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Texas Life Insurance Exam Series
In a survivorship life policy, when does the insurer pay the death benefit? a) If the insured survives to age 100 b) Upon the last death c) Upon the first death d) Half at the first death, and half at the second death - โโb) Upon the last death A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a) The premiums will become tax deductible until the insured's 18th birthday. b) Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected.
c) The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. d) The insured's premiums will be waived until she is 21. - โโd) The insured's premiums will be waived until she is 21 A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Other-insured rider. b) Change of insured rider. c) Juvenile rider. d) Payor rider. - โโa) Other-insured rider. Annually renewable term policies provide a level death benefit for a premium that a)
When an annuity is written, whose life expectancy is taken into account? a) Beneficiary b) Life expectancy is not a factor when writing an annuity. c) Owner d) Annuitant - โโd) Annuitant Which of the following is TRUE regarding the accumulation period of an annuity? a) It is limited to 10 years. b) It is a period during which the payments into the annuity grow tax deferred. c) It is also referred to as the annuity period. d)
It is a period of time during which the beneficiary receives income - โโb) It is a period during which the payments into the annuity grow tax deferred. A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a) Automatically pay the policy proceeds. b) Pay the policy proceeds only if it would have issued the policy. c) Pay the policy proceeds up to an established limit. d) Not pay the policy proceeds under any circumstances. - โโb) Pay the policy proceeds only if it would have issued the policy. When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Purchase a term rider to attach to the policy. b) Pay back all premiums owed plus interest.
b) That the policy premiums will never increase c) That the cash value will not be lost d) That the dividends will be paid annually - โโc) That the cash value will not be lost All of the following are true regarding insurance policy loans EXCEPT a) The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. b) Policyowners can borrow up to the full amount of their whole life policy's cash value. c) Policy loans can be made on policies that do not accumulate cash value. d) The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. - โโc) Policy loans can be made on policies that do not accumulate cash value.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of medical exam b) The date of policy delivery c) The date of issue d) The date of application - โโa) The date of medical exam Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a) An irrevocable beneficiary b) A buy-sell agreement c) Family term rider
c) The face amount steadily declines throughout the duration of the contract. d) The payable premium amount steadily declines throughout the duration of the contract. - โโd) The payable premium amount steadily declines throughout the duration of the contract. An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Reduction of Premium b) Annual Dividend Provision c) Accumulation at Interest d) Cash option - โโd) Cash option Which of the following products requires a securities license? a)
Fixed annuity b) Equity Indexed annuity c) Deferred annuity d) Variable annuity - โโd) Variable annuity An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? a) Second-to-Die b) Common Disaster c) Accidental Death d) Survivor Life - โโb) Common Disaster
It decreases when an adopted child is added to the policy. - โโa) It remains the same no matter how many children are added to the policy. If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 7 days b) 10 days c) 3 days d) 5 days - โโd) 5 days All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional insurance up to the amount specified in the base policy. b)
It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. c) This rider is available to all insureds with no additional premium. d) The insured may purchase additional coverage at the attained age. - โโc) This rider is available to all insureds with no additional premium. A key person insurance policy can pay for which of the following? a) Costs of training a replacement b) Loss of personal income c) Workers compensation d) Hospital bills of the key employee - โโa) Costs of training a replacement
Taxation on accumulation A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a) Secondary beneficiary. b) Contingent beneficiary. c) Irrevocable beneficiary. d) Revocable beneficiary. - โโd) Revocable beneficiary. Which statement is NOT true regarding a Straight Life policy? a) The face value of the policy is paid to the insured at age 100. b) It usually develops cash value by the end of the third policy year. c)
It has the lowest annual premium of the three types of Whole Life policies. d) Its premium steadily decreases over time, in response to its growing cash value. - โโd) Its premium steadily decreases over time, in response to its growing cash value All of the following are characteristics of group life insurance EXCEPT a) Certificate holders may convert coverage to an individual policy without evidence of insurability. b) Premiums are determined by the age, sex and occupation of each individual certificate holder. c) Amount of coverage is determined according to nondiscriminatory rules. d) Individuals covered under the policy receive a certificate of insurance. - โโb) Premiums are determined by the age, sex and occupation of each individual certificate holder.
It determines if the insurance policy is a MEC. When would a 20-pay whole life policy endow? a) When the insured reaches age 100 b) At the insured's age 65 c) After 20 payments d) In 20 years - โโa) When the insured reaches age 100 Why should the producer personally deliver the policy when the first premium has already been paid? a) To make sure the policy is not stolen or lost b) To help the insured understand all aspects of the contract c) To ensure the producer gets paid commission d)
To find out how the family has been doing since the initial presentation
- โโb) To help the insured understand all aspects of the contract If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? a) Fixed period b) Fixed amount c) Lump sum d) Life income - โโc) Lump sum Which is NOT true about beneficiary designations? a) The beneficiary must have insurable interest in the insured. b) The beneficiary may be a natural person. c)
