Texas Life Insurance Licensing Exam Practice Questions

All of the following statements are correct regarding credit life insurance EXCEPT? A) Benefits are paid to the borrower's beneficiary B) The amount of insurance permissible is limited per borrower C) Premiums are usually paid by the borrower D) Benefits are paid to the creditor

A) Benefits are paid to the borrower's beneficiary. "In credit life insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan"

The current interest rate on an equity indexes annuity is often based on?

An index like standard & poor's 500

An insurer must acknowledge receipt of a Notice of Claim within how many days? A) 5 B) 15 C) 20 D) 30

B) 15

In Texas, how is the Commissioner of Insurance place in office? A) Appointed by the Governor for a term of 4 years B) Appointed by the senate for a term of 2 years C) By election, at the same election when other state officials are chosen D) Appointed by the Governor for a term of 2 years

D) Appointed by the Governor for a term of 2 years

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? A) Insurable interest B) Modification clause C) Ownership provision D) Collateral assignment

D) Collateral assignment

Which of the following term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A) Undercutting B) Twisting C) Slandering D) Defamation

D) Defamation

A participating insurance policy may do which of the following? A) Provide group coverage B) Pay dividends to the stockholder C) Require 80% participation D) Pay dividends to the policyowner

D) Pay dividends to the policyowner "A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs".

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? A) 401(k) plan B) Tax-sheltered account plan C) HR 10 plan D) Profit sharing plan

D) Profit sharing plan

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit? A) Immediately after receiving written proof of loss B) On the next anniversary of the policy C) Within 30 days D) Within 2 months

D) within 2 months

What type of insurance policies is most commonly used in credit life insurance?

Decreasing term

Which is true regarding the accumulation period of annuity?

It's the period where the payments into the annuity grow tax deferred

If a settlement option is not chosen by the policy owner or beneficiary, which option will be used?

Lump sum

What are the licensing requirements for someone who sells variable life insurance?

Must have a federal securities licence and a state insurance license

Which policy assignment decreases in decreasing insurance?

The face amount (Death benefit)

What kind of policy allows withdrawals and partial surrenders?

Whole life and universal life

What is the purpose of settlement options?

determine how death proceeds will be paid