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Life Insurance Concepts and Terminology, Exams of Personal Health

Tarrant County CollegePersonal Health

A wide range of life insurance concepts and terminology, including coercion, beneficiaries, policy types, policy provisions, underwriting, claims, and regulations. It provides detailed explanations and definitions for various life insurance terms and features, making it a comprehensive resource for understanding the fundamental aspects of life insurance. The document could be useful for insurance professionals, students studying insurance, or individuals seeking to deepen their knowledge of life insurance products and practices.

Typology: Exams

2024/2025

Available from 09/29/2024

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Life Insurance Exam Question (Texas)
1. A 20 pay whole life policy means that insured is covered - ✔✔until
death or age 100
2. A agent's license must be renewed - ✔✔every 2 years on the
anniversary date of issurance
3. A banker is ready to close on a customer's loan. The bank is prepared
to offer the loan but only if the customer purchases a life insurance
policy from the bank in the amount of the loan. This is an example of
- ✔✔Coercion.
4. (This is an example of the illegal practice of coercion.)
5. A beneficiary must have a insurable interest in the insured - ✔✔False
6. A beneficiary that may be changed at any time by the policyowner is
known as - ✔✔Revocable
7. A beneficiary who has a vested interest in the proceeds of a life
insurance policy is the - ✔✔irrevocable beneficiary
8. A cease and desist order issued by the Department of Insurance
means a person must - ✔✔stop a specified trade practice
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Life Insurance Exam Question (Texas)

  1. A 20 pay whole life policy means that insured is covered - ✔✔until death or age 100
  2. A agent's license must be renewed - ✔✔every 2 years on the anniversary date of issurance
  3. A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of
    • ✔✔Coercion.
  4. (This is an example of the illegal practice of coercion.)
  5. A beneficiary must have a insurable interest in the insured - ✔✔False
  6. A beneficiary that may be changed at any time by the policyowner is known as - ✔✔Revocable
  7. A beneficiary who has a vested interest in the proceeds of a life insurance policy is the - ✔✔irrevocable beneficiary
  8. A cease and desist order issued by the Department of Insurance means a person must - ✔✔stop a specified trade practice
  1. A conditional receipt guarantees that coverage will begin on the date of application - ✔✔False (after the first payment)
  2. A current assumption or interest- sensitive whole life policy has - ✔✔Premiums that the policy owner may change based on certain assumptions
  3. A document that provides information for underwriting purposes is the... - ✔✔Application
  4. A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? - ✔✔If the father is disabled for more than 6 months
  5. A flexible premium policy that may be term or permanent insurance is known as - ✔✔Adjustable life
  6. A key- person insurance policy benefit will pay for which of the following? - ✔✔Cost of training a replacement
  7. A level term life policy has a level face amount and a level premium - ✔✔true

agreement. Insurance can be used to either fully or partially fund the buy-sell agreement.)

  1. A life insurance producer may share commissions with - ✔✔another life producer
  2. A life settlement options that pays out the death benefits incrementally, in a specified amount until all of the proceeds are exhausted is called. - ✔✔Fixed amount installment
  3. A limited pay whole life policy limits - ✔✔premium payments
  4. A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy - ✔✔Required a premium increase each renewal
  5. A mutual interchange of rights and privileges is known as - ✔✔reciprocity
  6. A permanent and total transfer of policy ownership right is called - ✔✔Absolute assignment
  1. A person of average physical condition and lifestyles would receive which underwriting classification? - ✔✔Standard
  2. A policy owned by someone other than the insured is known as - ✔✔Third-party ownership
  3. A printer has hired an advertising agency to design and edited advertisement brochures for an insurance company. Once the brochures are printed, who is responsible for the advertisement and their content? - ✔✔The insurance company
  4. A producer delivers a policy to an insured, but nine days later the insured returns the policy and wants a complete refund. What provisions allows the insured to return the policy? - ✔✔Free look
  5. A producer's obligation to handle the insured's funds in a trust capacity is called an - ✔✔Fiduciary responsibility
  6. A reinstated life insurance policy is issued at the attained age of the insured - ✔✔False
  7. A single premium whole life policy has cash value immediately available for a policy loan - ✔✔True
  1. A woman has a life policy in force for $300,000. She is terminally ill. She wants to get an "advance" from her death benefit to help pay her mounting medical bills. She met some people who said they could advance her $100,000 if she would sign ownership over to them. - ✔✔She probably met with a Viatical Settlement Company.
  2. According to the limitations of lawsuit provision, how many years does a claimant have to take legal actions against the insurer? - ✔✔ 2 years
  3. Agents whose license has been revoked will not be able to receive another license in Texas for at least - ✔✔5 years
  4. All of the following apply to the waiver of premium rider except - ✔✔There is not charge for this provision
  5. All of the following are nonforfeiture options in life insurance policies EXCEPT - ✔✔Automatic premium loans
  6. All of the following are true regarding insurance policy loans except - ✔✔Policy loans can be made on polices that do not accumulate cash value.
  1. All of the following are true regarding insurance policy loans EXCEPT - ✔✔Policy loans can be made on policies that do not accumulate cash value.
  2. All of the following are true regarding the guaranteed insurability rider EXCEPT - ✔✔it is available automatically, for no extra premium
  3. All of the following persons who do not have an employer- sponsored retirement plan would be eligible to set up contribution to a traditional IRA EXCEPT - ✔✔Arelene, age 70, a nurse (70 1/2)
  4. All of the following statements about sources of underwriting are true EXCEPT - ✔✔The contents of an inspection report cannot be disclosed to the applicant.
  5. All of the following would be considered a insurance transaction EXPECT - ✔✔Obtaining an insurance license.
  6. All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? - ✔✔Lower
  7. All the following may have an insurable interest in the insured EXCEPT - ✔✔Insured's best friend
  1. An annuity in which investment growth is dependent on the performance of an index such as the standard and poor's 500 is called an - ✔✔Equity indexed annuity
  2. An annuity is considered fixed when it does all the following EXCEPT - ✔✔provides the annuitant with either the guaranteed or current interest rate, whichever is less.
  3. An annuity that is purchased with a lump-sum payment and begins income payment within one year is a - ✔✔single premium immediate annuity
  4. An employee quits his job and converts his group insurance to an individual policy. On which of the following will the premium for the individual policy be based? - ✔✔Insured 's attained age
  5. An illustration used in the sale of a life insurance policy must include a label stating - ✔✔"Life insurance illustration"
  6. An immediate annuity has no accumulation period. - ✔✔True
  7. An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for

drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history 1 year later. What will probably happen? - ✔✔The policy will not be affected.

  1. An individual has just been diagnosed with a quickly-spreading, fatal form of cancer; his oncologist predicts that he will live for 5 months. He applies for individual life insurance. What risk classification will he most likely receive? - ✔✔Declined
  2. An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet this need? - ✔✔Deferred
  3. An individual owns a adjustable life policy. Sometimes in the future he wants to increase the death benefit. Which of the following statement is correct regarding the death benefits increases? - ✔✔It can be increased by providing evidence of insurability.
  4. An individual receives a temporary life insurance agent's license on January 1, 2010. When will the licensee be eligible to receive another temporary license? - ✔✔July 1, 2010
  1. An insured receives a monthly summary of his life insurance policy. The cash value this month is significantly lower than it was last month. What type of policy is it? - ✔✔Variable
  2. An insured submits the full premium along with a completed application, and the policy is issued 10 days later. When does the coverage begin? - ✔✔On the date of the application
  3. An insurer is required to obtain a signed disclosures authorization form when it intends to - ✔✔obtain a consumer report (credit report)
  4. An insurer who deliberately make a maliciously critical statement about another insurance company is guilty of an illegal trade practice called - ✔✔defamation
  5. An insurer who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice called
    • ✔✔defamation
  6. An unfair practice of twisting means misrepresenting a policy to persuade the policyholder to lapse or replace the policy even though it's not in the owner's best interest. - ✔✔True
  1. Anyone who violates the Insurance Code of Texas may be fined up to - ✔✔$25,000.
  2. As a field underwriter, an agent is responsible for helping the insurer prevent adverse selection. - ✔✔True
  3. Assignment is a permanent or temporary change of policy ownership - ✔✔True
  4. At the age 25, an individual purchased a decreasing term policy. what does that say about the coverage and the premium? - ✔✔The coverage decreases but the premium stays the same.
  5. At the age can a participant receive distribution from a qualified plan without incurring a 10% penalty? - ✔✔59 1/
  6. Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes - ✔✔Wavier of premium rider
  7. Betty is the only beneficiary named on her husband Bob's policy, which as a common Disaster provision. They are in a car accident, and Bob die instantly. Betty lives for 29 days. Who will receive the death benefits? - ✔✔Bob's estate
  1. Policy : term life
  2. policy period: 5 year
  3. premium: $300 - ✔✔Policy Summary
  4. Failing to complete continuing education in a timely manner may result in the producer's license being terminated. - ✔✔True
  5. First insured dies: no death benefits
  6. Last insured dies: death benefits paid - ✔✔Survivorship life
  7. Generally, the premium paid for personal life insurance is - ✔✔Not tax deductible
  8. Group life insurance contracts are - ✔✔annually renewable term insurance
  9. How long does an employee have to convert a group policy to an individual policy without evidence of insurability? - ✔✔31 days
  10. How long is the grace period in group life polices issued in this state? - ✔✔31 days
  11. How many days does a viator have to rescind a viatical settlement after receiving the proceeds? - ✔✔15 days
  1. How many hours of continuing education can be carried over from one licensing period to the next? - ✔✔0 (All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period.)
  2. How often must producers renew their licenses? - ✔✔every 2 years
  3. If a claimant is to bring a recovery action against an insurance company for a loss claimed under a policy, the action must be brought - ✔✔Within 2 years.
  4. If a life insurance policy has an irrevocable beneficiary designation, - ✔✔The beneficiary can only be changed with written permission of the beneficiary.
  5. If a life policy does not pass the 7-pay test, that policy - ✔✔Becomes a modified Endowment Contract
  6. If a misstatement of age is discovered during the processing of a life insurance claim, what will the insurance company do? - ✔✔Adjust the death benefits based on the premium that were paid.
  1. If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be - ✔✔Authorized.
  2. If no beneficiary is named in the policy, the death benefits is paid to the insured's - ✔✔estate
  3. If no receipt is issued at the time application, a statement of good health is usually required at the time of - ✔✔Policy Delivery
  4. If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must the agent do? - ✔✔Inform the insurance company
  5. If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered? - ✔✔The portion that exceeds the premiums paid is taxable
  6. If the insured's death occurs during the grace period, the beneficiary receives - ✔✔The face amount minus any overdue premiums
  7. If the policy premium has not been submitted with the application, upon policy delivery the agent must obtain____from the insured. - ✔✔A statement of GOOD health
  1. If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving insurability, his policy includes a - ✔✔Guaranteed insurability option.
  2. In a group life polices, individual certificates are given to - ✔✔Each insured person
  3. In a life insurance policy, hazardous occupation would be an example of a/ an ___. - ✔✔Exclusion
  4. In a life insurance policy, when must insurable interest exist? - ✔✔A valid insurable interest may exist between the policyowners and the insured when they policy is insuring any of the following
  5. policyowner's own life
  6. the life of a family member (a spouse or a close blood relative)
  7. The life of a business partner, key employees, or someone who has a financial obligation to the policy owner (such as debtor to a creditor)
  8. In a renewable term policy the additional premium pays for the right to renew the policy - ✔✔with the same coverage amount regardless of the insured's death
  9. In an individual life insurance policy, when must the nonforfeiture benefits begin? - ✔✔After 3 policy years