LicenseCoach - Texas Life Insurance Final Exam

After proof of death has been provided, how much time does a life insurance company have to pay the claim?

2 months

If an applicant is found guilty of material misrepresentation on an application, how long does the insurer have to contest the policy?

2 years from the effective date of the policy

What is the maximum reinstatement period for a life insurance policy in Texas?

3 years

If a group life insurance policy is terminated, an individual policy can be issued within how many days?

31 Days

What is the grace period for life insurance policies in Texas?

31 Days

What is the maximum amount of time an insurance policy may be backdated?

6 months

A variable whole life policy would be the most appropriate for:

A 34 year old executive with a lawyer wife and a child

A decreasing term life policy would be the most appropriate for:

A 41 year old lawyer who wants a policy to pay his mortgage if he dies

Josh wants to provide income for his family for a designated period if he should die, and a lump sum benefit as well. He should purchase:

A family income rider

What should someone buy who is concerned about being able to function independently without help when they become older?

A long-term care rider attached to a life insurance policy

Errors & Omissions are most likely to occur during:

A replacement

With what receipt is coverage assured, even if the person is later proved to be uninsurable, until the insurer formally rejects the application?

Binding

A Business Continuation Agreement is used to assure business ownership is transferred upon the death of an owner or partner. Another name for this is:

Buy and Sell Agreement.

If the Commissioner has reason to believe an insurer or agent has been engaging in any violation of insurance regulations, the Commissioner must first:

Call for a hearing of the suspected violation

Alex's life policy lapsed, which Nonforfeiture option would the insurer send him the value of the policy?

Cash surrender

What must an insurer have before engaging in the insurance business?

Certificate of authority

Which of the following is not a change that a policyowner can make to an adjustable life policy?

Change the named insured

The provision that determines who becomes the beneficiary if the insured and primary beneficiary both die in the same accident:

Common disaster

The policyowner's obligation to pay the premium is the:

Consideration Clause

What type group plan requires 75% participation?

Contributory

Preston needs a life policy. He is just starting out as a doctor. In two years he will be making more money, and would like the option for a more permanent policy. What type policy should he buy?

Convertible term

What are the two most common adjustments made during a month with a universal life insurance policy?

Cost of death protection deducted and current interest rate credited

Which of the following terms can be used in the advertising of life insurance policies in Texas?

Death

On December 6, an application for life insurance is submitted with the initial premium. On December 23 the insurer issues the policy. Due to it being Christmas, the agent doesn't deliver the policy until December 28. A conditional receipt was issued without a required medical exam. When is coverage effective?

December 6

What kind of term policy would a man with limited resources most likely purchase to make sure that his wife and children are secure in their home if he dies while the children are young and in school?

Decreasing term

Which of the following is NOT a nonforfeiture option that will protect the cash value of a permanent life insurance policy in the event of lapse?

Lengthened Benefit Period

What kind of contract pays an income to an insured until the insured dies?

Life annuity

What happens to a death benefit if it is determined that an applicant stated their age was younger than their actual age?

The death benefit would be lowered.

Which of the following is true about the Waiver of Premium provision in a life policy?

The disability must be total and permanent.

The fact that the application is part of the policy is stated in:

The entire contract

What are the advantages of purchasing a straight life policy?

The face amount and the premiums are level, and payable over the life of the insured, up to 100 years of age, the cash value and death benefits are guaranteed by the insurer. and the premium can be lower than limited payment and single premium polices.

Which of the following is not true about an increasing term policy?

The increases occur randomly.

Coverage becomes effective in a life policy when:

The initial premium is paid, and the policy is delivered.

The Commissioner must examine each insurer every:

5 years

To be allowed to convert a group life insurance policy to an individual policy, someone must have been employed for how much time?

5 years

Which contract pay an additional sum if the insured dies due to an accident?

AD&D (Accidental Death and Dismemberment)

In a life insurance policy in Texas what provision describes the early payment of a death benefit?

Accelerated life benefit

Transacting insurance does NOT include which of the following?

Adjudication

What would be best for someone who received a large lump sum from their company retirement and wants to be sure their basic living needs are always covered?

An immediate annuity purchased with a lump sum

Which of the following could be used to prevent a lapse in the payment of life insurance premiums?

Automatic premium loan

This type annuity benefit payments start at a later date, greater than 12 months from of purchase:

Deferred

The policy summary is usually given to the purchaser at the time of:

Delivery

Dylan is looking at buying an equity-indexed life policy; it will likely be tied to:

Dow Jones Industrial Average

The type policy agents buy to protect themselves if they give incorrect advice or didn't advise a client about an important issue is a:

E&O

If Dylan wants a set minimum rate of return, what type annuity should he buy?

Fixed

Becky is a 31 years old and knows she needs to start a retirement plan. She currently works in a bakery and is worried about how inflation would affect her retirement plan. Which annuity would be a good fit for her needs?

Flexible premium deferred annuity

Premium payment mode is:

Frequency of premium payments

The rider that you would pick if you want to be able to add coverage in the future, without having to show proof of insurability:

Guaranteed insurability

Blake died 20 days after his group life insurance coverage was terminated. He did not apply for individual coverage. Which of the following is true?

His beneficiary will receive the full death benefit.

If an agent's appointment is terminated for cause, how much time does the agent have to inform the Commissioner?

Immediately

The Commissioner can suspend a producer's license for all the following, EXCEPT:

Indictment for a felony

A person licensed to give advice regarding insurance policies in exchange for a fee includes all the following, EXCEPT:

Insurance broker

In which clause would the insurance company's promise to pay be included?

Insuring clause

If the word, variable, is in the name of an insurance plan or annuity, it means that:

Investment in securities is involved.

Which of the following statements is true about the return of premium rider?

It is an increasing term rider that matches the total premium input.

What type policy would pay the death benefits after the first person dies, if it covers two or more lives?

Joint life

Over-funded life insurance policies where the proceeds are subject to taxation are called:

MECs

Marshall wants to reinstate his life policy and to do so he need not do which of the following?

Make a collateral assignment to the insurance company.

Which of the following types of policy cannot be third-party ownership?

Modified life

Noncontributory plans:

Must have 100% participation

Which of the following are commercial companies owned by policyholders?

Mutual insurers

A credit life policy must contain all of the following, EXCEPT:

Name and address of the debtor

What approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities?

Needs

Which of the following is true about the granting of a temporary insurance license?

None of the above

All of the following are true regarding nonresident producer licensing, EXCEPT:

Nonresident licensees' home state must not have a reciprocal relationship with Texas.

A Lump Sum payment for life insurance is:

Not taxable

Baxter tells the insurer to keep the dividend and apply it to the face value of his life policy. He is using which dividend option?

Paid-up addition

Which of the following statements is not true about the tax liabilities for individual life insurance policies?

Policy loans are taxable as income.

A guaranteed insurability rider allows the insured to protect against insurability risk. What is NOT protected?

Premiums

Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using which dividend option?

Reduction of premium

Jamie has a renewable term policy. Which of the following is not an incorrect statement about this type of policy.

Renewability is the insurer's option.

All of the following acts are considered unfair trade practices, EXCEPT:

Replacement

In a life insurance policy, statements by the insured are considered:

Representations

When Jason filled out his application his statements had to be ______________ to be considered legal.

Representations

The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as:

Return of premium

A life insurance policy in Texas must contain all the following provisions, EXCEPT:

Settlement and/or Viatical

The manner in which the proceeds of a life policy are handled are specified in what provision?

Settlement options

Which of the following factors does not influence the amount that an individual receives as monthly income under Social Security?

Sex

Which type of life policy would best suit someone who retires in good health with a large amount of cash, whose investment goals are conservative?

Single premium whole life insurance

When an insured dies, the settlement option provision:

Specifies how the proceeds are handled.

Phil and Sarah bought a life policy in which both are insured. Sarah dies before Phil. If the policy pays the death benefit after Phil dies, it is a:

Survivorship life

For tax purposes, how are premiums from a group life policy treated for an employer?

Tax deductible

Jeff has limited financial resources, but finds himself in a position where he needs a good deal of protection. A __________would probably best suit his needs at this time.

Term policy

Sandra needs more protection than she can afford right now due to her limited financial resources. Her needs can be met by a:

Term policy

Which of the following is a difference between the level premium annuity and the flexible premium annuity?

The amount of the annuity benefit can be guaranteed.

In a life policy, a statement of good health is needed when:

The application does not include the premium.

Which of the following is not true about the granting of a temporary insurance license?

The license is valid for 6 months after date of issue and the license cannot be renewed more than twice in a 12 month period.

Which of the following statements regarding the misstatement of age provision is false?

The provision allows the policy to remain the same even if the insured's age is misstated on the policy application.

An insurance application is not complete unless it has:

The signature of the insured (unless not an adult), and the agent.

Jennifer made an additional premium payment on her Adjustable Life policy. Which of the following is not a way that her policy is affected by this payment?

The value of nonforfeiture options may decrease.

Which of the following is not true about variable universal life policies?

They have no provision for policy loans and withdrawals.

All of the following policies are not interest-sensitive EXCEPT:

Universal life

An agent's appointment remains in force:

Until terminated or surrendered

What is the advantage of a Waiver of Premium provision in a life policy?

Waive an insured's premiums if he/she becomes disabled.

If an applicants statements on an application are guaranteed to be true, they are:

Warranties.

An insurance producer inquired with what company an applicant had a Medicare Supplement policy. When she told him, the producer was silent. Concerned by his silence, the woman asked if the company was a reliable company. The producer asked, "Have you received any financial statements regarding their solvency?" This producer:

Was engaging in defamation

Jeremy, a producer, is proposing a life policy to a new client. When must he inform the client of their rights under the FCRA?

When he completes the application.

At what time during the application and approval process for life insurance must insurable interest exist?

When the application on a proposed insured is written.

Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled?

Yes, the interest can be paid annually, or added to the loan.