TEXAS LIFE AND HEALTH INSURANCE EXAM 220
QUESTIONS & CORRECT ANSWERS LATEST 2025
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - ANSWER-Upon completion of the
application
Who elects the governing body of a mutual insurance company? - ANSWER-
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - ANSWER-Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure? - ANSWER-Treaty
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called - ANSWER-reserves
Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated - ANSWER-1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - ANSWER-Promise to pay a death benefit
,When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have - ANSWER-insurable interest in
the proposed insured
Statements made on an insurance application that are believed to be true to the best
of the applicant's knowledge are called - ANSWER-representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANSWER-
warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANSWER-Principal
The Consideration clause of an insurance contract includes - ANSWER-the
schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life insurance
policy be directed to? - ANSWER-In this situation, the proceeds from E's life
insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an
insurance contract by the insurer? - ANSWER-Unilateral
, When must insurable interest exist for a life insurance contract to be valid? -
ANSWER-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - ANSWER-conditional
Which of these require an offer, acceptance, and consideration? - ANSWER-
Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWER-Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out life
insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the death
benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANSWER-negotiating
An agent is an individual that represents whom? - ANSWER-Insurer
QUESTIONS & CORRECT ANSWERS LATEST 2025
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act? - ANSWER-Upon completion of the
application
Who elects the governing body of a mutual insurance company? - ANSWER-
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the - ANSWER-Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure? - ANSWER-Treaty
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called - ANSWER-reserves
Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated - ANSWER-1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy? - ANSWER-Promise to pay a death benefit
,When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have - ANSWER-insurable interest in
the proposed insured
Statements made on an insurance application that are believed to be true to the best
of the applicant's knowledge are called - ANSWER-representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANSWER-
warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANSWER-Principal
The Consideration clause of an insurance contract includes - ANSWER-the
schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life insurance
policy be directed to? - ANSWER-In this situation, the proceeds from E's life
insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an
insurance contract by the insurer? - ANSWER-Unilateral
, When must insurable interest exist for a life insurance contract to be valid? -
ANSWER-Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid. - ANSWER-conditional
Which of these require an offer, acceptance, and consideration? - ANSWER-
Contract
Which of these arrangements allows one to bypass insurable interest laws? -
ANSWER-Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated
life insurance (or STOLI) is used to circumvent state insurable interest statutes.
This is done when an investor (or stranger) persuades an individual to take out life
insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the death
benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANSWER-negotiating
An agent is an individual that represents whom? - ANSWER-Insurer
