Texas Life and Health Insurance Exam
(Answered) Verified Solution
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act?
Upon completion of the application
Who elects the governing body of a mutual insurance company?
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the
Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure?
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
reserves
Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy?
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
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
representations
The part of a life insurance policy guaranteed to be true is called a(n)
warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Principal
The Consideration clause of an insurance contract includes
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?
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?
Unilateral
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid.
conditional
Which of these require an offer, acceptance, and consideration?
Contract
Which of these arrangements allows one to bypass insurable interest laws?
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
negotiating
An agent is an individual that represents whom?
Insurer
Insurable interest must exist at what time?
at the time of application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling?
Variable Life
Which of the following actions require a policy owner to provide proof of
insurability in an Adjustable Life policy?
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?
Conversion provision
What type of life insurance are credit policies issued as?
Term
How long does the coverage normally remain on a limited-pay life policy?
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
The premiums can be lowered or raised, based on investment performance
Which of these is an element of a Variable Life policy?
A fixed, level premium
What type of life insurance incorporates flexible premiums and an adjustable
death benefit?
Universal Life
T would like to be assured $10,000 is available in 10 years to replace a roof on his
house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What type of life policy covers 2 lives and pays the face amount after the first one
dies?
Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a
limited time is called
Limited-Pay Life
What kind of life insurance product covers children under their parent's policy?
Term rider
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the
premium payment
Policyowner has no say where the investment will go but can choose the
premium mode
The investment vehicle for this type of policy is held in the insurer's general
portfolio
The death benefit can vary but the policyowner has no say in the premium
amount paid
Policyowner controls where the investment will go and selects the amount of the
premium payment
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?
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
It provides a minimum guaranteed Death benefit
Credit Life insurance is
(Answered) Verified Solution
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act?
Upon completion of the application
Who elects the governing body of a mutual insurance company?
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the
Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing
their risk exposure?
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
reserves
Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life
policy?
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
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
representations
The part of a life insurance policy guaranteed to be true is called a(n)
warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent
Principal
The Consideration clause of an insurance contract includes
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?
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?
Unilateral
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts
must occur before any claims can be paid.
conditional
Which of these require an offer, acceptance, and consideration?
Contract
Which of these arrangements allows one to bypass insurable interest laws?
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
negotiating
An agent is an individual that represents whom?
Insurer
Insurable interest must exist at what time?
at the time of application
Which policy requires an agent to register with the National Association of
Securities Dealers (NASD) before selling?
Variable Life
Which of the following actions require a policy owner to provide proof of
insurability in an Adjustable Life policy?
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?
Conversion provision
What type of life insurance are credit policies issued as?
Term
How long does the coverage normally remain on a limited-pay life policy?
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
The premiums can be lowered or raised, based on investment performance
Which of these is an element of a Variable Life policy?
A fixed, level premium
What type of life insurance incorporates flexible premiums and an adjustable
death benefit?
Universal Life
T would like to be assured $10,000 is available in 10 years to replace a roof on his
house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What type of life policy covers 2 lives and pays the face amount after the first one
dies?
Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a
limited time is called
Limited-Pay Life
What kind of life insurance product covers children under their parent's policy?
Term rider
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the
premium payment
Policyowner has no say where the investment will go but can choose the
premium mode
The investment vehicle for this type of policy is held in the insurer's general
portfolio
The death benefit can vary but the policyowner has no say in the premium
amount paid
Policyowner controls where the investment will go and selects the amount of the
premium payment
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?
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
It provides a minimum guaranteed Death benefit
Credit Life insurance is
