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Texas Life and Health Insurance Exam Questions with correct Answers

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Which of these characteristics is consistent with a Straight Life Policy? - ANSWER Premiums are payable for as long as there is insurance coverage in force Which of the following are Equity Indexed... annuities typically invested in? - ANSWER S&P 500 Which of the following does Social Security NOT provide benefits for? - ANSWER Dismemberment An example of false advertising would be - ANSWER An insurer exaggerating its dividends in a magazine advertisement A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1500 per month beginning at age 60. Which of these annuities did this woman purchase? - ANSWER Deferred Fixed Annuity Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements? - ANSWER HMO Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application? - ANSWER Pay an amount the premiums would have purchased at the insured's actual age Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase? - ANSWER Term Life An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? - ANSWER 59 1/2 An applicant MUST receive an Outline of Coverage when an application is taken for a(n) - ANSWER Medicare Supplement policy Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: - ANSWER Limited Pay Life An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay is a total of $15,000 in covered medical expenses are incurred? - ANSWER $7000 $5,000 + 20% = $7,000 How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - ANSWER 6 months An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the - ANSWER Commissioner What is an organization that solicits insurance only to its members? - ANSWER Fraternal benefit society Which of the following is NOT a reason for a business to buy key person life insurance? - ANSWER A pension deficiency is the key employee dies When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the: - ANSWER Entire Contract Provision One becomes eligible for Social Security disability benefits after having been disabled for - ANSWER 5 Months An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim? - ANSWER $1,250 A license may be denied, suspended, or revoked if the licensee - ANSWER is found guilty of misrepresentation in obtaining the license Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? - ANSWER Misrepresentation K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT - ANSWER K will forfeit the right to use the automatic loan provision upon reinstatement When a policy pays dividends to its policyholders, it is said to be - ANSWER participating What is the basic function of an annuity? - ANSWER The systematic liquidation of accumulated funds Which of the following statements about health coverage for newborns is NOT true? - ANSWER Coverage is limited to only congenital defects Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? - ANSWER policyowner A(n) _________ rider may be used to include coverage for children under their parents' life insurance policy. - ANSWER Term Medicare Part C is: - ANSWER available to those who are enrolled in Medicare Part A and Part B Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this? - ANSWER Guaranteed insurability rider Which statement is true regarding a minor beneficiary? - ANSWER Normally, a guardian is required to be appointed in the beneficiary clause of the contract What is required for an agent whose license has been revoked? - ANSWER Wait at least five years before applying for a new license. Which of these provisions is NOT required in life insurance policies? - ANSWER Extended Term Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement? - ANSWER 6 What is the MINIMUM benefit period that must be offered by a Long-Term Care policy? - ANSWER 12 months What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made? - ANSWER Irrevocable beneficiary Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - ANSWER Life Income Major Medical policies typically: - ANSWER contain a deductible and coinsurance A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of application. How will the insurer handle this claim? - ANSWER Claim will be paid and coverage will remain in force Which of these is NOT an example of doing insurance business? - ANSWER Selling shares of stock How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - ANSWER If the primary beneficiary dies before the insured ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering - ANSWER Unfair methods of competition P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - ANSWER Set up a meeting with the applicant to answer the remaining questions. N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? - ANSWER Exclusion Under a Long Term Care policy, which benefit would be typically excluded or limited? - ANSWER Alcohol Rehabilitation At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in: - ANSWER Income tax and 10% penalty assessed upon funds withdrawn from the Qualified Plan Why would the Insurance Commissioner examine the records of an insurance company? - ANSWER To determine the solvency of the company Before a life insurance policy is issued, which of these components of the contract is required? - ANSWER Applicant's signature on the application The reason for backdating a policy is - ANSWER to obtain a premium rate based on an earlier age Medicare Part B does NOT cover - ANSWER inpatient hospital services A foreign insurance company conducting insurance business in Texas - ANSWER was formed under the-laws of another state K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? - ANSWER Level All of the following statements about traditional individual retirement accounts are false EXCEPT - ANSWER 10% penalty is applied to withdrawals before age 59 1/2 All of these statements about the Waiver of Premium provision are correct EXCEPT - ANSWER Insured must be eligible for Social Security disability for claim to be accepted P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? - ANSWER P will still receive declared dividends Which of the following consists of an offer, acceptance, and consideration? - ANSWER Contract Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy? - ANSWER Entire Contract S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? - ANSWER $50,000 K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? - ANSWER Proceeds will be paid to P's estate What kind of life insurance product covers children under their parent's policy? - ANSWER A term rider The consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and - ANSWER The initial premium Why must an insurance applicant answer all questions on the application? - ANSWER Statements and representations on the application are part of the consideration for issuing a policy Which of these statements concerning an individual Straight Life annuity is accurate? - ANSWER Payments are made to an annuitant for life The amount of coverage on a group credit life policy is limited to: - ANSWER The insured's total loan value M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? - ANSWER Determined by the terms of the policy The sections of an insurance contract which limit coverage are called - ANSWER exclusions A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013? - ANSWER $1,000 When determining the monthly benefit amount for a disability amount for a disability Income policy, the factor that limits the amount a prospective insured may purchase is: - ANSWER Income Which of the following is TRUE is the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? - ANSWER The account can be rolled into the surviving spouse's IRA A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as: - ANSWER Variable Life Under an interest sensitive whole life policy - ANSWER cash values are determined by interest rates To terminate an agent's appointment, an insurance company must - ANSWER send termination notice to the Texas Department of Insurance Deductibles are used in health policies to lower - ANSWER overuse of medical services An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ANSWER Full face amount minus any past due premiums In Texas, how long must a policy be enforce before an insurance company must pay death benefits for suicide? - ANSWER 2 years S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be - ANSWER Universal Life Under a Graded Premium Whole Life policy, - ANSWER the premium increases each year during the early years of the contract and remains the same after that time If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? - ANSWER Contributory Which of the following types of care is typically not covered in a Long-Term Care policy? - ANSWER Acupuncture A pilot applies for Life Insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n) - ANSWER Aviation Exclusion K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase? - ANSWER Single Premium Immediate Joint with Survivor Annuity The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is: - ANSWER The Cost An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the - ANSWER Fair Credit Reporting Act Before a life policy is issued, which of these contract elements is necessary? - ANSWER A signed application by the prospect Which statement is TRUE in regards to a policy loan? - ANSWER Past-due interest on a policy loan is added to the total debt An immediate annuity consists of a - ANSWER Single Premium Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - ANSWER If Tom's employment is terminated, 20% of the funds would be forfeited If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? - ANSWER Insured's contingent beneficiary Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy? - ANSWER Discourages overutilzation the insurance coverage What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy? - ANSWER Premiums may increase at time of renewable Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): - ANSWER Third-party with no insurable interest Which of these statements describe a Modified Endowment Contract (MEC)? - ANSWER Exceed the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract Medicare Part A and Part B do NOT pay for - ANSWER dental work Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ANSWER Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take? - ANSWER The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age A characteristic of preferred provider organization (PPOs) would be: - ANSWER Discounted fees for the patient A medical Information Report (MIB) report may disclose which of the following: - ANSWER Prior use of marijuana A plan through the Marketplace may be purchased by - ANSWER Any legal resident (except those imprisoned) On a life insurance policy, who is qualified to change the beneficiary designation? - ANSWER policyowner Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of - ANSWER 31 days Which of these life products is NOT considered interest-sensitive? - ANSWER Modified Whole Life In Texas, which of these statements regarding the Suicide clause is TRUE? - ANSWER An insurer may not use suicide as a defense agent payment after the second year S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT - ANSWER beneficiary's age The provision that defines to whom the insurer will pay benefits to is called: - ANSWER Payment of Claims Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT? - ANSWER Premiums normally increase at the time of renewal P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own? - ANSWER Endowment at age 70 How often must an insurance agent license normally be renewed? - ANSWER Every two years A(n) _________ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities - ANSWER Variable When must insurable interest exist for a life insurance contract to be valid? - ANSWER Inception of the contract Which statement is correct regarding the premium payment schedule for whole life policies? - ANSWER Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured An insurer may normally delay the payment of cash value loan or surrender value for up to - ANSWER 6 months Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase? - ANSWER Applicant's monthly income Which of the following BEST describes how pre-admission certification is used? - ANSWER Used to prevent nonessential medical costs Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? - ANSWER Activate insurance companies' financial reserves X is insured with a disability income policy that provides coverage until age 65. This policy allows the insurer to change the premium rate for the overall risk class assigned. Which of these renewability features does this policy contain? - ANSWER Guaranteed Renewable Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas? - ANSWER The agent and the company As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? - ANSWER coercion A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the: - ANSWER Policy Loan Provision Which of these describe a participating insurance policy? - ANSWER Policyowners are entitled to receive dividends Who owns a stock insurance company? - ANSWER Stockholders What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled? - ANSWER Waiver of Premium Loan The consideration clause of an insurance contract includes - ANSWER the schedule and amount of premium payments In Texas, an individual life insurance policy is REQUIRED to have a grace period of - ANSWER 31 days Which of the following actions is required by an insured who leave the primary area of medical coverage and seeks medical care? - ANSWER Obtain prior approval from the insurer to the medical service Which of the following is a requirement for obtaining a Texas insurance agent's license? - ANSWER Be honest, trustworthy, and reliable When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? - ANSWER Recurrent disability K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? - ANSWER $20,000 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 Which of these options can an individual use their medical flexible spending account to pay for? - ANSWER prescription drugs A medicare supplement policy may be cancelled for which of the following reasons? - ANSWER The premium has not been paid by the insured T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? - ANSWER Income that cannot be outlived by the owner A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. which type of designation would fulfill this need? - ANSWER irrevocable Which of the following will a Long Term Care plan typically provide benefits for? - ANSWER home health care What type of life policy covers two people and pays upon the death of the last insured? - ANSWER Survivorship The phrase "transacting business" includes - ANSWER collecting premiums Which of these needs is satisfied by Adjustable Life insurance? - ANSWER Insured's need for flexible premiums An insurance company organized under New York laws and licensed to do business in Texas is considered a(n) - ANSWER foreign company A major medical policy typically: - ANSWER provides benefits for reasonable and necessary medical expenses, subject to policy limits Credit Life Insurance is - ANSWER insurance issued on a debtor to [Show More]

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