Readiness Exam

At what point would an automatic premium loan be generated

Following the grace period

How will life insurance proceeds that are paid as a lump sum received by the beneficiary?

Free of federal income taxation.

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

S set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does S have?

Simplified Employee Pension (SEP)

When term insurance is added to the main policy to enhance the policy or provide added benefit or coverage, it is called a

Term rider

Which of the following statements regarding HIV testing is NOT true?

Test results must be sent to the Department of Insurance

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is

taxed as ordinary income

Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs?

term insurance

Where are premiums from fixed annuities invested?

general account

Which of the following is guaranteed under a variable whole life insurance policy

minimum death benefit

Insurance contracts are unilateral in nature. What does that mean?

only one party makes a promise

If an applicant's health is poorer than that of an average applicant, the policy may be issued

substandard

Reports required by the Texas Department of Insurance based on complaints about unfair settlement practices must contain information about all of the following EXCEPT

The resident state of the claimants

A loss resulting from which of the following would qualify for the accidental death rider coverage?

an automobile accident

If a credit life policy is terminated upon the payment of the death benefit , what happens to the premium paid into the policy ?

the premium is considered EARNED, so no refund is required

What guarantees that the information explained in the insurance contract is true

warranty

In Texas, nonforfeiture law applies to which of the following insurance policies?

whole life insurance

A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will

continue to increase

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

pay the death benefit to the estate of the insured

All of the following are advantages of a qualified retirement plan EXCEPT

the income at retirement is tax free

An insurer incorporated under the laws of another state but doing business in this state is considered

foreign

Which of the following has the right to change a settlement option in a life insurance policy?

The policy owner at any time during the life of the insured

An illustration used in the sale of a life insurance policy must include a label stating

"Life insurance illustration"

The maximum monetary penalty for an agent who violates an insurance law, rule or order is

$25,000

Which of the following best describes a rebate

A producer returning part of her commission to her client, as an inducement to buy

Which of the following would NOT constitute a policy replacement

Converting group coverage to individual coverage

In this state the owner gets a "free look" of a specified number of days from

Delivery of the policy

An adjustable life policy can assume the form of

Either term insurance or permanent insurance

A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal

Family term

What does an annuity protect the annuitant against

Living longer than expected

Agents may be found guilty of defamation if they make false statements that are intended to

Maliciously criticize another insurance company

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

Which of the following bears the investment risk in a variable life insurance policy

Policyowner

If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?

Prior to performance of the test

What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?

Reduce the death benefit

Life insurance creates an immediate estate. Which of the following best explains this statement?

The face value of the policy is payable to the beneficiary upon the death of the insured

An agent has created a new advertisement to help expand his business. Prior to use, the advertisement must be approved by

The insurer's home office

All of the following statements about indexed whole life insurance are correct EXCEPT

The policy face amount remains level throughout the life of the policy

All of the following are true of the Survivorship Life policy EXCEPT

The premium is based on the age of each insured

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?

insurance application

An agent solicits insurance on behalf of the

insurance company

With Adjustable Life, the owner can change all of the following EXCEPT

insured

Which of the following statements is TRUE regarding an Agent's Report during the policy application process

it provides the agents personal observations concerning the proposed insured

The family term rider incorporates

Spouse term and children's term

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

immediately

An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive

$70,000

How long is the grace period for an individual life insurance policy

1 month

In order for a business partner to be eligible for a Keogh plan, he/she must work full-time and own at least how much of the business

10%

What is the maximum amount of time an insurer may delay payment of a claim without having to pay an additional interest

60 days

A Texas resident agent seeking to sell insurance to customers in another state needs

A nonresident license in that state

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination

Charging the insured higher premiums based on her race

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount

Children's term rider

Which of the following is the distinguishing characteristic of the interest-adjusted net cost method

Considering the time value of money in comparing life insurance costs

An individual has a $200,000 convertible term life insurance policy. If he chooses, he can

Convert to a whole life policy for the same face amount without proof of insurability

Which of the following is a correct statement about annuities?

Fixed annuities do not provide protection against inflation

Dividends received on participating life insurance policies are

Not taxable because they are a return on your investment

If a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered

Stoli

Unfair claims practices will be assumed to be intentional if:

They occur with such frequency as to indicate a general business practice

Variable life insurance is regulated by all of the following entities EXCEPT

U.S. Department of the Treasury

Which of the following policies can be described as a flexible premium adjustable life policy?

Universal Life

Because of an injury, an insured has been unable to work for 9 months. He paid the policy premium for his life insurance for the first 6 months of disability, but didn't have to pay anything for the remaining 3 months, yet the policy remained in force. The policy includes

Waiver of premium rider

If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?

When the policy is delivered

An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer

alien

Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?

Automatic Premium Loan Option

To obtain a Texas producer license, an applicant must do all of the following EXCEPT

Complete prelicensing training

An insurance company that is owned by the policyholders is called a

Mutual insurer

The reduction of premium option uses the dividend to reduce

Next year's premium

An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a

representation