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Life Insurance Policy Fundamentals, Exams of Personal Health

Tarrant County CollegePersonal Health

A wide range of topics related to life insurance policies, including policy types, features, and regulations. It provides detailed information on various life insurance concepts such as insurable interest, premium structures, policy provisions, and regulatory aspects. The document delves into the characteristics of different life insurance products like whole life, term life, variable life, and modified endowment contracts. It also discusses important insurance industry practices, such as underwriting, claims processing, and policy administration. This comprehensive resource would be valuable for students, professionals, or anyone seeking a thorough understanding of the fundamental principles and mechanics of life insurance policies.

Typology: Exams

2024/2025

Available from 09/29/2024

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Texas Life and Health Insurance Exam
2024/2025
1. "A producer does not have the authority to change a policy or waive
any of its provisions". The health
provision that best describes this statement is called the - ✔✔Entire
Contract
2. A 15-year mortgage is best protected by what kind of life policy? -
✔✔15-year decreasing term
3. A company that owns a life insurance policy on one of its key
employees may do all of the following EXCEPT - ✔✔Change the
policy's interest rate
4. A contract where one party either accepts or rejects the terms of a
contract written by another party is called a contract of -
✔✔adhesion
5. A father who dies within 3 years after purchasing a life insurance
policy on his infant daughter can have the policy premiums waived
under which provision? - ✔✔Payor provision
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Texas Life and Health Insurance Exam

  1. "A producer does not have the authority to change a policy or waive any of its provisions". The health provision that best describes this statement is called the - ✔✔Entire Contract
  2. A 15-year mortgage is best protected by what kind of life policy? - ✔✔ 15 - year decreasing term
  3. A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT - ✔✔Change the policy's interest rate
  4. A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of - ✔✔adhesion
  5. A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? - ✔✔Payor provision
  1. A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a - ✔✔risk retention group
  2. A level premium indicates: - ✔✔The premium is fixed for the entire duration of the contract
  3. A life insurance arrangement which circumvents insurable interest statues is called - ✔✔Investor-Originated Life Insurance
  4. A life insurance policy that provides a policy owner with cash value along with a level face amount is called: - ✔✔whole life
  5. A life insurance policy that provides a policyowner with cash value along with a level face amount is called: - ✔✔Whole Life
  6. A life insurance policy would be considered a wagering contract WITHOUT: - ✔✔insurable interest
  7. A life insurance policy would be considered a wagering contract WITHOUT: - ✔✔Insurable Interest
  1. A policy of adhesion can only be modified by whom? - ✔✔the insurance company
  2. A policy of adhesion can only be modified by whom? - ✔✔The insurance company
  3. A policy of adhesion can only be modified by whom? - ✔✔The insurance company.
  4. A policy that becomes a Modified Endowment Contract (MEC): - ✔✔will lose many of its tax advantages
  5. 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? - ✔✔ 20 - Pay Life accumulates cash value faster than Straight Life
  6. A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies - ✔✔Proceeds will go to the contingent beneficiary
  1. A Return of Premium life insurance policy is: - ✔✔Whole life and Increasing term
  2. A temporary agent's license issued by the Commissioner of Insurance is valid for up to _______
  3. days. - ✔✔90 days
  4. A term life insurance policy matures - ✔✔upon the insured's death during the term of the policy
  5. A term life insurance policy matures: - ✔✔upon the insured's death during the term of the policy
  6. A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can
  7. see the interest earned, expense charges, and the - ✔✔cost of insurance
  8. A universal life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the - ✔✔expense charges
  9. A variable insurance policy - ✔✔does not guarantee a return on its investment accounts
  1. All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: - ✔✔Bilateral
  2. All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT - ✔✔Bilateral
  3. All of the following statements about traditional individual retirement accounts are false EXCEPT - ✔✔10% penalty is applied to withdrawals before age 59 1/
  4. All of the statements about Equity Indexed Life Insurance are correct , EXCEPT - ✔✔The premiums can be lowered or raised, based on investment performance
  5. All of these are characteristics of an Adjustable Life policy EXCEPT
    • ✔✔face amount can be adjusted using policy dividends
  6. All of these products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for - ✔✔Modified Whole Life
  7. All of these statements about the Commissioner of Insurance are true EXCEPT - ✔✔The Commissioner must be elected
  1. All students attending a large university could be covered by: - ✔✔a blanket policy
  2. An applicant MUST receive an Outline of Coverage when an application is taken for a(n) - ✔✔Medicare Supplement policy
  3. An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the: - ✔✔applicant's physician
  4. An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the - ✔✔Fair Credit Reporting Act
  5. An insured may assign up to _______ of policy ownership under an individual life insurance policy. - ✔✔100%
  6. 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/ months, what
  7. is the MAXIMUM amount he would receive for an approved claim? - ✔✔$1,
  1. Comprehensive Major Medical policies usually combine: - ✔✔Major Medical with Basic Hospital/Surgical coverage
  2. Credit Life insurance is - ✔✔insurance issued on a debtor to cover outstanding loan balances
  3. Credit Life Insurance is - ✔✔issued in an amount not to exceed the amount of the loan
  4. Credit life insurance is typically issued with which of the following types of coverage? - ✔✔Decreasing term
  5. Credit life insurance is typically issued with which of the following types of coverage? - ✔✔Decreasing term
  6. D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to? - ✔✔Ex-wife
  7. D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? - ✔✔Level term
  1. D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop
  2. and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with? - ✔✔Extended term
  3. Deductibles are used in health policies to lower: - ✔✔overuse of medical services
  4. Dividends payable to a policyowner are - ✔✔Declared by the insurance company
  5. 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? - ✔✔F
  6. Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of - ✔✔31 days
  7. F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? - ✔✔Decreasing term policy
  1. If a retiree on Medicare required five hospital stays in one year, which policy would provide the best
  2. insurance for excess hospital expenses? - ✔✔Medicare Supplement
  3. If an individual is covered under an Accidental Death Policy and dies, an autopsy can be performed in all these situations, EXCEPT: - ✔✔When the state prohibits this by law
  4. In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? - ✔✔Unilateral
  5. In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? - ✔✔Unilateral
  6. In Major Medical Expense policies, what is the objective of a Stop Loss provision? - ✔✔Limits an insured's out-of-pocket medical expenses
  7. In order to sell a ______ Life policy, a producer is required to register with the FINRA - ✔✔Variable
  1. In regards to representations or warranties, which of these statements is TRUE - ✔✔If material to the risk, false representations will void a policy
  2. In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide? - ✔✔2 years
  3. In Texas, which of these statements regarding the Suicide clause is True? - ✔✔An Insurer may not use suicide as a defense against payment after the second year
  4. Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - ✔✔Inspection report
  5. Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - ✔✔Inspection report
  6. Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. - ✔✔conditional

thereafter, all the while the death benefit remains the same. What kind of policy is this? - ✔✔Modified Whole Life

  1. K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? - ✔✔Modified Whole Life
  2. K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? - ✔✔level
  3. K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of
  4. annual premium. Which of these policies best fits her needs? - ✔✔Straight life
  5. K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs? - ✔✔Straight life
  6. K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy. - ✔✔universal
  1. K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT - ✔✔K's wife dies at age 66
  2. Life and health insurance policies are - ✔✔unilateral contracts
  3. Life and health insurance policies are: - ✔✔Unilateral contracts
  4. Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a quaranteed minimum death benefit? - ✔✔Variable Life
  5. Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? - ✔✔Variable Life
  6. Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: - ✔✔Limited Pay Life
  7. Long Term Care policies will usually pay for eligible benefits using which of the following methods? - ✔✔Expense incurred
  1. P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA benefits, which of the following statements is TRUE? - ✔✔She DOES need to provide evidence of insurability
  2. 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
  3. Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - ✔✔Policy was returned within the free-look period, premium will be fully refunded
  4. 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? - ✔✔Term life
  5. Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values

reflects which of the following insurance contract features? - ✔✔Aleatory

  1. S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? - ✔✔Equity index insurance
  2. S is covered by a whole life policy. Which insurance product can cover his children? - ✔✔Child term rider
  3. S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own? - ✔✔Variable Whole Life
  4. S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own? - ✔✔Variable Whole Life
  5. S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law
  6. dictates that S must be enrolled in a: - ✔✔High Deductible Health Plan