Texas Insurance License Exam – Life & Health Questions
and Correct Answers (Verified Answers) Plus Rationales |
Latest Update 2026/2027 | Graded A+.
1. What type of life insurance provides coverage for a specified period
and pays a death benefit only if the insured dies during that period?
A) Whole Life
B) Universal Life
C) Term Life
D) Variable Life
C) Term Life
Term life insurance covers a set period and pays only if the insured
dies within that time frame.
2. Which policy feature allows a policyholder to borrow against the cash
value of a permanent life insurance policy?
A) Dividend
B) Cash Surrender Value
C) Policy Loan
D) Accelerated Death Benefit
C) Policy Loan
Policy loans allow the insured to borrow money from the insurer
using the policy's cash value as collateral.
3. What does the “free-look” period in a life insurance policy refer to?
A) Time to review the policy and cancel for full refund
B) Period during which premiums are waived
C) Time when policy benefits are doubled
D) Initial coverage waiting period
A) Time to review the policy and cancel for full refund
, The free-look period allows the policyholder to review the policy and
return it for a full refund within a certain timeframe.
4. What is the primary purpose of disability income insurance?
A) To pay medical bills
B) To replace lost income due to disability
C) To cover funeral expenses
D) To pay off mortgage upon death
B) To replace lost income due to disability
Disability income insurance provides income replacement if the
insured cannot work due to disability.
5. Which of the following is a characteristic of a whole life
insurance policy?
A) It provides coverage only for a limited term
B) It has no cash value accumulation
C) It provides lifetime coverage with a fixed premium
D) Premiums fluctuate based on market performance
C) It provides lifetime coverage with a fixed premium
Whole life policies offer lifelong protection with level premiums and
build cash value.
6. What is a “rider” in a life insurance policy?
A) The beneficiary of the policy
B) An amendment to the policy that adds or modifies coverage
C) The agent selling the policy
D) The grace period for premium payment
B) An amendment to the policy that adds or modifies coverage
Riders are optional provisions added to customize a policy.
7. In health insurance, a “copayment” is:
A) A fixed dollar amount the insured pays for specific services
B) The total premium amount
, C) The maximum out-of-pocket cost
D) A type of policy cancellation
A) A fixed dollar amount the insured pays for specific services
Copayments are fixed fees paid at the time of service.
8. What type of policy pays a death benefit and accumulates cash
value that can be invested in separate accounts?
A) Term Life
B) Variable Life
C) Universal Life
D) Group Life
B) Variable Life
Variable life policies invest cash value in separate accounts, allowing
for investment risk.
9. Which of the following best describes “accelerated death
benefits”?
A) Additional benefits paid if the insured dies in an accident
B) Early payment of a portion of the death benefit if the insured is
terminally ill
C) Benefits paid to multiple beneficiaries
D) Extra coverage for children
B) Early payment of a portion of the death benefit if the insured is
terminally ill
Accelerated benefits provide funds to the insured before death under
qualifying conditions.
10. In health insurance, the deductible is best defined as:
A) The amount the insurer pays before the insured is responsible
B) The fixed amount paid monthly for coverage
C) The amount the insured must pay out of pocket before insurance
benefits begin
, D) The co-payment amount per doctor visit
C) The amount the insured must pay out of pocket before insurance
benefits begin
Deductibles require the insured to pay a certain amount before
benefits apply.
11. Which of the following is NOT a requirement for an insurance
contract to be valid?
A) Offer and acceptance
B) Legal purpose
C) Consideration
D) Unilateral agreement by the insurer
D) Unilateral agreement by the insurer
Insurance contracts require mutual agreement; unilateral means
only one party is bound.
12. What is the function of the Health Maintenance Organization
(HMO)?
A) To reimburse insureds after they receive care anywhere
B) To provide comprehensive health care services through a network of
providers
C) To insure only catastrophic injuries
D) To cover only prescriptions
B) To provide comprehensive health care services through a
network of providers
HMOs offer prepaid, coordinated health care through a specified
network.
13. Which term refers to the amount an insured must pay before the
insurer pays benefits in a health insurance policy?
A) Copayment
B) Coinsurance
and Correct Answers (Verified Answers) Plus Rationales |
Latest Update 2026/2027 | Graded A+.
1. What type of life insurance provides coverage for a specified period
and pays a death benefit only if the insured dies during that period?
A) Whole Life
B) Universal Life
C) Term Life
D) Variable Life
C) Term Life
Term life insurance covers a set period and pays only if the insured
dies within that time frame.
2. Which policy feature allows a policyholder to borrow against the cash
value of a permanent life insurance policy?
A) Dividend
B) Cash Surrender Value
C) Policy Loan
D) Accelerated Death Benefit
C) Policy Loan
Policy loans allow the insured to borrow money from the insurer
using the policy's cash value as collateral.
3. What does the “free-look” period in a life insurance policy refer to?
A) Time to review the policy and cancel for full refund
B) Period during which premiums are waived
C) Time when policy benefits are doubled
D) Initial coverage waiting period
A) Time to review the policy and cancel for full refund
, The free-look period allows the policyholder to review the policy and
return it for a full refund within a certain timeframe.
4. What is the primary purpose of disability income insurance?
A) To pay medical bills
B) To replace lost income due to disability
C) To cover funeral expenses
D) To pay off mortgage upon death
B) To replace lost income due to disability
Disability income insurance provides income replacement if the
insured cannot work due to disability.
5. Which of the following is a characteristic of a whole life
insurance policy?
A) It provides coverage only for a limited term
B) It has no cash value accumulation
C) It provides lifetime coverage with a fixed premium
D) Premiums fluctuate based on market performance
C) It provides lifetime coverage with a fixed premium
Whole life policies offer lifelong protection with level premiums and
build cash value.
6. What is a “rider” in a life insurance policy?
A) The beneficiary of the policy
B) An amendment to the policy that adds or modifies coverage
C) The agent selling the policy
D) The grace period for premium payment
B) An amendment to the policy that adds or modifies coverage
Riders are optional provisions added to customize a policy.
7. In health insurance, a “copayment” is:
A) A fixed dollar amount the insured pays for specific services
B) The total premium amount
, C) The maximum out-of-pocket cost
D) A type of policy cancellation
A) A fixed dollar amount the insured pays for specific services
Copayments are fixed fees paid at the time of service.
8. What type of policy pays a death benefit and accumulates cash
value that can be invested in separate accounts?
A) Term Life
B) Variable Life
C) Universal Life
D) Group Life
B) Variable Life
Variable life policies invest cash value in separate accounts, allowing
for investment risk.
9. Which of the following best describes “accelerated death
benefits”?
A) Additional benefits paid if the insured dies in an accident
B) Early payment of a portion of the death benefit if the insured is
terminally ill
C) Benefits paid to multiple beneficiaries
D) Extra coverage for children
B) Early payment of a portion of the death benefit if the insured is
terminally ill
Accelerated benefits provide funds to the insured before death under
qualifying conditions.
10. In health insurance, the deductible is best defined as:
A) The amount the insurer pays before the insured is responsible
B) The fixed amount paid monthly for coverage
C) The amount the insured must pay out of pocket before insurance
benefits begin
, D) The co-payment amount per doctor visit
C) The amount the insured must pay out of pocket before insurance
benefits begin
Deductibles require the insured to pay a certain amount before
benefits apply.
11. Which of the following is NOT a requirement for an insurance
contract to be valid?
A) Offer and acceptance
B) Legal purpose
C) Consideration
D) Unilateral agreement by the insurer
D) Unilateral agreement by the insurer
Insurance contracts require mutual agreement; unilateral means
only one party is bound.
12. What is the function of the Health Maintenance Organization
(HMO)?
A) To reimburse insureds after they receive care anywhere
B) To provide comprehensive health care services through a network of
providers
C) To insure only catastrophic injuries
D) To cover only prescriptions
B) To provide comprehensive health care services through a
network of providers
HMOs offer prepaid, coordinated health care through a specified
network.
13. Which term refers to the amount an insured must pay before the
insurer pays benefits in a health insurance policy?
A) Copayment
B) Coinsurance
