Texas Life and Health Insurance Exam
Study Guide Ins TX - LAH05 - General Lines - Life, Accident, and Health
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - correct 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 - correct answer-reserves
When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have - correct answer-insurable interest
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - correct answer-representations
The part of a life insurance policy guaranteed to be true is called a(n) - correct
answer-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - correct answer-Principal
The Consideration clause of an insurance contract includes - correct 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? - correct answer-In this situation, the
proceeds from E's life insurance policy will go to F.
Which term defines the legally enforceable promise in an insurance contract by the insurer?
- correct answer-Unilateral
Insurance contracts are known as ____ because certain future conditions or acts must occur
before any claims can be paid. - correct answer-conditional
Which of these require an offer, acceptance, and consideration? - correct answer-Contract
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
, consideration - correct answer-negotiating
An agent is an individual that represents whom? - correct answer-Insurer
Which policy requires an agent to register with the National Association of Securities Dealers
(NASD) before selling? - correct answer-Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an
Adjustable Life policy? - correct answer-increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing proof
of good health, which of these apply? - correct answer-Conversion provision
What type of life insurance are credit policies issued as? - correct answer-Term
How long does the coverage normally remain on a limited-pay life policy? - correct
answer-age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
- Cash value has a minimum rate of accumulation
- If the gain on the index goes beyond the policy's minimum rate of return, the cash value will
mirror that of the index
-The premiums can be lowered or raised, based on investment performance
-Tied to an equity index such as the S&P 500 - correct answer-The premiums can be
lowered or raised, based on investment performance
What type of life insurance incorporates flexible premiums and an adjustable death benefit? -
correct answer-Universal Life
What type of life policy covers 2 lives and pays the face amount after the first one dies? -
correct answer-Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a limited
time is called - correct answer-Limited-Pay Life
What kind of life insurance product covers children under their parent's policy? - correct
answer-Term rider
P is looking to purchase a life insurance policy that will pay a stated monthly income to his
beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year
period. What type of policy should P purchase? - correct answer-Family Maintenance policy
Which of the following statements about a Variable Whole Life policy is CORRECT?
-It provides a minimum guaranteed Death benefit
- It is a combination of a Limited Period Endowment and a Decreasing Term policy
- Its premiums and benefits are variable
- It has a guaranteed rate of return - correct answer-It provides a minimum guaranteed
Death benefit
Study Guide Ins TX - LAH05 - General Lines - Life, Accident, and Health
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - correct 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 - correct answer-reserves
When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have - correct answer-insurable interest
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - correct answer-representations
The part of a life insurance policy guaranteed to be true is called a(n) - correct
answer-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - correct answer-Principal
The Consideration clause of an insurance contract includes - correct 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? - correct answer-In this situation, the
proceeds from E's life insurance policy will go to F.
Which term defines the legally enforceable promise in an insurance contract by the insurer?
- correct answer-Unilateral
Insurance contracts are known as ____ because certain future conditions or acts must occur
before any claims can be paid. - correct answer-conditional
Which of these require an offer, acceptance, and consideration? - correct answer-Contract
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
, consideration - correct answer-negotiating
An agent is an individual that represents whom? - correct answer-Insurer
Which policy requires an agent to register with the National Association of Securities Dealers
(NASD) before selling? - correct answer-Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an
Adjustable Life policy? - correct answer-increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing proof
of good health, which of these apply? - correct answer-Conversion provision
What type of life insurance are credit policies issued as? - correct answer-Term
How long does the coverage normally remain on a limited-pay life policy? - correct
answer-age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
- Cash value has a minimum rate of accumulation
- If the gain on the index goes beyond the policy's minimum rate of return, the cash value will
mirror that of the index
-The premiums can be lowered or raised, based on investment performance
-Tied to an equity index such as the S&P 500 - correct answer-The premiums can be
lowered or raised, based on investment performance
What type of life insurance incorporates flexible premiums and an adjustable death benefit? -
correct answer-Universal Life
What type of life policy covers 2 lives and pays the face amount after the first one dies? -
correct answer-Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a limited
time is called - correct answer-Limited-Pay Life
What kind of life insurance product covers children under their parent's policy? - correct
answer-Term rider
P is looking to purchase a life insurance policy that will pay a stated monthly income to his
beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year
period. What type of policy should P purchase? - correct answer-Family Maintenance policy
Which of the following statements about a Variable Whole Life policy is CORRECT?
-It provides a minimum guaranteed Death benefit
- It is a combination of a Limited Period Endowment and a Decreasing Term policy
- Its premiums and benefits are variable
- It has a guaranteed rate of return - correct answer-It provides a minimum guaranteed
Death benefit
