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Texas Life and Health Insurance
Examination with A+ Answers
A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? Claim will be paid and coverage will remain in force Claim will be denied and coverage will remain in force Claim will be denied and coverage will be cancelled Claim will be denied, the coverage cancelled, and all premiums paid will be refunded - ✔✔Claim will be paid and coverage will remain in force A group life insurance policy may NOT insure groups consisting exclusively of persons who are salaried, clerical, or administrative employees hourly paid laborers or their supervisors administrative, managerial, or sales personnel related by marriage, blood or legal adoption - ✔✔related by marriage, blood or legal adoption
A Health Maintenance Organization (HMO) may issue an Evidence of Coverage form after it has been approved by the State Board of Health HMO's Board of Directors Commissioner of Insurance State HMO Association - ✔✔Commissioner of Insurance A level premium indicates: the premium is fixed for a period stated in the contract, then becomes variable the premium can only be changed with the consent of the insurer the premium stays level until the policy's renewal date the premium is fixed for the entire duration of the contract - ✔✔the premium is fixed for the entire duration of the contract A life insurance illustration is NOT required to include the name of the insurer underwriting or rating classification upon which the illustration is based initial death benefit company's mortality table - ✔✔company's mortality table
A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need? Revocable Contingent Irrevocable Primary - ✔✔Irrevocable A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? Straight life accumulates faster than Limited-pay Life 20 - Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20 - Pay Life and Straight Life accumulate cash value at the same rate - ✔✔ 20 - Pay Life accumulates cash value faster than Straight Life A stock insurance company is owned by it's directors stockholders
agents insureds - ✔✔stockholders ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has: waived one of its legal rights issued a voidable policy committed an act of fraud assigned the risk to a reinsurer - ✔✔waived one of its legal rights According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options? Annually Semiannually Quarterly Monthly - ✔✔Monthly Additional coverage can be added to a Whole Life policy by adding a(n): payor rider accelerated benefit rider
critical illness policies - ✔✔life insurance policies All of the following statements about health coverage for newborns are correct EXCEPT coverage begins and benefits are payable from the moment of birth coverage includes necessary care and treatment of congenital defects coverage during the first year is limited to congenital defects continued coverage after the first 31 days is dependent on notification - ✔✔coverage during the first year is limited to congenital defects An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? When the policy is issued The date of policy delivery When the conditions of the receipt are met The date the sales appointment was set - ✔✔When the conditions of the receipt are met An agent MUST give a prospective insured an Outline of Coverage when taking an application for a
Whole life policy Variable Annuity Medicare Supplement policy Term Life policy - ✔✔Medicare Supplement policy An agent who tells a client that dividends are guaranteed may be guilty of fraud rebating misrepresentation slander - ✔✔misrepresentation An agent who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of defamation rebating coercion discrimination - ✔✔coercion An applicant for an agent's license must meet which of the following requirements?
An incomplete life insurance application submitted to an insurer will result in which of these actions? Application will be returned to the writing agent Application will be approved with restrictions Application will be pending until a MIB report is sent to the insurer Application will be automatically declined - ✔✔Application will be returned to the writing agent An insurance agent does NOT have fiduciary responsibilities to *insurance companies *insureds *applicants *other agents - ✔✔other agents An insurance company must do which of the following to terminate an agent's appointment? Send notice of the termination to the Texas Department of Insurance Request that the Texas Department of Insurance cancel the agent's license Notify the agent of the termination at least 30 days before the effective date of termination
Request a hearing before the Commissioner of Insurance - ✔✔Send notice of the termination to the Texas Department of Insurance An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses? Loss of life due to a heart attack Loss of eyesight due to an accidental injury Loss of the spleen due to an accidental injury Partial paralysis due to a stroke - ✔✔Loss of eyesight due to an accidental injury An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision? 7 10 20 31 - ✔✔ 31 An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Benefits for drug and alcohol treatment under a group health policy must include all of the following services EXCEPT treatment in a certified facility transportation to and from an outpatient facility outpatient treatment through a public hospital or clinic group therapy prescribed by a physician - ✔✔transportation to and from an outpatient facility Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the Texas Insurance Code covering *rebating *false advertising *discrimination *unfair methods of competition - ✔✔unfair methods of competition
C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most? The cost The nonforfeiture options The contestable period The assignment of ownership - ✔✔The cost D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits? *Residual Benefit clause *Waiver Benefit clause *Concurrent Benefit clause *Guaranteed Benefit clause - ✔✔Residual Benefit clause D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? Limited-pay life Graded Premium Level term Endowment - ✔✔Level term
Group life policies MUST include all of the following provisions EXCEPT Ownership Beneficiary Designation Conversion Privilege Right to Loan Proceeds - ✔✔Right to Loan Proceeds How does a typical Variable Life Policy investment account grow? Tied to price of gold Through mutual funds, stocks, bonds Based on returns from insurer's general account Tied to Treasury Bills - ✔✔Through mutual funds, stocks, bonds How long is the typical free look period for Long Term care insurance policies? 20 days 30 days 40 days 50 days - ✔✔30 days If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insurer Beneficiary Reinsurer Insured - ✔✔Insured If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations, EXCEPT: When the cause of death is unknown When the state prohibits this by law When consent for the autopsy is not obtained When foul play was a contributing factor - ✔✔When the state prohibits this by law If an insurance company is organized under the laws of New Jersey and licensed to do business here, it is considered which of the following in Texas? a domestic company a foreign company an alien company an imported company - ✔✔a foreign company
pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age pay the policy proceeds less a penalty not to exceed 12% of those proceeds - ✔✔pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? Nonforfeiture Entire Contract Insuring Clause Owner's Rights - ✔✔Owner's Rights In an individual retirement account (IRA), rollover contributions are: subject to capital gains tax subject to ordinary income tax partially limited by dollar amount not limited by dollar amount - ✔✔not limited by dollar amount In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:
Whenever an insured is unable to work During the time an insured is confined in a hospital Following an accidental injury, but not during sickness After an insured has become totally disabled as defined in the policy - ✔✔After an insured has become totally disabled as defined in the policy In Texas, a domestic insurance company is defined as a company that employs Texas residents agents only maintains a full service branch office in Texas is incorporated and formed in Texas is licensed to issue Homeowners policies only - ✔✔is incorporated and formed in Texas Insurance agent licenses normally must be renewed every six months one year two years three years - ✔✔two years Insurance company agent appointments remain in force for which of the following maximum periods of time, if any?
