PEARSON VUE TEXAS STATE LIFE AND HEALTH
INSURANCE EXAM 2026 COMPREHENSIVE
EXAM
◉ 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
◉ Insurable interest must exist at what time? Answer: at the time of
application
◉ Which policy requires an agent to register with the National
Association of Securities Dealers (NASD) before selling? Answer:
Variable Life
INSURANCE EXAM 2026 COMPREHENSIVE
EXAM
◉ 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
◉ Insurable interest must exist at what time? Answer: at the time of
application
◉ Which policy requires an agent to register with the National
Association of Securities Dealers (NASD) before selling? Answer:
Variable Life
