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Life Insurance Policy Provisions and Regulations, Exams of Personal Health

Tarrant County CollegePersonal Health

A wide range of topics related to life insurance policies, including cash value accumulation, dividend guarantees, policy conversion, grace periods, premium payment schedules, underwriting processes, annuity types, policy ownership and beneficiary changes, and various other policy provisions and regulations. It provides detailed information on the key features and requirements of different life insurance products, as well as the legal and regulatory framework governing the life insurance industry. The document would be particularly useful for insurance professionals, financial advisors, and individuals seeking a comprehensive understanding of life insurance policies and the associated rules and guidelines.

Typology: Exams

2024/2025

Available from 09/29/2024

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Texas Life Insurance Exam with Answers
1. P completes an application for a $10,000 life policy, but does not
give the producer the initial premium. P's coverage becomes
effective when - ✔✔P receives the policy and pays the premium
2. 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 carrer? - ✔✔20-Pay Life accumulates cash value faster than
Straight Life
3. How does an indexed annuity differ from a fixed annuity ? -
✔✔Indexed annuity owners receive credited interest tied to the
fluctuations of the linked index
4. During a sales presentation for a participating life insurance policy,
an agent MUST - ✔✔make a prospect understand that dividends are
NOT guaranteed
5. T is covered by an Accidental Death and Dismemberment (AD&D)
policy that has an irrevocable eneficiary. What action will the
insurance company take if I requests a change of beneficiary? -
✔✔request of the change will be refused
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Download Life Insurance Policy Provisions and Regulations and more Exams Personal Health in PDF only on Docsity!

Texas Life Insurance Exam with Answers

  1. P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when - ✔✔P receives the policy and pays the premium
  2. 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 carrer? - ✔✔ 20 - Pay Life accumulates cash value faster than Straight Life
  3. How does an indexed annuity differ from a fixed annuity? - ✔✔Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
  4. During a sales presentation for a participating life insurance policy, an agent MUST - ✔✔make a prospect understand that dividends are NOT guaranteed
  5. T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable eneficiary. What action will the insurance company take if I requests a change of beneficiary? - ✔✔request of the change will be refused
  1. Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? - ✔✔conversion
  2. T has a term policy that allows him to continue the coverage after expiration of the initial policy period What type of term coverage is this? - ✔✔renewable
  3. Which of the following is NOT a required provision in group life policies? - ✔✔Right to loan
  4. The Insurance Commissioner must give how many days notice prior to holding a hearing regarding an agent's unfair or deceptive practice? - ✔✔ 30
  5. The Accelerated Death Benefit provision in a life insurance policy is also known as a(n) ) - ✔✔Living Benefit
  6. In Texas, an individual life insurance policy is required to have a grace period of - ✔✔31 days
  7. Which statement is correct regarding the premium payment schedule for whole life policies? - ✔✔Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
  1. In regards to representations or warranties, which of these statements is TRUE? - ✔✔If material to the risk, false representations will void a policy
  2. What provision in a life insurance policy states that the application is considered part of the contract? - ✔✔Entire Contract provision
  3. J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? - ✔✔ 20 - pay life
  4. Which of the following statements about accumulated interest eared on dividends from an insurance policy is TRUE? - ✔✔It is taxed as ordinary income
  5. A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? - ✔✔Waiver of Premium
  6. Which of the following is a requirement for obtaining a Texas insurance agent's license? - ✔✔Be honest, trustworthy, and reliable
  1. Which of the following groups may NOT be insured by a group life insurance policy? - ✔✔Individuals who are related by blood
  2. The amount of coverage on a group credit life policy is limited to - ✔✔the insured's total loan value
  3. D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - ✔✔The full face amount
  4. The underwriting process involves all of these EXCEPT for - ✔✔Policy loan
  5. Which of the following Dividend options results in taxable income to the policyowner? - ✔✔Accumulation at interest
  6. Which of these is NOT relevant when determining the amount of personal life insurance needed? - ✔✔Local unemployment rate
  7. An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ✔✔Full face amount minus any past due premiums
  1. How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - ✔✔6 months
  2. N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities?
    • ✔✔Flexible Installment Deferred
  3. The Consideration clause of an insurance contract includes: - ✔✔the schedule and amount of premium payments
  4. What type of employee welfare plans are not subject to ERISA regulations? - ✔✔Church plans
  5. A policyowner is allowed to pay premiums more than once a year under which provision? - ✔✔Mode of Premium
  6. Which of these is an element of a Single Premium annuity? - ✔✔Lump-sum payment
  7. Insurance policies are considered aleatory contracts because - ✔✔performance is conditioned upon a future occurrence
  8. F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly

according to a schedule. What kind of policy is needed? - ✔✔Decreasing term policy

  1. To terminate an agent's appointment, an insurance company must - ✔✔Send termination notice to the Texas Department of Insurance
  2. The annuity that represents the largest possible monthly payment to an individual annuitant is a(n) - ✔✔Straight Life annuity
  3. An example of false advertising would be - ✔✔An insurer exaggerating its dividends in a magazine advertisement
  4. A new agent must complete at LEAST_ licensure. hours of continuing education within 24 months of initial - ✔✔ 24
  5. An insured may assign up toof policy ownership under an individual life insurance policy - ✔✔100%
  6. Which statement regarding the Change of Beneficiary provision is true? - ✔✔The policyowner can change the beneficiary
  7. Which of the following is NOT included in a life insurance illustration? - ✔✔Company's mortality table
  1. T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? - ✔✔Conditional receipt
  2. S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? - ✔✔$50,
  3. An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the - ✔✔applicant's physician
  4. T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - ✔✔Life Annuity with Period Certain
  5. The phrase "transacting business" includes - ✔✔Collecting premiums
  6. In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide? - ✔✔2 years
  1. What action can a policyowner take if an application for a bank loan requires collateral? - ✔✔Assign policy ownership to the bank
  2. What is the Suicide provision designed to do? - ✔✔safeguard the insurer from an applicant who is contemplating suicide
  3. An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program? - ✔✔$25,
  4. ___ of continuing education MUST be completed in the classroom or classroom equivalent. - ✔✔50%
  5. What kind of life insurance product covers children under their parent's policy? - ✔✔Term rider
  6. All of these statements concerning Settlement Options are true, EXCEPT: - ✔✔Only the beneficiary may select
  7. Which type of policy is considered to be overfunded, as stated by IRS guidelines? - ✔✔Modified Endowment Contract
  1. When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? - ✔✔Establishes the needs of the individual and his dependents
  2. Which of the following types of policies pays a benefit if the insured goes blind? - ✔✔AD&D
  3. A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the - ✔✔Policy Loan provision
  4. A Renewable Term Policy is renewable at the option of the - ✔✔insured
  5. N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? - ✔✔30 Pay Life
  6. With whom may an agent legally share commissions? - ✔✔Another agent with the same line of insurance
  1. A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid - ✔✔mandatory income tax withholding on the transfer amount
  2. Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ✔✔Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
  3. When must insurable interest be present in order for a life insurance policy to be valid? - ✔✔When the application is made
  4. G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer - ✔✔Does not have to make any further payments
  5. A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. - ✔✔variable
  6. An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum Jpon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the

accident, where would the death proceeds be directed? - ✔✔daughter

  1. Who owns a stock insurance company? - ✔✔stockholders
  2. Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J. because the check is made out to J instead of the insurance company. What action should I take? - ✔✔Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
  3. In a qualified retirement plan, the yearly contributions to an employee's account - ✔✔are restricted to maximum levels set by the IRS
  4. Whose life is covered on a life insurance policy that contains a payor benefit clause? - ✔✔child
  5. 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 conditions of the receipt are met
  1. Which of these is NOT a reason for a business to buy key person life insurance? - ✔✔A pension deficiency if the key employee dies
  2. All of these statements about the Waiver of Premium provision are correct EXCEPT - ✔✔Insured must be eligible for Social Security disability for claim to be accepted
  3. How long does an insurance company appointment remain in force? - ✔✔Until terminated
  4. If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be - ✔✔an amount that the premiums paid would have purchased at the current age
  5. Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? - ✔✔Variable Life
  6. Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? - ✔✔Activate insurance companies financial reserves
  1. How are Roth IRA distributions normally taxed? - ✔✔Distributions are received tax-free
  2. An example of an unfair claims settlement practice is - ✔✔turning down a claim without providing the basis of denial
  3. A foreign insurance company conducting insurance business in Texas - ✔✔was formed under the laws of another state
  4. Which rider provides coverage for a child under a parent's life insurance policy? - ✔✔Child term rider
  5. Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? - ✔✔Ordinary income tax and a 10% tax penalty for early withdrawal
  6. The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and
- ✔✔the initial premium
  1. P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? - ✔✔P will still receive declared dividends
  1. On a life insurance policy, who is qualified to change the beneficiary designation? - ✔✔Policyowner
  2. A certificate of ____ permits an insurance company to transact business in - ✔✔Authority
  3. Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ✔✔Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
  4. Post-tax dollar contributions are found in - ✔✔Roth IRA investments
  5. Which statement regarding third-party ownership of a life insurance policy is true? - ✔✔It is used extensively in estate-planning as well as business circumstances
  6. Which statement about a whole life policy is correct? - ✔✔Cash value may be borrowed against