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Life Insurance Texas Exam/LATEST UPDATE
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P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when - ✔✔P receives the policy and pays the premium 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 carrer? - ✔✔ 20 - Pay Life accumulates cash value faster than Straight Life How does an indexed annuity differ from a fixed annuity? - ✔✔Indexed annuity owners receive credited interest tied to the fluctuations of the linked index During a sales presentation for a participating life insurance policy, an agent MUST - ✔✔make a prospect understand that dividends are NOT guaranteed T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable eneficiary. What action will the insurance company take if I requests a change of beneficiary? - ✔✔request of the change will be refused Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? - ✔✔conversion T has a term policy that allows him to continue the coverage after expiration of the initial policy period What type of term coverage is this? - ✔✔renewable
Which of the following is NOT a required provision in group life policies? - ✔✔Right to loan The Insurance Commissioner must give how many days notice prior to holding a hearing regarding an agent's unfair or deceptive practice? - ✔✔ 30 The Accelerated Death Benefit provision in a life insurance policy is also known as a(n) ) - ✔✔Living Benefit In Texas, an individual life insurance policy is required to have a grace period of - ✔✔ 31 days Which statement is correct regarding the premium payment schedule for whole life policies? - ✔✔Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? - ✔✔Each partner must own a policy on the other partners Why would the Insurance Commissioner examine the records of an insurance company? - ✔✔To determine the solvency of the company Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? - ✔✔Conversion privilege
Which of the following groups may NOT be insured by a group life insurance policy? - ✔✔Individuals who are related by blood The amount of coverage on a group credit life policy is limited to - ✔✔the insured's total loan value D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - ✔✔The full face amount The underwriting process involves all of these EXCEPT for - ✔✔Policy loan Which of the following Dividend options results in taxable income to the policyowner? - ✔✔Accumulation at interest Which of these is NOT relevant when determining the amount of personal life insurance needed? - ✔✔Local unemployment rate 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? - ✔✔Full face amount minus any past due premiums What action should a producer take if the initial premium is NOT submitted with the application? - ✔✔Forward the application to the insurer without the initial premium
The type of annuity that can be purchased with one monetary deposit is called a(n) - ✔✔Immediate annuity How does a typical Variable Life Policy investment account grow? - ✔✔Through mutual funds, stocks, bonds Which of these provisions is NOT required in life insurance policies? - ✔✔Extended Term If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? - ✔✔insured 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 How long does the coverage normally remain on a limited-pay life policy? - ✔✔Age 100 How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - ✔✔ 6 months N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? - ✔✔Flexible Installment Deferred The Consideration clause of an insurance contract includes: - ✔✔the schedule and amount of premium payments What type of employee welfare plans are not subject to ERISA regulations? - ✔✔Church plans
An insured may assign up toof policy ownership under an individual life insurance policy - ✔✔100% Which statement regarding the Change of Beneficiary provision is true? - ✔✔The policyowner can change the beneficiary Which of the following is NOT included in a life insurance illustration? - ✔✔Company's mortality table The automatic premium loan provision is designed to - ✔✔avoid a policy lapse A term life insurance policy matures: - ✔✔upon the insured's death during the term of the policy Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? - ✔✔Payor clause All are true statements regarding the underwriting process, EXCEPT: - ✔✔AIDS and HIV virus exams can be conducted in a discriminatory fashion All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: - ✔✔bilateral Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - ✔✔If Tom's employment is terminated, 20% of the funds would be forfeited
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? - ✔✔Conditional receipt 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? - ✔✔$50, An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the - ✔✔applicant's physician T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - ✔✔Life Annuity with Period Certain The phrase "transacting business" includes - ✔✔Collecting premiums In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide? - ✔✔ 2 years What action can a policyowner take if an application for a bank loan requires collateral? - ✔✔Assign policy ownership to the bank What is the Suicide provision designed to do? - ✔✔safeguard the insurer from an applicant who is contemplating suicide
An example of rebating would be - ✔✔Returning a portion of a premium as inducement to purchase insurance 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 When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? - ✔✔Establishes the needs of the individual and his dependents Which of the following types of policies pays a benefit if the insured goes blind? - ✔✔AD&D A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the - ✔✔Policy Loan provision A Renewable Term Policy is renewable at the option of the - ✔✔insured N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? - ✔✔30 Pay Life With whom may an agent legally share commissions? - ✔✔Another agent with the same line of insurance A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid - ✔✔mandatory income tax withholding on the transfer amount
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - ✔✔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 When must insurable interest be present in order for a life insurance policy to be valid? - ✔✔When the application is made G purchased a $50,000 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer - ✔✔Does not have to make any further payments A(n) Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. - ✔✔variable An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum Jpon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? - ✔✔Distribution is subject to federal income tax withholding 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 - ✔✔unfair methods of competition Credit Life insurance is - ✔✔Insurance issued on a debtor to cover outstanding loan balances
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? - ✔✔When the conditions of the receipt are met Which of these is NOT a reason for a business to buy key person life insurance? - ✔✔A pension deficiency if the key employee dies All of these statements about the Waiver of Premium provision are correct EXCEPT - ✔✔Insured must be eligible for Social Security disability for claim to be accepted How long does an insurance company appointment remain in force? - ✔✔Until terminated If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be - ✔✔an amount that the premiums paid would have purchased at the current age Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? - ✔✔Variable Life Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? - ✔✔Activate insurance companies financial reserves A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as - ✔✔Variable Life Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the - ✔✔marital deduction
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - ✔✔Variable Life Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits? - ✔✔ 5 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 because the check is made out to J instead of the insurance company. What action should J take? - ✔✔Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company A life insurance policy would be considered a wagering contract WITHOUT: - ✔✔insurable interest How are Roth IRA distributions normally taxed? - ✔✔Distributions are received tax-free An example of an unfair claims settlement practice is - ✔✔turning down a claim without providing the basis of denial A foreign insurance company conducting insurance business in Texas - ✔✔was formed under the laws of another state Which rider provides coverage for a child under a parent's life insurance policy? - ✔✔Child term rider
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period? - ✔✔Claims are denied under the Suicide clause of the policy T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? - ✔✔Income that cannot be outlived by the owner 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? - ✔✔Pay an amount the premiums would have purchased at the insured's actual age When must insurable interest exist for a life insurance contract to be valid? - ✔✔Inception of the contract
