WHO ELECTS THE GOVERNING BODY OF A MUTUAL INSURANCE COMPANY? -
ANS POLICYHOLDERS
AN INSURANCE APPLICANT MUST BE INFORMED OF AN INVESTIGATION REGARDING HIS/HER
REPUTATION AND CHARACTER ACCORDING TO THE - ANS FAIR CREDIT REPORTING ACT
WHAT TYPE OF REINSURANCE CONTRACT INVOLVES TWO COMPANIES AUTOMATICALLY
SHARING THEIR RISK EXPOSURE? - ANS 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 -
ANS RESERVES
WHICH OF THE FOLLOWING REQUIRES INSURERS TO DISCLOSE WHEN AN APPLICANT'S
CONSUMER OR CREDIT HISTORY IS BEING INVESTIGATED - ANS 1970 - FAIR CREDIT
REPORTING ACT
1
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
, WHAT IS THE CONSIDERATION GIVEN BY AN INSURER IN THE CONSIDERATION CLAUSE OF A
LIFE POLICY? - ANS 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 - ANS 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 - ANS REPRESENTATIONS
THE PART OF A LIFE INSURANCE POLICY GUARANTEED TO BE TRUE IS CALLED A(N) -
ANS WARRANTY
WHICH OF THESE IS NOT A TYPE OF AGENT AUTHORITY?
EXPRESS
IMPLIED
PRINCIPAL
APPARENT - ANS PRINCIPAL
THE CONSIDERATION CLAUSE OF AN INSURANCE CONTRACT INCLUDES - ANS 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? - ANS IN THIS SITUATION, THE PROCEEDS FROM E'S
LIFE INSURANCE POLICY WILL GO TO F.
2
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
, WHICH OF THE FOLLOWING TERMS DEFINES THE LEGALLY ENFORCEABLE PROMISE IN AN
INSURANCE CONTRACT BY THE INSURER? - ANS UNILATERAL
WHEN MUST INSURABLE INTEREST EXIST FOR A LIFE INSURANCE CONTRACT TO BE VALID? -
ANS INCEPTION OF THE CONTRACT
INSURANCE CONTRACTS ARE KNOWN AS ____ BECAUSE CERTAIN FUTURE CONDITIONS OR
ACTS MUST OCCUR BEFORE ANY CLAIMS CAN BE PAID. - ANS CONDITIONAL
WHICH OF THESE REQUIRE AN OFFER, ACCEPTANCE, AND CONSIDERATION? -
ANS CONTRACT
WHICH OF THESE ARRANGEMENTS ALLOWS ONE TO BYPASS INSURABLE INTEREST LAWS? -
ANS 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 - ANS NEGOTIATING
AN AGENT IS AN INDIVIDUAL THAT REPRESENTS WHOM? - ANS INSURER
3
PAGE
@COPYRIGHT BRAINBARTER 2025/2026
