Life Exam Terms and Questions
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
The maximum monetary penalty for an agent who violates an insurance law, rule or order is..?
$25,000
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
A life insurance policy has a value of $100,000. The insured took out a policy loan for $10,000 and never paid it back. Policy cash value equals $50,00. If the insured dies, how much will the beneficiary receive?
$90,000
In a noncontributory group policy
100% of eligible employees must participate
How many continuing education hours must be completed on the subject of ethics every license renewal period?
2
Resident Agents must complete how many hours of continuing education every 2 years?
24
The recipient of a Cease and Desist Order wants to contest the Commissioner's charges in court. Within what span of time must the request be made?
30 days
The entire contract includes all of the following EXCEPT
A buyer's guide
The policy-owner has an option to pledge the life insurance policy as collateral for a bank loan. This is called..?
A collateral assignment
A Texas resident agent seeking to sell insurance to customers in another state needs..?
A nonresident license in that state
Which of the following best describes a rebate?
A producer returning part of her client, as an inducement to buy
In an Indvidual life insurance policy, when must the nonforfeiture benefits begin?
After 3 policy years
An insurer who transacts in this sate but whose articles of incorporation are registered in Canada is considered what type of insurer?
Alien
Which of the following is NOT an example of the company's location of incorporation?
Authorized
In Credit life insurance, who is responsible for paying policy premiums?
Borrower only
What is NOT an indicator of a competent party?
Business profession
What type of life polices requires a nonforfeiture provision?
Cash Value
It is the agent's responsibility to notify the department on a monthly basis about all of the following EXCEPT
Change of agent's marital status
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
A whole life policy os surrendered for a reduced- paid up policy. The cash value in the new policy will..?
Continue to increase
An individual has a $200,00 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
What would likely be covered under the Accidental Death rider?
Death caused by a head-on collision
An insurer mails an insurance policy to a new policy owner. When the insurer relinquishes control of the policy, the policy is considered..?
Delivered
The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of action?
Deny any payment of death benefit
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate Conservation
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extend term
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
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
Fixed Amount
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation
The owner deferred annuity pays $100 in premium one month, and $130 the next month. Which of the following terms best describes this premium payment?
Flexible premium
If a license is revoked , the license will NOT be eligible for a new license
For 5 years
An insurer incorporated under the laws of another state but doing business in this state is considered..?
Foreign
An insurer that operates for one or more social, educational, charitable, benevolent, or religious purposes, for the benefit of its members is known as a?
Fraternal Insuer
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this?
Grace period
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before hand
To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable Interest
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
Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract?
Insurance transaction
The provision that sets forth the basic agreement between the insurer and the insure and sates the insure's promise to pay the death benefit upon the insure's death is called the?
Insuring clause
When comparing a Joint Life Policy to two indvidual life polices of the same amount on the same insureds, which condition is true?
Joint Life has a lower premium than the total of the two individual polices
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?
Joint life
An agreement that is enforceable by law is known as what kind of contract?
Legal
An illustration in the sale of life insurance policy must include a label stating
Life insurance illustration
Guaranteeing future dividends is considered to be na unfair or deceptive act known as..?
Misrepresentation
An insurance company that is owned by the policyholders is called a
Mutual insurer
If an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answer to those questions?
Never; the insure has waived its right to those answers by issuing the policy
Dividends received on participating life insurance policies are..?
Not taxable because they are a return of unused premiums.
Which of the following best defines the unfair trade practice of rebating?
Offering an inducement of something of value not specified in the policy
What statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
When the owner of a participating whole life policy uses the divided to provide more life insurance coverage, which of the following divided options is being used?
Paid-up additions
Which dividend option will increase the death benefit?
Paid-up additions
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy of either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit
Policies written on a third-party ownership basis are usually written to cover:
Policy owner's minor children or business associates
The manner and/or frequency that the policy owner pays the policy premium is called?
Premium Mode
What is the difference between a straight life policy and a 20-pay whole life policy
Premium payment period
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
All of the following are true of annually renewable term insurance EXCEPT The death benefit remains level The policy must be renewed no matter what happens to one's health Proof of insurability must be provided at each renewal The premium increases each year
Proof of insurability must be provided at each renewal
The purpose of the Fair Credit Reporting Act
Protect consumers against the circulation of inaccurate or obsolete personal or financial information
An annuity would normally be purchased by an individual who wants to
Provide income for retirement
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
Purchase of a new home
What does the application of contract of adhesion mean?
Since, the insured does not participate in preparing the contract, any ambiguities would b resolved in favor of the insured
A whole life policy that will generate immediate cash value is a..?
Single Premium Policy
Which statement is CORRECT?
Solicitation if insurance may not associated with the federal government
What will not be included in the buyer's guide?
Specific information about the policy
The family term rider incorporates
Spouse term and children's term
Which of the following does NOT constitute false advertising?
Stating that dividends are not guaranteed
In contrasting stock insures with mutual insures, which statement is true?
Stock insurers are owned by the shareholders and issue non participating policies
Life insurance can provide what?
Survivor protection
Which of the following policies would NOT offer a policy loan? Whole life Universal Life Variable universal life Term life
Term Life
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
What is not correct
Testimonials used in advertisements may or may-not apply to the policy advertised
If an agent suspects that a fraudulent insurance act has been committed in this state, whom should the agent notify first and foremost?
The Insurance Fraud Unit of the Texas Department of Insurance
With Adjustable Life, the owner can change all of the following EXCEPT
The Insured
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
In life insurance, which of the following is NOT required to have an insurable interest in the insured?
The beneficiary
All of the following are true about key person insurance EXCEPT The death benefit is taxable to the business The business is the applicant and owner The employee must give written consent by signing the application The business is the beneficiary
The death benefit is taxable to the business
A false statement about Group Life Insurance
The employer is the beneficiary
In Texas, life insurance polices that include illustrations must include which of the following disclosures?
The illustration is not part of the insurance contract
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
Sharing commission is legal if..?
The other party is license for the same lines of insurance as the agent sharing the commission.
Who bears the investment risk in a variable life insurance policy
The policy owner
According to the Common Disaster Clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
The primary beneficiary died before the insured
When a settlement option is chosen at death, how are the monthly income payments taxed?
The principal portion is generally income tax-free while the interest portion is taxed as ordinary income
If an applicant submits the initial premium with an application which action constitues acceptance?
The underwriters approve the application
What is the maximum period of time the Commissioner may revoke your agent's license?
There is no maximum time period
Which statement is accurate description of life insurance policy diviends?
They are not taxable and are not guaranteed
Unfair claims practices will be assumed to be intentional if
They occur with such frequency as to indicate a general business practice
Two indviduals of the same age, health stats, and life expectancy apply for individual insurance coverage. When polices are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
Unfair Discrimination
An Insured's flexible premium is invested into a separate account. What type of insurance product did he purchase?
Variable Universal Life
In Texas, Nonforfeiture law applies to which of the following insurance polices?
Whole life insurance
When an insured terminates membership in the insured group, the insured can convert to..?
Whole life without proof of insurability
Which of the following is true regarding policy conversion from group to individual coverage?
conversion must occur within 31 days
False Statement about regarding an Ordinary (Straight) Life policy
it does not have a guaranteed death benefit
For a contract to be enforceable by law, the purpose of the contract must be
of pure Legal and not against public policy