Texas Life Insurance Exam
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider . In which of the following scenarios will the rider waive the payment of premium ?
If the father is disabled for more than 6 months
Stranger - originated life insurance policies are in direct opposition to the principle of
Insurable interes
A life insurance policy has a legal purpose if both of which of the following elements exist?
Insurable interest and consent
Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance ?
Insurance agent
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance ?
Insuring clause
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured , and to whom the benefits will be paid ?
Insuring clause
The policyowner wants to make sure that upon his death , the life policy will pay a portion of the proceeds annually to his spouse , but that the principal will be paid to their children when they reach a certain age . Which settlement option should the policyowner choose ?
Interest only option
As a field underwriter , a producer is responsible for all of the following tasks EXCEPT
Issue the policy that is requested
Which of the following best describes a misrepresentation ?
Issuing sales material with exaggerated statements about policy benefits
Which of the following is TRUE of a qualified plan ?
It has a tax benefit for both employer and employee.
What is the purpose of a conditional receipt ?
It is intended to provide coverage on a date prior to the policy issue.
Which of the following statements about the reinstatement provision is true ?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated .
Variable Whole Life insurance is based on what type of premium ?
Level fixed
Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home ?
Long - term care
If a settlement option is not chosen by the policyowner or the beneficiary , which option will be used ?
Lump sum
What is the other term for the cash payment settlement option ?
Lump sum
On a participating insurance policy issued by a mutual insurance company dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid .
Under a pure life annuity , an income is payable by the company
Only for the life of the annuitant
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other insured rider
Which of the following is another term for the accumulation period of an annuity ?
Pay - in period
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will...
Pay the policy proceeds only if it would have issued the policy
Which of the following is NOT true about a joint and survivor annuity benefit option ?
Payments stop after the first death among the annuitants
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled ?
Payor Benefit
All of the following are mandatory life insurance policy provisions EXCEPT
Policy backdating .
All of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age , sex and occupation of each individual certificate holder .
In which of the following instances would the premium be tax deductible ?
Premiums paid by an employer on a $ 30,000 group term life insurance plan for employees
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
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
Rebating
The policyowner pays for her life insurance annually . Until now , she has collected a nontaxable dividend check each year . She has decided that she would rather use the dividends to help pay for her next premium . What option would allow her to do this ?
Reduction of premium
The Federal Fair Credit Reporting Act
Regulates consumer reports .
Theregulations regarding replacement apply to which of the following ?
Renewable term
. A man decided to purchase a $ 100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college . He discovered that his policy
Required a premium increase each renewal
A man decided to purchase a $ 100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college . He discovered that his policy
Required a premium increase each renewal .
When an insured under a life insurance policy died , the designated beneficiary received the face amount of the policy , as well as a refund of all of the premiums paid . Which rider is attached to the policy ?
Return of premium
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy . She also wishes to retain all of the rights of ownership The policyowner should have her husband named as the
Revocable beneficiary
A domestic insurer issuing variable contracts must establish one or more
Separate accounts .
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions
Upon policy delivery , the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium
Which type of life insurance policy generates immediate cash value ?
Single Premium
Which of the following applicants would NOT qualify for a Keogh Plan ?
Someone who works 400 hours per year
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles ?
Standard risk is representative of the majority of people
Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy ?
Substitute insured rider
Which of the following is an example of a producer being involved in an unfair trade practice of rebating ?
Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following is NOT the consideration in a policy ?
The application given to a prospective insured
The annuitant dies while the annuity is still in the accumulation stage . Which of the following is TRUE ?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
The annuitant dies while the annuity is still in the accumulation stage . Which of the following is TRUE ?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
The policyowner of an adjustable life policy wants to increase the death benefit . Which of the following statements is correct regarding this change ?
The death benefit can be increased by providing evidence of insurability
The policyowner of an adjustable life policy wants to increase the death benefit . Which of the following statements is correct regarding this change ?
The death benefit can be increased by providing evidence of insurability .
Which of the following best describes the tax advantage of a qualified retirement plan ?
The earnings in a qualified plan accumulate tax deferred
An insured purchased a 10 - year level term life policy that is guaranteed renewable and convertible . What happens at the end of the 10 - year term ?
The insured may renew the policy for another 10 years , but at a higher premium rate
An insured purchased a 10 - year level term life policy that is guaranteed renewable and convertible . What happens at the end of the 10 - year term ?
The insured may renew the policy for another 10 years , but at a higher premium rate.
If an insurer issued a policy based on the application that had unanswered questions , which of the following with be TRUE ?
The policy will be interpreted as if the insurer waived its right to have an answer on the application .
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
If an insured continually uses the automatic premium loan option to pay the policy premium ,
The policy will terminate when the cash value is reduced to nothing
If an insured continually uses the automatic premium loan option to pay the policy premium ,
The policy will terminate when the cash value is reduced to nothing.
A life insurance counselor is someone who , for a fee or commission , offers to examine a life insurance , an annuity , or pure endowment policy and gives advice , recommendations or information regarding the policy's terms , conditions , benefits , coverage or premium .
The producer must provide the applicant with a Notice Regarding Replacement .
How are contributions to a tax - sheltered annuity treated with regards to taxation ?
They are not included as income for the employee , but are taxable upon distribution
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 policy owner?
Third - party ownership
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
The paid - up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy
The paid - up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy .
In insurance policies , the insured is not legally bound to any particular action in the insurance contract , but the insurer is legally obligated to pay losses covered by the policy . What contract element does this describe ?
Unilateral
An insured owns a life insurance policy . To be able to pay some of her medical bills , she withdraws a portion of the policy's cash value . There is a limit for a withdrawal and the insurer charges a fee . What type of policy does the insured most likely have ?
Universal life
What kind of policy allows withdrawals or partial surrenders ?
Universal life
Which of the following CANNOT be included along with illustrations used to sell life insurance ?
Vanishing premium information
Why is an equity indexed annuity considered to be a fixed annuity ?
it has a guaranteed minimum interest rate .
Who can make a fully deductible contribution to a traditional IRA ?
An individual not covered by an employer - sponsored plan who has earned income
consumer report been provided , the report may contain all of the following information EXCEPT the applicant's
Ancestry
The term " illustration " in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy . .
Who is considered a nonresident agent ?
An agent who resides in another state , but is licensed to write insurance in Texas .
The insured under a $ 100.000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident . It was determined that the accident was his fault . The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner . In this case , what will the policy beneficiary receive ?
$ 100,000
If $ 100,000 of life insurance proceeds were used in a settlement option , which paid $ 13,000 per year for ten years , which of the following would be taxable annually ?
$ 3.000
The Insurance Commissioner may examine the affairs of any insurer as often as necessary , but not less frequently than once every
5 years
How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer ?
60 days
The Commissioner of Insurance issues a Cease and Desist Order to an agent . If the agent wishes to contest the charges in court , how many days after the order was issued does the agent have to make the request ?
60 days
According to the Entire Contract provision , a policy must contain
A copy of the original application for insurance .
Which of the following is NOT a possible penalty for a violation of the Insurance Code ?
A fine up to $ 100,000
The term " illustration " in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy .
Which of the following is TRUE about a class designation ?
Beneficiaries are not identified by name
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary .
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
. An insurance professional advises a client regarding the benefits of her life insurance policy , in exchange for a fee . Which of the following terms best describes this type of insurance professional ?
Counselor
The term " fixed " in a fixed annuity refers to all of the following EXCEPT
Death benefit
An individual has just borrowed $ 10,000 from his bank on a 5 - year installment loan requiring monthly payments . What type of life insurance policy would be best suited to this situation ?
Decreasing term
Which of the following best describes an insurance company that has been formed under the laws of this state ?
Domestic
If an annuitant dies before annuitization occurs , what will the beneficiary receive ?
Either the amount paid into the plan or the cash value of the plan , whichever is the greater amount
When the insured selects the extended term nonforfeiture option , the cash value will be used to purchase term insurance with what face amount ?
Equal to the original policy for as long as the cash values will purchase .
If an insured worker has earned 40 quarters of coverage , the worker's status under Social Security disability is
Fully insured
Which of the following would NOT be considered rebating ?
Giving a client a $ 25 pen with the insurer's logo during the insurance application process
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates , without proving insurability , the policy includes a
Guaranteed insurability rider