Texas Life Insurance exam

#74. Viatical settlements may be rescinding within what time period after the viator receives the proceeds? a) 15 days b) 30 days c) 90 days d) Indefinitely

a) 15 days

#71. All of the following statements about the continuing education requirement in this state are true EXCEPT a) All licensed agents must comply by January 1 of even-numbered years. b) It does not allow excess credit hours to be carried forward to the next reporting period. c) Hours may be completed using independent self-study courses or classroom study. d) It requires satisfactory completion of 24 hours of approved training every 2 years.

a) All licensed agents must comply by January 1 of even-numbered years.

#65. All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract EXCEPT a) Availability of stranger-originated life insurance (STOLI). b) Alternatives to the viatical settlement. c) Tax consequences resulting from entering into the settlement. d) The amount of compensation received by any person from the viatical settlement.

a) Availability of stranger-originated life insurance (STOLI).

#95. An insurer must acknowledge receipt of a Notice of Claim within how many days? a) 5 b) 15 c) 20 d) 30

b) 15

#87. An agent completed a CE course in 2019. Until what year must the agent keep the records of completion? a) 2020 b) 2023 c) 2024 d) 2029

b) 2023

#37. An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? a) Second-to-Die b) Common Disaster c) Accidental Death d) Survivor Life

b) Common Disaster

#9. Annually renewable term policies provide a level death benefit for a premium that a) Fluctuates. b) Increases annually. c) Decreases annually. d) Remains level.

b) Increases annually.

#83. If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a) Qualified. b) Approved. c) Authorized. d) Certified.

c) Authorized.

#72. A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of a) Defamation. b) Twisting. c) Coercion. d) Loading.

c) Coercion.

#89. An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a) Twisting b) Defamation c) False advertising d) Unfair claims

c) False advertising

#60. If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? a) Fixed period b) Fixed amount c) Lump sum d) Life income

c) Lump sum

#25. 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? a) Paid-up additions b) Dividend Accumulation option c) Paid-up option d) Accumulation at Interest

c) Paid-up option

#82. Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? a) 14 b) 28 c) 30 d) 31

d) 31

#41. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 7 days b) 10 days c) 3 days d) 5 days

d) 5 days

#11. When an annuity is written, whose life expectancy is taken into account? a) Beneficiary b) Life expectancy is not a factor when writing an annuity. c) Owner d) Annuitant

d) Annuitant

#86. An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an a) Local insurer. b) Certified insurer. c) Self-insurer. d) Authorized insurer.

d) Authorized insurer.

#3. A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a) The premiums will become tax deductible until the insured's 18th birthday. b) Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. c) The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. d) The insured's premiums will be waived until she is 21.

d) The insured's premiums will be waived until she is 21

#28. All of the following are true regarding a decreasing term policy EXCEPT a) The death benefit is $0 at the end of the policy term. b) The contract pays only in the event of death during the term and there is no cash value. c) The face amount steadily declines throughout the duration of the contract. d) The payable premium amount steadily declines throughout the duration of the contract.

d) The payable premium amount steadily declines throughout the duration of the contract.

#24. 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? a) An irrevocable beneficiary b) A buy-sell agreement c) Family term rider d) Third-party ownership

d) Third-party ownership

#10. 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? a) Adjustable life b) Term life c) Limited pay d) Universal life

d) Universal life

#68. Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as a) Coercion. b) Rebating. c) Misleading advertising. d) Defamation.

a) Coercion.

#43. A key person insurance policy can pay for which of the following? a) Costs of training a replacement b) Loss of personal income c) Workers compensation d) Hospital bills of the key employee

a) Costs of training a replacement

#84. Which of the following is TRUE about credit life insurance? a) Creditor is the policyowner. b) Debtor is the annuitant. c) Creditor is the insured. d) Debtor is the policy beneficiary.

a) Creditor is the policyowner.

#40. Which of the following is true about the premium on the children's rider in a life insurance policy? a) It remains the same no matter how many children are added to the policy. b) It decreases when the oldest child reaches the age of 21. c) It increases when a newborn baby is added to the policy. d) It decreases when an adopted child is added to the policy.

a) It remains the same no matter how many children are added to the policy.

#7. A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Other-insured rider. b) Change of insured rider. c) Juvenile rider. d) Payor rider.

a) Other-insured rider.

#61. Which is NOT true about beneficiary designations? a) The beneficiary must have insurable interest in the insured. b) The beneficiary may be a natural person. c) The policy does not have to have a beneficiary named in order to be valid. d) Trusts can be valid beneficiaries.

a) The beneficiary must have insurable interest in the insured.

#23. An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of medical exam b) The date of policy delivery c) The date of issue d) The date of application

a) The date of medical exam

#17. The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom? a) The producer b) The beneficiary of the applicant c) The insurance company d) The applicant

a) The producer

#57. When would a 20-pay whole life policy endow? a) When the insured reaches age 100 b) At the insured's age 65 c) After 20 payments d) In 20 years

a) When the insured reaches age 100

#56. What is the main purpose of the Seven-pay Test? a) It guarantees the minimum interest. b) It determines if the insurance policy is a MEC. c) It requires level premium payments for 7 years. d) It ensures that the policy benefits are paid out in 7 years.

b) It determines if the insurance policy is a MEC.

#12. Which of the following is TRUE regarding the accumulation period of an annuity? a) It is limited to 10 years. b) It is a period during which the payments into the annuity grow tax deferred. c) It is also referred to as the annuity period. d) It is a period of time during which the beneficiary receives income

b) It is a period during which the payments into the annuity grow tax deferred.

#54. Which of the following statements is TRUE concerning the Accidental Death Rider? a) It is only available in group insurance. b) It will pay double or triple the face amount. c) It is also known as a triple indemnity rider. d) This rider is only available to insureds over the age of 65.

b) It will pay double or triple the face amount.

#14. A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a) Automatically pay the policy proceeds. b) Pay the policy proceeds only if it would have issued the policy. c) Pay the policy proceeds up to an established limit. d) Not pay the policy proceeds under any circumstances.

b) Pay the policy proceeds only if it would have issued the policy.

#63. All of the following are mandatory life insurance policy provisions EXCEPT a) Grace period. b) Policy backdating. c) Misstatement of age. d) Incontestability.

b) Policy backdating.

#51. All of the following are characteristics of group life insurance EXCEPT a) Certificate holders may convert coverage to an individual policy without evidence of insurability. b) Premiums are determined by the age, sex and occupation of each individual certificate holder. c) Amount of coverage is determined according to nondiscriminatory rules. d) Individuals covered under the policy receive a certificate of insurance.

b) Premiums are determined by the age, sex and occupation of each individual certificate holder.

#69. According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT a) Shortened benefit period b) Reduction of premium c) Reduced paid-up d) Extended term

b) Reduction of premium

#44. Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? a) Payor benefit rider b) Substitute insured rider c) Term rider d) Guaranteed insurability rider

b) Substitute insured rider

#45. All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) IRS approval requirements b) Taxation on accumulation c) Taxation of withdrawals d) Taxation of contributions

b) Taxation on accumulation

#59. Why should the producer personally deliver the policy when the first premium has already been paid? a) To make sure the policy is not stolen or lost b) To help the insured understand all aspects of the contract c) To ensure the producer gets paid commission d) To find out how the family has been doing since the initial presentation

b) To help the insured understand all aspects of the contract

#1. In a survivorship life policy, when does the insurer pay the death benefit? a) If the insured survives to age 100 b) Upon the last death c) Upon the first death d) Half at the first death, and half at the second death

b) Upon the last death

#20. All of the following are true regarding insurance policy loans EXCEPT a) The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. b) Policyowners can borrow up to the full amount of their whole life policy's cash value. c) Policy loans can be made on policies that do not accumulate cash value. d) The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies.

c) Policy loans can be made on policies that do not accumulate cash value.

#39. Children's riders attached to whole life policies are usually issued as what type of insurance? a) Adjustable life b) Whole life c) Term d) Variable life

c) Term

#19. Nonforfeiture values guarantee which of the following for the policyowner? a) That the death benefit will be paid in a lump sum b) That the policy premiums will never increase c) That the cash value will not be lost d) That the dividends will be paid annually

c) That the cash value will not be lost

#42. All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional insurance up to the amount specified in the base policy. b) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. c) This rider is available to all insureds with no additional premium. d) The insured may purchase additional coverage at the attained age.

c) This rider is available to all insureds with no additional premium.

#30. An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Reduction of Premium b) Annual Dividend Provision c) Accumulation at Interest d) Cash option

d) Cash option

#66. 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 a) Personal insurance. b) Rebating. c) Self-insurance. d) Controlled business.

d) Controlled business.

#50. Which statement is NOT true regarding a Straight Life policy? a) The face value of the policy is paid to the insured at age 100. b) It usually develops cash value by the end of the third policy year. c) It has the lowest annual premium of the three types of Whole Life policies. d) Its premium steadily decreases over time, in response to its growing cash value.

d) Its premium steadily decreases over time, in response to its growing cash value

#15. When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Purchase a term rider to attach to the policy. b) Pay back all premiums owed plus interest. c) Receive payments for a fixed amount. d) Purchase a single premium policy for a reduced face amount.

d) Purchase a single premium policy for a reduced face amount.

#48. 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 a) Secondary beneficiary. b) Contingent beneficiary. c) Irrevocable beneficiary. d) Revocable beneficiary.

d) Revocable beneficiary.

#62. The initial amount of credit life insurance may NOT exceed a) An amount set by statute and adjusted regularly for inflation. b) The borrower's monthly income. c) The borrower's annual income. d) The amount to be repaid under the contract.

d) The amount to be repaid under the contract.

#32. Which of the following products requires a securities license? a) Fixed annuity b) Equity Indexed annuity c) Deferred annuity d) Variable annuity

d) Variable annuity