TEXAS LIFE INSURANCE EXAM PREP TEST
BANK SOLVED QUESTIONS VERIFIED
ANSWERS COMPREHENSIVE STUDY SHEET
⩥ 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
⩥ 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.
⩥ 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
BANK SOLVED QUESTIONS VERIFIED
ANSWERS COMPREHENSIVE STUDY SHEET
⩥ 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
⩥ 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.
⩥ 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
