TEXAS STATE LIFE AND HEALTH INSURANCE
PRACTICE EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2025
1. What is the primary purpose of life insurance?
A. To accumulate interest
B. To provide financial protection to beneficiaries upon the insured’s death
C. To offer investment returns
D. To avoid paying taxes
Life insurance provides financial protection for beneficiaries in the event of the
insured's death, ensuring income replacement and debt coverage.
2. Which of the following is considered an element of an insurance contract?
A. Endorsement
B. Warranty
C. Consideration
D. Premium
,Consideration is the value exchanged between the parties; the insured provides
premiums, and the insurer provides the promise to pay.
3. In Texas, the free-look period for life insurance policies is:
A. 30 days
B. 10 days
C. 15 days
D. 5 days
The Texas Insurance Code mandates a 10-day free-look period during which the
policyholder can cancel the policy for a full refund.
4. Which of the following is NOT a type of term life insurance?
A. Decreasing term
B. Renewable term
C. Convertible term
D. Whole life term
Whole life insurance is permanent insurance, not a type of term policy.
5. What does the incontestability clause do?
A. Allows the insurer to contest a claim at any time
B. Prevents the insurer from contesting claims after a certain period (usually 2
years)
, C. Waives premiums upon death
D. Terminates coverage at age 65
The incontestability clause protects the insured after a policy has been in force
for 2 years.
6. In Texas, who must be licensed to sell life and health insurance?
A. Policyowners
B. Claimants
C. Insurance producers (agents)
D. Underwriters
Insurance producers must be licensed to sell, solicit, or negotiate insurance
policies.
7. What type of policy accumulates cash value?
A. Term life
B. Whole life
C. Accidental death
D. Credit life
Whole life policies build cash value that can be borrowed against or used in the
future.
8. Which health insurance policy is best for short-term needs?
PRACTICE EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2025
1. What is the primary purpose of life insurance?
A. To accumulate interest
B. To provide financial protection to beneficiaries upon the insured’s death
C. To offer investment returns
D. To avoid paying taxes
Life insurance provides financial protection for beneficiaries in the event of the
insured's death, ensuring income replacement and debt coverage.
2. Which of the following is considered an element of an insurance contract?
A. Endorsement
B. Warranty
C. Consideration
D. Premium
,Consideration is the value exchanged between the parties; the insured provides
premiums, and the insurer provides the promise to pay.
3. In Texas, the free-look period for life insurance policies is:
A. 30 days
B. 10 days
C. 15 days
D. 5 days
The Texas Insurance Code mandates a 10-day free-look period during which the
policyholder can cancel the policy for a full refund.
4. Which of the following is NOT a type of term life insurance?
A. Decreasing term
B. Renewable term
C. Convertible term
D. Whole life term
Whole life insurance is permanent insurance, not a type of term policy.
5. What does the incontestability clause do?
A. Allows the insurer to contest a claim at any time
B. Prevents the insurer from contesting claims after a certain period (usually 2
years)
, C. Waives premiums upon death
D. Terminates coverage at age 65
The incontestability clause protects the insured after a policy has been in force
for 2 years.
6. In Texas, who must be licensed to sell life and health insurance?
A. Policyowners
B. Claimants
C. Insurance producers (agents)
D. Underwriters
Insurance producers must be licensed to sell, solicit, or negotiate insurance
policies.
7. What type of policy accumulates cash value?
A. Term life
B. Whole life
C. Accidental death
D. Credit life
Whole life policies build cash value that can be borrowed against or used in the
future.
8. Which health insurance policy is best for short-term needs?
