Texas Life and Health Exam
Which of the following statements about a group accident & health policy issued to an employer is CORRECT?
A policy must be issued to the employer and a certificate must be issued to each employee
Which of the following elements of a contract is necessary before a life policy will be issued?
A prospect's signature on an application
A policy that is overfunded, according to IRS tables, is classified as which of the following types of policies?
Modified Endowment Contract
P purchases a $70,000 Life Insurance Policy with premium payments of $550 per year for the first 5 years. At the beginning of the sixth year, the premium will go up to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that P has purchased is
Modified Premium Life
Which of the following statements is CORRECT about accelerated death benefits?
Only available to the terminally ill with a restricted life expectancy
All of the following are correct in regards to a Preferred Provider Organization (PPO) EXCEPT
PPO's are not considered to be managed health care systems
Which of the following is a mandatory provision?
Payment of Claims
Which of the following provisions states to whom claims will be paid?
Payment of Claims
An immediate annuity can be recognized by which of the following features?
Payout begins one payment period after purchase
A certificate of authority does which of the following?
Permits an insurance company to transact business in Texas
Which of the following policies insures two individuals and is designed to pay a benefit at the second death?
Survivorship Life
Under the Intoxicants and Narcotics exclusion, if an insured suffers severe injuries in a fall while intoxicated, who is liable for the medical bills?
The insured
A terminated employee who was covered under a group life policy for $15,000 of Term Life insurance may convert to a
$15,000 Whole Life policy
An insured purchases a family Hospital/Surgical Expense policy on May 1, 2013. The policy is issued with a $250 deductible and a limit of three deductibles per calendar year. The insured and the insured's spouse incur medical expenses in excess of the deductible on July 15 and September 1 of the same year. Their two children incur medical expenses in excess of the deductible on January 15 and April 1 of the following year. The insured's MAXIMUM out-of-pocket expenses for 2013 would be which of the following amounts?
$500
Q and H are co-primary beneficiaries on the $100,000 Accidental Death and Dismemberment policy insuring their mother. Their father is the contingent beneficiary. If Q dies of cancer and the mother is killed in an auto accident two months later, the father will receive a MAXIMUM of
0$
Long Term Care policies require that in order for an insured to be qualified for benefits they must be unable to perform a minimum of how many Activities of Daily Living (ADL)?
2
The MOST practical Term Policy to protect a 20 year mortgage is a
20 year decreasing term
Which of the following life insurance policies provide a 25-year old with the most rapid growth of cash value?
20-pay Life
Before holding a hearing regarding an agent's unfair or deceptive practice, the Insurance Commissioner MUST give how many days notice?
30
Under the Nonforfeiture Law, a cash surrender value payment may be deferred by the insurance company for NO LONGER than how many months?
6
The Commissioner of Insurance may issue a temporary agent's license for a maximum of how many days?
90
S wants to purchase a life insurance policy that will pay a specified monthly income to her beneficiaries for 20 years after she dies and a lump sum of $10,000 at the end of that 20 year period. S should purchase which of the following policies?
A Family Maintenance Policy
Which of the following items may be used to include coverage for children under their parent's insurance policy?
A Term rider
If G want to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on G under the same policy, the applicant should purchase
A Whole Life Policy with an Other insured rider
Which of the following provisions of a life insurance policy will pay a stated amount to an insured if the insured is blinded in an accident?
Accidental Death and Dismemberment clause
When submitting an application for an individual policy to an insurance company, a producer should take which of the following actions?
Advise the company of any other relevant information not contained in the application
Which of the following options provides an additional death benefit for a limited period of time at the lowest possible cost?
An Accidental Death and Dismemberment (AD&D) rider
Which of the following would be a certificate holder under a trustee group life policy?
An employee
An insured who has a Disability Income policy that pays a $1,500 monthly benefit becomes disabled for a period of one year. The insured later dies as a result of complications from the disability. In this situation, which of the following describes the rights of the insured's estate?
Any earned but unpaid benefits will be paid
A policyowner may change a revocable beneficiary at which of the following times?
At any time
Which of the following provisions would keep a Whole Life policy in force if a required premium payment is not made and sufficient cash value exists from which the premium can be paid?
Automatic Policy Loan
W, an architect who has five employees, is concerned about how the business would survive financially if W became ill and was disabled. Which of the following policies would BEST meet W's needs?
Business Overhead Expense
Which of the following statements is CORRECT about an irrevocable beneficiary designation?
By naming an irrevocable beneficiary, a policyowner forfeits the right to change the beneficiary
Which of the following policies provides temporary coverage that may be changed to permanent coverage without regard to the insured's health?
Convertible Term
A Basic Hospital/Surgical policy would most likely cover which of the following expenses
Cosmetic surgery to remove a birthmark from an insured's face
An insured is unable to work for six weeks because of a sickness contracted while on vacation. Which of the following policies would cover the insured's loss of earnings?
Disability income
S applies for an individual medical policy and the insurance company issues a standard policy. When S receives the policy, S notices that the application is attached to the policy. Which of the following policy elements makes the application, if attached, part of the contract between S and the insurance company?
Entire Contract provision
The policy provision that prevents an insurance company from altering its agreement with a policyowner by referring to documents or other items not contained in the policy is called the
Entire Contract provision
Which of the following sections of a life insurance contract states that the application is part of the contract
Entire Contract provision
Coverage for the cost of a regular physical examination for preventative care would most likely be provided by a
Health Maintenance Organization
Under federal law a tax exempt Health Savings Account can only be opened for an individual who is enrolled in which type of plan?
High deductible health plan
Which of the following statements about a five-year old Whole Life policy is CORRECT
If a policyowner stops paying premiums, the policyowner may elect a Nonforfeiture option
Which of the following statements about Equity Indexed Life Insurance is INCORRECT?
If the actual investment differs from what was expected, the premiums will be either lowered or raised
An agent MUST do which of the following during a sales presentation for a participating life insurance policy?
Include a statement that dividends are not guaranteed
A retirement plan that may be established by an employee, regardless of any other retirement plan is called a(n)
Individual Retirement Account (IRA)
Which of the following BEST describes Credit Life insurance?
Insurance issued on a debtor to cover outstanding balances on installment loans
Which of the following clauses of an insurance contract states that a specified amount of money will be paid to a designated person on the death of an insured?
Insuring Agreement
Which of the following beneficiary designations may limit a policyowner's rights?
Irrevocable
Which of the following statements about an Incontestable clause is CORRECT
It allows an insurer to contest a claim during the Contestable Period
Which of the following conditions is typical of a Major Medical policy?
It contains a deductible and coinsurance
Which of the following statements is CORRECT about a Variable insurance contract?
It does not guarantee a return on investment accounts
Which of the following statements is CORRECT about third-party ownership of a life insurance policy?
It is widely used in business insurance and estate-planning situations
Which of the following statements is CORRECT about the Misstatement of Age provision?
It requires that an adjustment be made in the amount of insurance if the age of the insured is misstated
All of the following statements about a Guaranteed Insurability Option rider are true EXCEPT
It requires the insured to provide evidence of insurability when exercising the option
What MUST an insurance company use in its advertising?
Its true corporate name
A Life Insurance Policy that promises to pay the face amount on the death of first of 2 lives covered by the policy is called a
Joint Life Policy
Benefits are payable on a Critical Illness plan for which of the following situations or illnesses?
Leukemia
A life insurance policy that provides protection for the insured's whole life with level premiums for a limited number of years is
Limited Pay Life
Which of the following medical care expense programs is partially funded by the federal government and administered by individual states?
Medicaid
Under a unilateral insurance policy, which of the following parties makes the legally enforceable promises?
The insurance company
The policy feature that permits the policyowner to select the timing of premium payments is
Premium Mode
Which of the following statements is CORRECT about a Straight Life policy?
Premiums are payable for the period of time that insurance protection is provided
The person who provides all care for a particular member and controls all referrals for specialized care, and in some cases, hospital care, is known as which of the following?
Primary Care Physician
The statement that an insured MUST give an insurance company to show that a loss actually occurred is a
Proof of Loss
An injured insured receives Disability income benefits for two months and then returns to work. Three months later, the insured is not able to continue because of the same condition. In this situation, the insurer may regard the second period of disability as a continuation of the first and pay benefits on the basis of which of the following provisions?
Recurrent Disability
Which of the following policy provisions specifies that if an insured fails to pay a renewal premium within the time granted but the insurer subsequently accepts the premium, coverage may be restored
Reinstatement
Which of the following provisions can an insured use to put a policy in force that has lapsed as a result of nonpayment of premium?
Reinstatement
Which of the following Term policies guarantees the insured the right to continue term coverage after expiration of the initial policy period?
Renewable
Which of the following information is included in the Consideration clause of a Life or Health policy?
Schedule and amount of premium payments
A producer who discovers that answers to a series of questions on a life insurance application were omitted should take which of the following actions?
Schedule another appointment with the applicant to complete the unanswered questions
A 64-year old widow recently received a $100,000 death benefit from her husband's life policy. If she wants to purchase an annuity that will provide her an immediate, guaranteed income for life, which of the following types of annuity BEST suits her needs?
Single Premium
The Old Age and Survivors Disability Health Insurance (OASDHI) system is COMMONLY referred to as
Social Security
A church member recently pledged $10,000 to the church to replace a roof, which will need replacement in 10 years. If the member wants to be sure that the $10,000 will be available when needed, the member should purchase which of the following $10,000 policies?
Ten-Year Endowment
Credit policies MUST be issued in which of the following forms?
Term
Which of the following statements is CORRECT about an agent who is taking an insurance application?
The agent should have the applicant initial any changes made on the application
Changes made on an insurance application should be signed or initialed by which of the following parties
The applicant
L purchased a life insurance contract on July 16, 2004. L became severely depressed and on November 1, 2004 took his own life. Which of the following statements best describes how the insurance company settled the claim with L's beneficiaries?
The claim was denied under the Suicide clause of the policy
If a primary beneficiary dies before the insured and a contingent beneficiary is also named in the policy, which of the following will occur when the insured dies?
The contingent beneficiary will receive the proceeds
A producer takes an application for individual insurance and accepts a check from the client. The producer mails the check and application to the insurance company. A member of the company's underwriting department notices that the application is signed but the check is not. In this situation, if the applicant is approved by the insurance company, coverage will be effective as of which of the following dates?
The date the producer delivered the policy collected the initial premium and obtained a statement indicating that there is no change in the insured's health
When an employer provides noncontributory group term life insurance, which of the following statements is CORRECT?
The employer pays the entire cost of the plan
J is sixty-five years old, works for a company with fifty employees, and decides to continue working to increase his Social Security benefits. He elects to continue group coverage. If J falls off a ladder at home and is hospitalized, which of the following coverages would be primary?
The group health plan
Which of the following statements about the Waiver of Premium provision is INCORRECT?
The insured must receive Social Security disability benefits before the waiver claim becomes valid
An insured named his wife beneficiary and his son as contingent beneficiary. If the insured and his wife are killed in the same accident, the Common Disaster clause provides for payment to whom?
The insured's son
Which of the following statements is CORRECT if the premiums on a participating policy are waived because of an insured's disability?
The insurer will continue to pay declared dividends
Which of the following persons has the right to change the beneficiary designation on a life insurance policy?
The policyowner
Which of the following policy provisions gives an insurance company the right to set requirements that an insured must meet while a claim is pending?
Time Limit on Certain Defenses
Which of the following provisions in a Group Health policy gives an insurance company the rights to delay coverage for a covered sickness for a specified number of days after the effective date of the policy?
Waiting Period
A rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled for a specified period of time is referred to as
Waiver of Premium
An applicant for life insurance must be informed of their rights under the Fair Credit Reporting Act at which of the following times?
When the producer completes the insured's application
A contract that provides permanent life insurance with premiums payable for life is which type of contract?
Whole Life
Which of the following policies guarantees to pay the face value either to the beneficiary when the insured dies or to the insured when age 100 is attained?
Whole Life
The Z Company takes out a Key Employee policy on its director of operations. Several years later the employee leaves Z company, joins A Company and is killed in an automobile accident while the Key Employee policy is still in force. In this situation, the insurance company will pay the proceeds to which of the following entities?
Z Company
A policyowner using the Life Insurance Policy as collateral for a bank loan normally would make
a collateral assignment
A life insurance policy written for a specified period of time with a death benefit that changes regularly according to a schedule is
a decreasing term policy
If an insurance company is organized under the laws of New Jersey and licensed to do business here, it is considered which of the following in Texas?
a foreign company
N was treated for a respiratory problem a month before applying for an individual Major Medical Policy. If N discloses the illness on the application and the policy is issued, the condition would be considered
a pre-existing condition and may not be covered for one year
Dread Disease policies cover
a single disease or illness only
N takes out a loan against a life insurance policy which is equal to one-half of the cash value. If N decides not to pay the interest when it is due, the insurance company will automatically
add to the loan balance the amount of interest due
An applicant understates his/her age by five years on an Accidental Death and Dismemberment (AD&D) application. The insured dies in an accident three years after policy issuance. If the insurance company discovers the misstatement of age at the time of claim, it will
adjust the Death benefit to what the premiums paid would have purchased at the insured's actual age
All of the following provisions are required in a group life policy EXCEPT
an Accidental Death and Dismemberment provision
If a forty-five year old individual bought an annuity to provide income for life beginning at age sixty-five, the insured did NOT buy
an immediate annuity
An insurance company must provide information on fraudulent claims at the request of all of the following entities EXCEPT
an insured
A beneficiary who must consent to a change in the beneficiary designation in a life insurance policy is referred to as
an irrevocable beneficiary
Most group life insurance policies are written as
annually renewable term
If a life policyowner wants to take out a bank loan and the bank insists on collateral, the insured may
assign the policy to the bank
A Probationary Period provision in a health insurance contract becomes effective
at the inception of the policy
The insuring agreement in a Life insurance contract establishes the
basic promise of the insurance company
An agent who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of
coercion
P, covered for the past 10 years under P's employer's group life contract retires at age 59 1/2 can elect to
convert to a permanent policy at the individual rates
A Business Overhead Expense Disability Plan is BEST described as having a benefit paid to a business for the purpose of
covering the fixed business costs
An organization that solicits insurance only among its members is known as a
fraternal benefit society
All of the following groups of people are eligible for Medicare EXCEPT
full-time college students
In third-party ownership, an applicant who is also the designated primary beneficiary must
have an insurable interest in the prospective insured
A Conditionally Renewable Health Insurance Policy can
increase premiums at time of renewal
All of the following individuals must sign a life insurance application EXCEPT an
irrevocable beneficiary
Life insurance written to cover a need for a specified period of time at the lowest premium is called
level term insurance
The purpose of a Stop Loss provision in Major Medical Expense policies is to
limit the amount of an insured's out-of-pocket medical expenses
A Life annuity offers protection against the risk of
living longer than anticipated
A prehospitalization authorization program (pre-certification) is a good example of
managed care
All of the following data on an insured may affect the underwriting of a life insurance policy EXCEPT the insured's
marital status
The Time Payment of Claims provision requires that an insurance company pay Disability Income benefits no less frequently than
monthly
In determining how much Disability income insurance a prospective insured should purchase, the MOST important factor to be considered is the insured's
monthly income
P is both the policyowner and the insured under a $100,000 Whole Life policy. The beneficiary is P's mother. When P marries, ownership of the policy is transferred to P's spouse. If P dies without making any other changes, the policy proceeds will be payable to P's
mother only
An insurance company received a prepaid application for an Individual Disability Income policy. One week later, it receives the Medical Information Bureau (MIB) report indicating that the applicant had a heart attack two years ago, although this was not disclosed on the application. In this situation, the company would most likely take all of the following actions EXCEPT
notify the MIB that coverage is denied
If a business owner becomes disabled, a Business Overhead Expense policy would cover
office rent and telephone bills
An insurance agent does NOT have fiduciary responsibilities to
other agents
Investor-Originated Life Insurance (IOLI) is an arrangement in which the death of the insured benefits the
owner
In a life insurance policy, the Consideration clause states that the policyowner's consideration consists of completing the application and
paying the initial premium
Question 74
policyowner additional time to pay overdue premiums
M is covered by a group health insurance plan through his employer. M is also covered as a dependent on his spouse's group health plan. Under the Model Group Coordination of Benefits provision, when M files a claim, his employer's plan is considered the
primary carrier
Group insurance differs from individual insurance in that group insurance usually
provides coverage at a lower cost
Dental care indemnity plans
reimburse services only after the carrier receives the bill
When an applicant's statements in an insurance application are accepted as true and accurate to the best of the applicant's belief, the statements are considered
representations
All of the following persons must sign an application for life insurance EXCEPT the
revocable beneficiary
An underwriter's evaluation of information on a life insurance application is also known as
risk classification
All of the following are defined as doing insurance business EXCEPT
selling mutual funds
Businesses may purchase group health insurance for all of the following EXCEPT
stockholders
Under the Claims Forms provision of a health policy, if the insurance company fails to send out the claim forms within the time period required by the provision, the insured should
submit the claim in any form, which must be accepted by the company as adequate proof of loss
A policyowner decides to use dividends from a life insurance policy to purchase paid-up additions. The policyowner asks a producer to explain how the amount of the paid-up addition that is purchased each year will be determined. The producer's explanation includes all of the following facts EXCEPT
the age of the beneficiary
Under an employer/employee group health plan
the employer receives a master policy and the employees receive certificates
M, an army lieutenant was killed in a skiing accident while on leave. M's policy contains a result type War Exclusion clause. M's beneficiary will receive
the full death benefit stated in the policy
Under an Accidental Death and Dismemberment policy, the contingent beneficiary will receive
the policy proceeds if the primary beneficiary dies before the insured's death
An application for an individual Disability income policy may require all of the following information about the proposed insured EXCEPT for
the spouses' occupation
Under a group Credit Life policy, the amount of insurance on the life of a debtor is limited to
the total amount of the insured's loan
All of the following statements are correct regarding the federal income tax treatment of life insurance EXCEPT
the total cash surrender value is taxable
Insurance agent licenses normally must be renewed every
two years
The insurance phrase which considers a particular fee charged by a physician, dentist, or other health professional is
usual, customary, and reasonable expenses
S and W are business partners. Each takes out a $100,000 life insurance policy on the other, naming himself as primary beneficiary. S and W eventually dissolve their business, and two months later S dies. Although S was married at the time of death, the primary beneficiary is still W. However, an insurable interest no longer exists. The proceeds from S's life insurance policy will go to
w
An agent whose license has been revoked is required to
wait at least five years before applying for a new license
In a policy with a rear-end loaded provision, surrender charges are deducted
when the policy is discontinued
