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Texas State Exam Simulator - Life and
Health Insurance Exam
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need? Endowment at Age 75 Universal Life Graded Benefit Whole Life Modified Whole Life - ✔✔Universal Life A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary? Medicaid Long-term care Medicare Her group health plan - ✔✔Her group health plan A Business Disability Buyout plan policy is designed
as an incurred expense plan with a very short Elimination period to pay benefits to the Corporation or other shareholders to pay benefits to the insured's spouse - ✔✔to pay benefits to the Corporation or other shareholders A certificate of authority does which of the following? Gives an agent authority to represent a specific insurance company Permits an agent to solicit insurance in Texas Permits a decreased agent's relative to act as an agent for a limited period of time Permits an insurance company to transact business in Texas - ✔✔Permits an insurance company to transact business in Texas A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for hospital charges physician fees experimental and investigative services nursing services - ✔✔experimental and investigative services
is a territory of the United States outside the United States - ✔✔under the laws of another state A group life insurance policy may NOT insure groups consisting exclusively of persons who are salaried, clerical, or administrative employees hourly paid laborers or their supervisors administrative, managerial, or sales personnel related by marriage, blood or legal adoption - ✔✔related by marriage, blood or legal adoption A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a treaty insurer risk retention group risk assumption group captive insurer - ✔✔risk retention group A Health Reimbursement Arrangement MUST be established with employee funding
with other employer-sponsored benefit plans by the employer only during specific open enrollment periods - ✔✔by the employer A life insurance illustration is NOT required to include the name of the insurer underwriting or rating classification upon which the illustration is based initial death benefit company's mortality table - ✔✔company's mortality table A Long-Term Care policy must offer a MINIMUM benefit period of how many months? 12 18 24 30 - ✔✔ 12 A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as a fraternal benefit society a stock insurer a mutual insurer the Life and Health Insurance Guaranty Association - ✔✔a fraternal benefit society A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow? Extended Term rider Cost of Living Adjustment rider Guaranteed Insurability Option rider Waiver of Premium rider - ✔✔Guaranteed Insurability Option rider A policyowner's rights are limited under which beneficiary designation? Revocable
Tertiary Contingent Irrevocable - ✔✔Irrevocable A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? Straight life accumulates faster than Limited-pay Life 20 - Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20 - Pay Life and Straight Life accumulate cash value at the same rate - ✔✔ 20 - Pay Life accumulates cash value faster than Straight Life A Renewable Term Policy is renewable at the option of the Owner Company Insured Assignee - ✔✔insured
After the initial enrollment period, an HMO must hold an open enrollment period of how many days at LEAST once in every 12-month period? 15 31 45 90 - ✔✔ 31 Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the
insurance company - ✔✔Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company All of the following are limited benefit plans EXCEPT cancer policies life insurance policies dental policies critical illness policies - ✔✔life insurance policies All of the following may charge fees for insurance advice EXCEPT Legal reserve agents Financial planners Life and Health insurance counselors Managing general agents - ✔✔Legal reserve agents All of the following provisions must be included in life insurance policies EXCEPT Incontestability Entire Contract
Include a statement that dividends ARE guaranteed Explain the applicable Nonforfeiture values Explain the surrender cost indexes for 5 and 10 years - ✔✔Include a statement that dividends are NOT guaranteed An agent MUST give a prospective insured an Outline of Coverage when taking an application for a Whole life policy Variable Annuity Medicare Supplement policy Term Life policy - ✔✔Medicare Supplement policy An agent who tells a client that dividends are guaranteed may be guilty of fraud rebating misrepresentation slander - ✔✔misrepresentation An agent whose license has been revoked is required to
wait at least five years before applying for a new license submit all previously written policies to the Commissioner of Insurance's office for servicing of the accounts cancel all policies currently in effect and advise the insureds to place them elsewhere continue to service the existing accounts but not solicit new business - ✔✔wait at least five years before applying for a new license An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called An installment Refund annuity A Straight Life annuity A Cash Refund annuity A Joint Life annuity - ✔✔An installment Refund annuity An applicant for an agent's license must meet which of the following requirements? Be honest, trustworthy, and reliable Be at least 17 years of age Have been a resident of Texas for at least 6 months
converted to an individual permanent policy at a group rate continued at an individual rate continued at a group rate - ✔✔converted to an individual permanent policy at an individual rate An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a $125,000 individual whole life policy $25,000 modified whole life policy $25,000 individual term life policy $25,000 individual whole life policy - ✔✔$25,000 individual whole life policy An employer that offers a qualified retirement plan to its employees is eligible to avoid ERISA regulations make tax-deductible contributions to the plan make tax deductible contributions to key employees only make partial tax-deductible contributions to the plan - ✔✔make tax- deductible contributions to the plan
An enrollee of a Health Maintenance Organization (HMO) may be cancelled or nonrenewed for which of the following reasons? Failure to pay for coverage Marriage to a person with a pre-existing condition Excessive use of health care benefits Refusing HMO advice to quit smoking - ✔✔Failure to pay for coverage An individual who purchases a Life annuity is given protection against inflation the risk of dying prematurely the risk of living longer than expected the risk of not having enough retirement income - ✔✔the risk of living longer than expected An insurance agent does NOT have fiduciary responsibilities to insurance companies insureds applicants other agents - ✔✔other agents
limited insurance company fraternal benefit society - ✔✔fraternal benefit society An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) delayed effective date exclusion for the medical condition extended Contestable period Concealment clause - ✔✔exclusion for the medical condition 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 Only income tax on the amount withdrawn Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan Continued tax-free accumulations in the bank savings account Only a 10% penalty on the withdrawal of funds - ✔✔Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan At what point does an informal contract become binding?
When one party makes an invitation and the other makes an offer When an offer is made by one party and the other party rejects the offer and makes a counteroffer When one party makes an offer and the other party accepts that offer When one party makes the required payment - ✔✔When one party makes an offer and the other party accepts that offer Basic Hospital and Surgical policy benefits are lower than the actual expenses incurred higher than the actual expenses incurred normally subject to deductibles normally subject to coinsurance - ✔✔lower than the actual expenses incurred Before holding a hearing regarding an agent's unfair or deceptive practice, the Insurance Commissioner MUST give how many days notice? 3 5 10
