Texas Health and Life Insurance Exam

Why does an insurer have a 2-year suicide clause?

a) because the commissioner of insurance requires it.

b) suicide is never paid for in life insurance.

c)to prevent payment of an immediate claim for a person contemplating suicide.

d) to help an insurer be more profitable.

Answer: C

To prevent payment of an immediate claim for a person contemplating suicide.

Which of these could the owner of a life insurance policy do when there is a collateral assignment?

a) determine how the dividends are used.

b) cash surrender the policy.

c) obtain another loan.

d) cancel the policy.

Answer: A

Determine how the dividends are used.

When only the insurer is allowed to alter an insurance contract, the clause that provides this is called?

a) ownership

b) entire contract

c) consideration

d) incontestable

Answer: B

Entire contract

Which of these is required to reinstate a lapsed policy?

a) obtain a loan

b) fill out a new application

c) pay a late fee

d) provide evidence of insurability

Answer: D

Provide evidence of insurability

The insuring clause in an adjustable life policy has all the following EXCEPT?

a) insured

b) insurer

c) amount of premium

d) amount of death benefit

Answer: C

Amount of premium

Which of the following cannot request or make a change to alter a life insurance policy?

a) the agent who wrote the policy

b) the policy owner

c) an executive officer of the insurer

d) a person who has absolute assignment

Answer: A

The agent who wrote the policy

Which of these cannot sign or request a change in an insurance contract?

a) policy owner

b) insured

c) executive officer of insurer

d) producer of insurer

Answer: D

Producer of insurer

When the policy owner pays a premium in exchange for the insurer's promise to pay, what provision is this?

a) consideration

b) entire contract

c) insuring clause

d) changes

Answer: A

Consideration

When the insurer cannot contest a claim after 2 years, that is called?

a) suicide clause

b) incontestability clause

c) entire contract

d) consideration clause

Answer: B

Incontestability clause

Misstatement of age or gender on the application will result in?

a) the policy being considered void or cancelled

b) return of premiums

c) death benefit paid adjusted to fit true age and gender

d) full death benefit regardless

Answer: C

Death benefit paid adjusted to fit true age and gender.

What happens if a person returns a policy during the free look period?

a) the insured may apply for another policy without a medical exam

b) the policy is immediately terminated; the insurer retains the premium for the underwriting costs

c) a refund of premiums minus the number of days the policy was in effect

d) a full refund of all premiums paid is returned

Answer: D

A full refund of all premiums paid is returned.

An applicant did not disclose a medial condition on a life insurance application 5 years later that person died due to the non disclosed condition. The insurer will?

a) keep all premiums and void the policy

b) refund all premiums and void the policy

c) pay the whole amount of the policy to the beneficiary

d) pay half of the policy to the beneficiary

Answer: C

Pay the whole amount of the policy to the beneficiary

An applicant lied about their age for a universal life policy. The insurer found out the truth at the time of death. The insurer will?

a) request the beneficiary to pay back the premiums for the correct age before paying the death benefit

b) refund all premiums and void the policy

c) pay the policy death benefit to reflect the correct age

d) pay the policy as it was issued

Answer: C

Pay the policy death benefit to reflect the correct age

A policy owner/insured takes a loan of 1/2 the cash value. The owner doesn't pay any interest that accumulates on the loan. which of these would be true?

a) dividends are withheld until the loan is paid back

b) interest is added to the loan annually

c) interest is deducted from the loan annually

d) dividends and interest are both withheld until the loan is paid back

Answer: B

Interest is added to the loan annually

Which of the following is NOT a non forfeiture option?

a) reduced paid up

b) extended term

c) cash surrender

d) life income

Answer: D

Life income

When an insured die with an outstanding loan on the policy which of the following applies?

a) nothing is payable the loan voids the policy's death benefits

b) the death benefit is payable minus any outstanding loans plus interest on the loan

c) all of the death benefit is paid without reductions

d) the loan must be repaid before any death benefits are paid

Answer: B

The death benefit is payable minus any outstanding loans plus interest on the loan

G has a life policy with his wife listen as primary beneficiary. They both die in a car accident. They don't know who died first. According to the Uniform Simultaneous Death Act where will the policy proceeds be paid?

a) wife's estate

b) g's estate

c) g's next of kin

d) wife's next of kin

Answer: B

G's estate

G has a life policy with his new wife listed as primary beneficiary and his son listed as contingent beneficiary. The whole family dies in the same accident. According to the Common Disaster Clause where will the policy proceeds be paid?

a) wife's estate

b) g's estate

c) son's estate

d) wife's and g's estate both share equally

Answer: B

G's estate

In which of these settlement options for life insurance would the death benefit not be paid out over a period of time?

a) fixed period

b) fixed amount

c) life income only

d) interest only

Answer: D

Interest only

Which of the following statements concerning settlement options is true?

a) principal payments and interest are income taxable

b) only the interest is taxable

c) the policy owner may not elect the settlement option, only the beneficiary can

d) principal payments and interest are not income taxable

Answer: B

Only the interest is taxable

When would the tertiary beneficiary receive death benefit in a life insurance policy?

a) if the insured dies before the he contingent beneficiary

b) if the primary and contingent beneficiary dies before the insured

c) if the primary and contingent beneficiary dies after the insured

d) if the contingent beneficiary dies after the insured

Answer: B

If the primary and contingent beneficiary dies before the insured

Cobra would cover dependents of an employee for how long after the death of the employee?

a) no months

b) 18 months

c) 36 months

d) 20 months

Answer: C

36 months

What is the minimum number of employees to be eligible for Cobra coverage?

a) 50

b) 100

c) 10

d) 20

Answer: D

20

A conversion privilege in a group health plan allows which of the following?

a) 31 days to request Cobra coverage under your group health insurance policy without proof of insurability

b) continuation of coverage for a dependent beyond age 26 for physical or mental handicap

c) 31 days to convert the group coverage to an individual health insurance policy without proof of insurability

d) the right to convert your ex-employers group health to your new employers group health

Answer: C

31 days to convert the group coverage to an individual health insurance policy without proof of insurability

Flexible Spending Accounts FSA's pay for which of these?

a) elective cosmetic surgeries

b) reimbursed medical expenses

c) cancer treatment only

d) unreimbursed medical expenses

Answer: D

Unreimbursed medial expenses

A certificate would be given to which of these in a group health plan?

a) spouses

b) employee

c) policy owner

d) employer

Answer: B

Employee

M switched his job and enrolled on his new employers group health plan. 3 months laters M was prescribed a new allergy medication. The health insurer will?

a) pay none of the new prescription

b) void the policy for preexisting conditions

c) pay the whole cost minus the deductible and coinsurance

d) pay 1/2 of the new prescription

Answer: C

Pay the whole cost minus the deductible and coinsurance

Which of these is true for medicaid?

a) part of social security

b) sold by insurers

c) federal and state funded

d) for people 65 and older

Answer: C

Federal and state funded

In order to have Medicare part C the individual must have?

a) A and B

b) A only

c) B only

d) A, B and D

Answer: A

A and B

In order for a claimant to be eligible for _______ benefits, they must qualify based upon income and medical need.

a) medicare supplement

b) medicaid

c) long-term care

d) medicare

Answer: B

Medicaid

Every Long-Term Care policy must provide a ______-day free look period from the date the policy is delivered.

a) 45

b) 20

c) 10

d) 30

Answer: D

30

You are the producer selling Medicare supplements, you must introduce yourself as an employee of ______?

a) insurer

b) insured

c) social security

d) federal government

Answer: A

Insurer

According to the Affordable Care Act all of these would be eligible for a catastrophic health plan, EXCEPT?

a) those with a hardship exemption

b) people who can't qualify for medicaid

c) people under 30

d) those who can't afford insurance

Answer: D

Those who can't afford insurance

Medicare A and B pays for?

a) A the doctor, B the hospital

b) A the hospital, B prescription drugs

c) A the physical exam, B the hospital

d) A the hospital, B physicians service

Answer: D

A the hospital, B physicians service

Of the following listed choices, which is true as it pertains to Medicare Part A?

a) all recipients pay a monthly premium

b) it is prepaid through FICA taxes

c) it covers all prescription drugs

d) provides coverage for outpatient services

Answer: B

It is prepaid through FICA taxes

All of the following are prohibited provisions in a long term care policy, except?

a) limits or denies benefits to a policy holder who is diagnosed with any destructive brain tissue disease with will result in loss of brain function

b) provides coverage for only skilled nursing care instead of lower levels of care

c) canceling a policy due to nonpayment of premium

d) cancels, non-renews, or terminates the policy on the grounds of age or deterioration of the mental or physical health of the insured

Answer: C

Canceling a policy due to nonpayment or premium

The OASDHI Old Age, Disability, and Health Insurance is also known as?

a) medicaid

b) medicare

c) social security

d) worker's compensation

Answer: C

Social security

What part of medicare pays for prescription drugs?

a) part a

b) part d

c) part b

d) part c

Answer: B

Part D

Long term care policies pay for all of these, EXCEPT?

a) skilled nurses

b) rehabilitation

c) substance abuse

d) home health care

Answer: C

Substance abuse

In order to have Medicare part C the individual must have?

a) A, B and D

b) A only

c) A and B

d) B only

Answer: C

A and B

P is 65 years old, he has medical coverage that pays his doctors visits and his hospital bills. he most likely has?

a) major medical

b) medicare A and B

c) Long term care

d) cancer policy

Answer: B

Medicare A and B

Medicare A and B pays for?

a) A the hospital, B physicians service

b) A the doctor, B the hospital

c) A the physical exam, B the hospital

d) A the hospital, B prescription drugs

Answer: A

A the hospital, B physicians service

Which policy provides the most protection for the least amount of money?

a) term life

b) universal life

c) equity indexed whole life

d) adjustable life

Answer: A

Term life

Which policy is a 2nd or last to die policy?

a) joint life

b) variable life

c) modified whole life

d) joint survivor life

Answer: D

Joint life survivor

Where is the Straight Whole Life insurance policy will you find the parties in the contract?

a) consideration clause

b) common disaster clause

c) incontestable clause

d) insuring clause

Answer: D

Insuring clause

P wants a life policy with quick cash value accumulation. Which policy should the producer recommend?

a) straight whole life

b) 20 year level term

c) 20 pay limited life

d) both the 20 pay limited whole life and the straight whole life have the same accumulation rate

Answer: C

20 pay limited life

Which policy pays the face amount at the end of the payment period?

a) life paid up at age 60

b) endowment at age 65

c) 20 pay whole life

d) 15 pay whole life

Answer: B

Endowment at age 65

Which of the following would be true if a child rider on a life insurance policy?

a) the child will be offered a conversion option to convert a permanent plan without proof of insurability at a specific age such as 21

b) the policy owner must request the new child be added to the policy and pay the additional premium

c) if the policy has the rider and a new child is born the new child is covered from the moment of birth

d) all children must prove good health to join the rider even after the rider is in force and another child is born

Answer: A

The child will be offered a conversion option to convert a perm plan without proof of insurability at a specific age such as 21

In which policy does the premium and face amount remain level all the way to age 100?

a) modified whole life

b) straight whole life

c) limited pay whole life

d) universal life

Answer: B

Straight whole life

Which of the following would be used to pay premiums on a life policy for an insured should they become disabled?

a) waiver of payor premium rider

b) return of premium rider

c) guaranteed insurability rider

d) waiver of premium rider

Answer: D

Waiver of premium rider

What happens to the cash values in a whole life policy if an insured is disabled and the waiver of premium riders becomes active?

a) it is reduced for each payment made by the rider

b) cash value and dividends continue to increase just as if the regular premium payments have been made

c) it is increased for each payment made by the rider

d) the cash value remains unchanged, until the insured is no longer disabled

Answer: B

Cash value and dividends continue to increase just as if the regular premium payments have been made

Which of the following life insurance policies provides protection for a limited period of time?

a) single premium whole life policy

b) universal life policy

c) term policy

d) limited pay whole life policy

Answer: C

Term policy

This rider guarantees a policy on a minor will continue even though the parent paying premiums became disabled?

a) payor benefits

b) guaranteed insurability

c) return of premium

d) waiver of premium

Answer: A

Payor benefit

Which of the following policies would be a limited pay whole life?

a) premiums and policy expire after a limited period of time

b) policy lasts for a limited time then expires

c) premiums payable for a limited time then expire but the policy goes on

d) premiums are limited for a while then they increase

Answer: C

Premiums payable for a limited time then expire but the policy goes on

The right to change a term policy to a permanent policy without proof of insurability if called?

a) changeable

b) convertible

c) level

d) renewable

Answer: B

Convertible

In which of the following policies is the cash value in the policy invested in stocks and/or bonds?

a) universal life

b) limited pay whole life

c) single premium whole life

d) variable life

Answer: D

Variable life

An insurance company incorporated in New York selling polices in Texas would be called?

a) domestic

b) mutual

c) alien

d) foreign

Answer: D

Foreign

A person is told they won't receive any aid processing a claim unless they sign a release form. This is known as?

a) coercion

b) discrimination

c) intimidation

d) boycott

Answer: A

Coercion

An insurer wishing to dissolve their relationship with a producer would?

a) terminate producers insurance license

b) non renew producers insurance license

c) file a law suit

d) terminate producers appointment

Answer: D

Terminate producers appointment

For which if the following polices must an Outline of Coverage be delivered?

a) major medical

b) medicare supplement

c) HMO

d) disability

Answer: B

Medicare supplement

After an investigation, an insurer denies a false claim. The insurer must?

a) terminate policy as of claim date

b) provide a reasonable explanation

c) immediately terminate the policy back to issue date

d) wait until the renewal to non renew the policy

Answer: B

Provide a reasonable explanation

When a person or a company voluntarily surrenders a known right, this is known as?

a) warranties

b) waiver

c) fraud

d) agreement

Answer: B

Waiver

When an insurance policy is know as a "Take it or leave it" contact it is?

a) aleatory

b) contract of adhesion

c) warranties

d) unilateral contact

Answer: B

Contract of adhesion

If an insurer accepts an incomplete application and issues the policy, what must they do?

a) get the application competed within the incontestability period

b) void the policy and rewrite it

c) honor the policy

d) resubmit a new application immediately

Answer: C

Honor the policy

Offer, acceptance and consideration are all parts of?

a) law of agency

b) negotiation

c) apparent authority

d) elements of a legal contract

Answer: D

Elements of a legal contract

An incorporated insurance company that sells shares would be?

a) stock

b) fraternal

c) mutual

d) lloyd's

Answer: A

Stock

Statements made on the application that are believed to be true to the best of the applicants knowledge are?

a) misrepresentations

b) waivers

c) representations

d) concealments

Answer: C

Representations

A statement made in an application for life insurance which is substantially true would be considered?

a) warranty

b) representation

c) waiver

d) misrepresentation

Answer: B

Representation

Statements made on a claim form or on an application for insurance that are believed to be true are?

a) waivers

b) misrepresentations

c) warranties

d) representations

Answer: D

Representations

S and W are partners in a business. They both buy and own policies on the other. 3 years later the business dissolved. S and W are both married. They don't change the beneficiaries on the policies. They no longer have insurable interest on each other. 5 months late S dies, who will receive the proceeds?

a) W

b) S's wife

c) W's wife

d) the partnership

Answer: A

W

Which of these is a requirement for licensing in Texas?

a) U.S. citizen

b) high school diploma

c) must be honest, fair and in good standing

d) must be 17 years old

Answer: C

Must be honest, fair and in good standing

If an applicant or insured discovers error in their credit report, the fair credit reporting act requires the following to correct the report?

a) applicant/insured

b) producer

c) credit reporting agency

d) underwriter

Answer: C

Credit reporting agency

AIDS testing requires all of these, EXCEPT?

a) gathering of data on positive results for studies

b) questions about HIV and AIDS are illegal

c) underwriting required testing

d) signed consent for testing

Answer: A

Gathering of data on positive results for studies

Which of these would be a requirement for obtaining a temporary license in Texas?

a) pass these written exam

b) 21 years old

c) be considered for appointment by an insurer

d) U.S. citizen

Answer: C

Be considered for appointment by an insurer

A long term care policy will provide payment for which of these?

a) pre-hospital doctor visit

b) home health

c) post hospital doctor visit

d) hospitalization

Answer: B

Home health

How many hours of continuing education hours must be ethics per renewal period?

a) 24

b) 10

c) 12

d) 2

Answer: D

2

Which of these cannot request information about fraudulent health claims?

a) local police

b) insured

c) district attorney

d) commissioner of insurance

Answer: B

Insured

Dividends paid by stock insurers are paid to:

a) service providers

b) shareholders

c) policy holders

d) agencies

Answer: B

Shareholders

The department of insurance does all the following except ?

a) computes reinsurance reserves

b) releases reinsurance reserves if needed

c) administers the worker's compensation system

d) ensures fair competition in the industry

Answer: B

Releases reinsurance reserves if needed

How long after passing your exam must you apply for your insurance license?

a) 6 months

b) 24 months

c) 18 months

d) 12 months

Answer: D

12

According to the fair credit reporting act, when must an applicant be informed of obtaining a credit report in the underwriting of the policy?

a) at the time of application

b) at the time of policy issuance

c) at the time of policy delivery

d) at the time of underwriting

Answer: A

At the time of application

Which of these cannot charge a fee for advice?

a) limited lines

b) counselor

c) managing general agent

d) financial planner

Answer: A

Limited Lines

Which of the following designations allow a person to obtain a Life and Health insurance license without testing?

a) certified public accountant

b) chartered life underwriter

c) chartered financial consultant

d) certified financial planner

Answer: B

Chartered life underwriter

Who determines whether or not the applicant will receive a policy from the insurance company once an application is submitted?

a) insured doctors

b) home office underwriting department

c) home office actuarial department

d) the producer that wrote the application

Answer: B

Home office underwriting department

What is not necessary to contract?

a) agreement

b) consideration

c) negotiation

d) legal purpose

Answer: C

Negotiation

An application for life insurance was submitted without all the questions being answered. The policy was issued and the incomplete application was attached. Which of these apply ?

a) the insurer waived their right to use any information from the unanswered questions.

b) the policy will later be found to be incomplete, it will be voided and all premiums refunded.

c) The insurer issued a normal policy and all provisions will apply regardless of the unanswered questions.

d) The insurer will deny a claim if the information from the unanswered questions were the result of the insured's death

Answer: A

The insurer waived their right to use any information from the unanswered questions

A corporation hires a new president. Concerned about losing him in an accident or to an illness. All of these would be true, except?

a) the employer would request a key person plan

b) the employee picks the beneficiary

c) the employee must sign the application

d) employer is the applicant/owner

Answer: B

The employee picks the beneficiary

V has a disability income policy paying $500 per month with a 30 day elimination period. V becomes disabled on May 1, returns to work on May 15. V becomes disabled again on June 1 and returns to work on December 1. How much did the disability income policy pay?

a) 0

b) $2500

c) $3000

d) $2750

Answer: B

$2500

A business owner buys a disability income policy paying $2000 per month which of these riders could be used to increase the benefits as his business grows without having to prove insurability?

a) elimination period

b) guaranteed purchase option

c) impairment rider

d) waiver of premium

Answer: B

guaranteed purchase option

X is disabled for 3 1/2 months. His policy pays $500 per month for total disability with a 30 day elimination period. The benefit paid would be?

a) $1000

b) $1500

c) $1250

d) $1750

Answer: C

$1250

J injures his lower back loading his furniture into a moving van. He recovers and then four months later reinjures the same area. What type of disability is this?

a) temporary disability

b) recurrent disability

c) residual disability

d) presumptive disability

Answer: B

recurrent disability

which rider in a disability income policy allows the insured to purchase additional monthly benefits at specific ages, dates or occurrences without providing proof of good health?

a) guaranteed purchase option

b) impairment rider

c) elimination period

d) waiver of premium

Answer: A

guaranteed purchase option

what is not used to determine premium in a disability income policy?

a) Health history

b) spouses occupation

c) avocation

d) income

Answer: B

spouses occupation

with a business overhead expense policy, all of the following are claims that are covered except?

a) employee labor

b) Office rent

c) Utilities

d) The salary or profit of the business owner

Answer: D

The salary or profit of the business owner

which of these annuities pays based on units?

a) fixed annuity

b) indexed annuity

c) flexible annuity

d) variable annuity

Answer: D

variable annuity

in which retirement plan, if the employer puts money in his own account must he also put money in his employees account?

a) simple

b) IRA

c) SEP

d) TSA

Answer: C

SEP

in an IRA a 10% penalty is levied for which of these?

a) money withdrawn before age 59 1/2

b) money withdrawn before age 62

c) money withdrawn before age 65

d) money withdrawn after age 70 1/2

Answer: A

money withdrawn before age 59 1/2

all of the following are eligible to participate in a Keogh Plan except?

a) sales person

b) Manager

c) secretary

d) silent partner

Answer: D

silent partner

The systematic liquidation of funds is the primary function of?

a) universal life

b) whole life

c) variable life

d) annuity

Answer: D

annuity

which of these would be a reason for someone to purchase an annuity?

a) replaces insured's income in the event of death

b) protects against outliving retirement benefits

c) guarantees benefits to pay mortgage in the event of premature death

d) pays off debt in the event the insured dies prematurely

Answer: B

protects against outliving retirement benefits