TEXAS State Insurance License Exam

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

In Texas, how is the Commissioner of Insurance placed in office?

Appointed by the Governor for a term of 2 years

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an

Authorized Insurer

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

An agent holds an insurance license in the state of Kansas and would like to transact insurance in Texas. The agent became licensed before written examinations were required. Therefore, the agent has not actually passed any kind of examination. Which of the following is true?

The written examination requirement will be waived.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third Party Ownership

An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. Which term best describes what the agent did?

Twisting

Upon the submission of a death claim under a life insurance policy, when must the insurer pay the policy benefit?

Within 2 Months

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?

Collateral Assignment

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

When an individual obtains an insurance license for the primary purpose of writing insurance on him- or herself, or for members of his or her immediate family, or business, this is called

Controlled business.

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

Cost comparison methods

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Entire Contract

All of the following are dividend options EXCEPT

Fixed period installments

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

Which of the following would be considered false advertising?

Implying that the agent is the insurer

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

Insurers are barred from requesting HIV testing.

All of the following are Nonforfeiture options EXCEPT

Intrest only

Which of the following best describes annually renewable term insurance?

It's Level Term Insurance

Variable Life insurance is based on what kind of premium?

Level Fixed

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy

What is the other term for the cash payment settlement option?

Lump Sum

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid Up Option

All of the following are mandatory life insurance policy provisions EXCEPT

Policy Backdating

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof Of Insurability is not required

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount.

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT

Reduction of premium

Which rule would apply if an agent knows that an insured is going to cash in an old policy and use the funds to purchase new insurance?

Replacement

Which two terms are associated directly with the way an annuity is funded?

Single Payment or Periodic Payments

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Traditional IRA contributions are

Tax deductible

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?

The Policy will not be affected

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% withholding tax.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

A temporary license holder can receive a commission from a sale made to all of the following EXCEPT

The license holder's sister-in-law.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A Policy Summary

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

Which of the following is the closest term to an authorized insurer?

Admitted