Texas Life Agent Exam Questions
A $10,000 Life insurance policy with a Triple Indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in a hospital five months later. The death proceeds payable under the policy would be:
$10,000
Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. The maximum amount that Mr. Metz will be able to convert is which of the following?
$2,000
The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is:
$2,000
A customer buys a $25,000 life insurance policy with a $25,000 Accidental Death Benefit rider attached. If he dies of cancer, how much will his policy pay?
$25,000
When the Commissioner finds, after a hearing, that a person has intentionally violated an insurance regulation, what is the maximum fine that may be levied:
$25,000
John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of:
100
Conversion of a Group Life Insurance policy may not be made to:
15 year level term
Which of the following is an example of a Limited-Pay Life policy:
20-Pay Life
At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response?
20-Pay life will accumulate cash value faster
Texas resident agents must complete _____ hours of continuing education every two years.
24
Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage?
31
Conversion to an Individual Whole Life Insurance policy written by the same company is permitted without a physical exam for ______days after termination of your employment:
31
How long does an agent whose license has been revoked have to wait before they can reapply for a new license:
5 years
Traditional IRAs have a premature distribution penalty for distributions taken prior to age
59 1/2
Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay?
A $50,000 decreasing term policy for 20 years.
A Life insurance policy of which the cash value is over-funded according to IRS rules is known as:
A Modified Endowment Contract
An insurable interest must exist when:
A life insurance policy is issued
"Twisting" is a commonly-used term describing:
A misrepresentation made to a policyholder for the purpose of inducing the lapse, forfeiture, surrender, retention or conversion of any policy of insurance
A producer submits a completed and signed application to the underwriter along with the first premium check. After checking the results of the physical exam, the underwriter issues a 'rated policy'. Which of the following will not be required?
A new completed and signed application
A Texas resident agent seeking to sell insurance to customers in another state needs:
A non-resident license in that state
A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy:
Adjustable Life
You have a client that is a real estate agent. Which of the following types of permanent protection is best for this type of client?
Adjustable life
A person appointed by an insurer to solicit or sell insurance on their behalf in this state is known as a(n):
Agent
All are true about insurance licensing EXCEPT:
All accounts of a terminated agent must be non-renewed by the insurer
Conditions for a corporate agency seeking a Texas insurance agent's license include:
All active corporate officers must have individual agent's licenses
Credit Life Insurance:
All answer options are correct
Which of the following is an unfair or deceptive act in connection with the sale of a life insurance policy:
All answer options are correct
Which of the following contracts require that a series of benefit payments be made at specified intervals?
Annuity
An insurable interest must exist:
At the time of the application
A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is:
Automatic premium loan
The provision in a life insurance policy that provides protection against unintentional policy lapse is known as?
Automatic premium loan provision
A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a:
Buy and Sell Agreement
All of the following are considered to be owner's rights under a life insurance policy, EXCEPT:
Changing an irrevocable beneficiary
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
Charge the extra premium
To add coverage for a child to your Whole Life policy you would purchase which of these riders?
Child term rider
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as:
Coercion
To obtain a Texas license, you must do all EXCEPT:
Complete pre-license training
When the applicant passes the exam and qualifies in all other respects except for the fingerprint check by the FBI, the Department of Insurance will issue a license called:
Conditional
All of the following are a part of a life insurance policy, EXCEPT:
Conditional receipt
A prospect's statements made in the application for insurance constitute a part of which of the following?
Consideration clause
When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group:
Contributory
An agent who procures a license for the principal purpose of obtaining insurance for themselves, for family members or employees, violates the regulations prohibiting:
Controlled business
Which of the following individual policy conversions is usually permitted without any evidence of insurability?
Conversion from a term policy to a whole life whole life policy
The Life Insurance Replacement Rule does not apply to which of the following:
Credit Life
Making false or malicious statements about the financial condition of an insurer or agent is what type of Unfair Trade Practice:
Defamation
A client buys a life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will:
Deny the claim, but refund the premium
All could be considered rebates EXCEPT:
Dividends
The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the:
Entire Contract Clause
Temporary licenses issued in Texas generally:
Expire in 90 days
Which federal law governs consumer investigative reports:
Fair Credit Reporting Act
If a license is revoked, the licensee shall NOT be eligible for a new license:
For at least 5 years
Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health?
Guaranteed insurability rider
If an existing client of a producer wants to buy another life insurance policy, the producer should:
Have the customer come in and complete and sign a new application
An annuity is designed to provide which of the of following financial features? I: the liquidation of principle and interest II: favorable tax treatment III: the creation of an estate
I and II
Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson
I and II
Which of the following statements is true about exercising a Guaranteed Insurability option: I: The new insurance is available at the original issue age rate II: Evidence of insurability is not required III: The insured can exercise the option at any time after the age of 21 IV: The maximum purchase is specified in the contract
II and IV
Once completed and signed by the applicant, a producer may change an application:
If the applicant initials the change
Which of the following statements about the Misstatement of Age provision in a life insurance policy is true?
If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable
A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a:
Immediate annuity
False advertising includes which of the following:
Implying that you are the insurer rather than the agent
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the:
Incontestability clause
When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT:
Increase the amount of insurance
All are true about variable products sold in this state EXCEPT:
Insurers invest the customer's premiums in their general account
The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the:
Insuring Clause
A beneficiary designation that prevents the policy owner from making certain changes in the policy is:
Irrevocable
Most term life insurance:
Is convertible to permanent Whole Life without a physical exam
Which of the following is true about the Misstatement of Age provision:
It allows the insurer to adjust benefits
Which of the following is true about the Insuring Clause?
It contains the insurer's enforceable promise to pay covered claims
Which of the following is true when the insurer issues a 'rated policy'.
It is considered to be a counteroffer
In the formation of a life insurance contract, the special significance of a conditional receipt is that it:
It is intended to provide coverage on a date earlier than the date of the issuance of the policy.
Which of the following statements about a renewable term policy is true?
It is renewable at the option of the insured
Which of the following is NOT true regarding the replacement of Life insurance:
It is unlawful
All of the following are true about Credit Life insurance EXCEPT:
It must be written as group insurance
Which of the following is true about the Texas Life, Accident, Health and Hospital Service Insurance Guaranty Association:
It protects the customers of insolvent insurance companies
Which of the following statements about the Reinstatement Provision is true?
It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated
Which of the following statements is true about a policy assignment
It transfers the owner's rights under the policy to the extent expressed in the assignment form
Which of the following settlement options might provide payments that exceed the proceeds of the policy and the interest earned?
Life annuity
Which of the following is an example of a limited-pay life policy?
Life paid-up at age 65
On life insurance, the purpose of the Entire Contract Clause is to:
Limit the policy to the contract plus the application, if attached
Insurers applying for authority to do business in Texas are required to do all of the following, EXCEPT:
Maintain their home office in Texas
On May 8th a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14th and issued the policy on May 15th. The producer delivered the policy on May 26th and collected the first premium. The coverage became effective on:
May 26th
With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the:
Medical Information Bureau (MIB)
Circulating deceptive sales material to the public is what type of Unfair Trade Practice:
Misleading advertising
A client applied for Life insurance on October 1st. The application was approved and the policy was issued on October 10th. It was delivered to the customer on October 18th. When did the Free Look start?
October 18
The Insurance Commissioner shall examine each established, authorized insurer in Texas no less than:
Once every five years
Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to:
Ordinary income tax plus a 10% penalty
A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the followin riders to his policy?
Other Insured Rider
Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add?
Other insured rider
A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following?
Ownership provision
To become a Texas insurance agent, you must:
Pass an exam
If the insured understated his age and the error is discovered after the insured's death, the insurance company will?
Pay the amount that the premium paid would have purchased at the correct age
If the insured dies 5 years after he bought a life insurance policy and the insurer determines that there was material misrepresentation on his application, they will:
Pay the claim
Which of the following is NOT considered an unfair practice:
Paying dividends to policyholders out of a surplus accumulated from participating policies
Grandma owns a policy on her grandchild. Which rider would kick in if Grandma should die tomorrow?
Payor benefit rider
In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments?
Payor benefit rider
An insurance company will grant an advance from the cash value of a life insurance policy when the policy owner requests which of the following?
Policy loan
Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the:
Policy owner
Which of the following statements is true about the premium amount schedule for a Whole Life policy?
Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death
Where there is no unconditional refund provision of at least 10 days, a Buyer's Guide and a policy summary must be delivered to the prospective life insurance purchaser:
Prior to accepting an initial premium
The purpose of the Grace period is:
Protect the policy owner against unintentional lapse
Which of the following is NOT prohibited under the Unfair Practices section of insurance law:
Readjusting group premium rates based on loss or expense experience
Which of the following is a non-forfeiture option that provides continuing cash value buildup
Reduced Paid-Up
A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy, and when the producer visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should:
Refuse to deliver the policy or to accept any premium offered
What life insurance policy provision applies if a policy lapsed last year and the insured wants it. back?
Reinstatement
Statements made by an insurance applicant on a life insurance policy that are supposed to be true are referred to as:
Representations
Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as:
Revocable beneficiary
Which of the following is not considered to be a 'qualified' plan
Split Dollar
The type of government primarily concerned with the regulation of insurance and insurance companies is:
State government
Which of the following statements about a typical suicide clause in a life insurance policy is true?
Suicide is excluded for a specific period of years and covered thereafter
A life insurance policy that covers two parties, but only pays when the last party dies is known as:
Survivorship Life
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
An insurance producer selling a variable annuity whose cash value depends on the performance of an underlying investment account must be registered with
The Financial Industry Regulatory Authority (FINRA, formerly NASD)
In order to sell variable life insurance you must be registered with which of the following?
The NASD (FINRA)
If an agent is convicted of a felony in this or another state, who do they have to notify:
The State Department of Insurance
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT:
The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report
In the replacement of existing life insurance policies, regulations mandate disclosure of relevant information to all of the following EXCEPT:
The beneficiaries of the existing policy
Which of the following is NOT correct regarding Ordinary Whole Life policies?
The cash value grows more quickly in the beginning years of the policy.
When giving a client a conditional receipt, which of the following is true?
The coverage will begin at earliest as of the date of the application or when the client passes a physical, whichever is later.
Under the Unfair Claims Settlement Practices Act, which of the following is NOT unfair:
The denial of an unsubstantiated claim
All of the following are true about Group Life insurance EXCEPT:
The employer is the beneficiary
An insured died during the grace period of their life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary:
The face amount of the policy less any earned premiums
If an application for life insurance is not complete:
The insurer will return it to the producer
A client with a participating Life insurance policy receives both interest and dividends. What are the tax implications?
The interest is taxable, but the dividends are not
Sharing commissions is legal if:
The other party is licensed for the same lines of insurance you are
The contingent beneficiary will receive policy proceeds when:
The primary beneficiary pre-deceases the insured
Dividend projections may be included in a proposal for Life insurance when which of the following is true?
There is a clear statement that payment of future dividends is not guaranteed
What is the maximum period of time the Commissioner may revoke your agent's license:
There is no maximum time period
If an agent's license is suspended or revoked, what happens to their accounts:
They continue in force
Which of the following statements regarding temporary licenses is FALSE:
They may be renewed
Unfair claims practices will be assumed to be intentional if:
They occur with such frequency as to indicate a general business practice
What is the maximum time a Texas insurance agent's license may be issued for:
Two years
A life insurance police that combines term insurance protection, a flexible premium, and cash value accumulation is:
Universal Life
If a person wants to invest in a lump sum in an annuity that may appreciate along with market and economic conditions, they should buy a:
Variable annuity
A life insurance policy whose cash value will fluctuate depend upon the performance of a separate account is:
Variable life
If a client wants ash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy:
Variable/Universal Life
The life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness:
Waiver of premium
Under what circumstances may a partially or totally blind person be offered life insurance at rates different from those applying to persons with unimpaired sight:
When such handicap is relevant to the risk of loss
Life insurance becomes effective when:
When the conditions in the conditional receipt are satisfied
The time period covered by the Free Look Provision of a life insurance contract starts:
When the insured receives the contract and makes the first premium payment, if needed
A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start?
When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health
A producer completes an application for Life insurance and sends it to the underwriter who approves it and issues the policy. When is the coverage effective:
When the producer delivers the policy and picks up the premium
Dividend projections may be included in a proposal for Life insurance when which of the following is true?
When there is a clear statement that they are not guaranteed
Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation?
Whole Life
