200 Questions Texas Life Insurance Only State Exam Simulator

200 questions Texas Life Insurance Only State Exam Simulator $25,000 (spouse may not exceed 1/2 of the amount) - ANS-An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program? $50,000-ANS-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? $50,000- ANS-T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? 10% penalty is applied to withdrawals before age 59 1/2 - ANS-All of the following statements about traditional individual accounts are false EXCEPT 100% - ANS-An insured may assign up to insurance policy. of policy ownership under an individual life 15-year decreasing term - ANS-A 15-year mortgage is best protected by what kind of life policy? 2 years - ANS-In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide 24-ANS-A new general property and casualty licensee must complete at LEAST continuing education within 24 months of initial licensure. hours of 31 days - ANS-In Texas, an individual life insurance policy is REQUIRED to have a Grace period of 5-ANS-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? 59 1/2-ANS-An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? 6 months - ANS-How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? 90-ANS-A temporary agent's license issued by the Commissioner of Insurance is valid for up to days A fine of up to $500 (unintentional is $50) - ANS-What is the monetary penalty for willfully violating a cease-and-desist order? A minimum number of employees is required to participate - ANS-Which of the following statements about noncontributory employee group life insurance is FALSE? A pension deficiency if the key employee dies - ANS-Which of these is NOT a reason for a business to buy a key person life insurance A signed application by the prospect - ANS-Before a life insurance policy is issued, which of these contract elements is necessary? A Whole Life Policy with an Other Insured Rider - ANS-Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase? Accidental Death and Dismemberment rider (AD&D) - ANS-The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n): Accumulation at interest - ANS-A policyowner may generate taxable income from which of the following Dividend Options? Activate insurance companies' financial reserves - ANS-Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? additional death benefits - ANS-A Cost of Living rider gives the insured additional Whole Life coverage at specified times - ANS-B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of adjust the death benefit to a reduced amount - ANS-L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will an amount that the premiums paid would have purchased at the current age - ANS-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 immediate annuity - ANS-P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy? An insurer may not use suicide as a defense against payment after the second year - ANS-In Texas, which of these statements regarding the Suicide clause is TRUE? annually renewable term - ANS-Group life insurance policies are generally written as Annuity - ANS-Which type of contract liquidates an estate through recurrent payments? Another agent with the same line of insurance - ANS-With whom may an agent legally share commissions? Any changes made on the application require the applicant's initials - ANS-When an insurance application is taken by a producer, which of these statements is true? applicant's physician - ANS-An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the Applicant's signature on application - ANS-Before a life insurance policy is issued, which of these components of the contract is required? Are restricted to maximum levels set by the IRS - ANS-In a qualified retirement plan, the yearly contributions to an employee's account: authority - ANS-A certificate of Texas. permits an insurance company to transact business in avoid a policy lapse - ANS-The Automatic Premium Loan provision is designed to: Be honest, trustworthy, and reliable - ANS-Which of the following is a requirement for obtaining a Texas insurance agent's license? beneficiary - ANS-A life insurance application must be signed by all of these, EXCEPT: beneficiary - ANS-T is the policyowner for a Life Insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the Beneficiary will be paid the Death Benefit - ANS-P dies five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will be the insurer taker? Bilateral - ANS-All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: both an insurance and securities product - ANS-Variable Whole Life Insurance can be described as: Business expenses - ANS-Which of these is NOT considered to be a cost connected with an individual's death? certificate - ANS-All individuals covered under a group contract will receive a(n) Child term rider - ANS-Which rider provides coverage for a child under a parent's life insurance policy? Coercion - ANS-As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? coercion - ANS-B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of Company's mortality table - ANS-Which of the following is NOT included in a life insurance illustration? Conditional, depending on the insurer's underwriting guidelines - ANS-T is given a receipt after completing a life insurance application and paying the initial premium, Under this situation, T's coverage is Contracts of Adhesion - ANS-Insurance policies are offered on a "take it or leave it" basis, which make them: contributory plan - ANS-What type of group insurance plan involves employees sharing the cost? conversion - ANS-Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? cost of insurance - ANS-A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the Decreasing term - ANS-What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? Decreasing term - ANS-Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? Decreasing term rider (A decreasing term rider can add additional coverage to a whole life policy.) - ANS-Additional coverage can be added to a Whole Life policy by adding a(n): decreasing term rider - ANS-Additional coverage can be added to a Whole Life policy by adding a(n): deferred - ANS-P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? Dismemberment - ANS-Which of the following does Social Security NOT provide benefits for? does not guarantee a return on its investment accounts - ANS-A variable insurance policy: Does not have to make any further payments - ANS-T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company Each partner owns a $500,000 policy on their partner's life - ANS-Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? Endowment at age 70-ANS-P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own? Entire Contract provision - ANS-What provision in a life insurance policy states that the application is considered part of the contract? Evidence of insurability is required when the option is exercised - ANS-Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? Exclusions - ANS-N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? Extended term - ANS-Which of these provisions is NOT required in life insurance policies? extra premium - ANS-An underwriter determines that a life insurance applicants risk should be reclassified due to a health issue. This policy may be issued with a(n): face amount can be adjusted using policy dividends - ANS-All of these are characteristics of an Adjustable Life policy EXCEPT Fair Credit Reporting Act - ANS-P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the Family Maintenance Policy - ANS-What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Fixed Deferred - ANS-N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? Flexible Installment Deferred - ANS-The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own? foreign company - ANS-An insurance company organized under New York laws and licensed to do business in Texas is considered a(n) Forward the application to the insurer without the initial premium - ANS-What action should a producer take if the initial premium is NOT submitted with the application? fraternal benefit society - ANS-What is an organization that solicits insurance only to its members? free-look period has expired - ANS-M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT: Full face amount minus any past due premiums - ANS-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? Fund a buy-sell agreement - ANS-What is considered a valid reason for small businesses to insure the lives of its major shareholders Gender - ANS-A Life insurance application may be rejected on the basis of all of these EXCЕРТ grace - ANS-The purpose of the period clause is to avoid an unintentional lapse of a life insurance policy, Group was formed for a purpose other than acquiring insurance - ANS-Which requirement must be met for an association to be eligible for a group life plan? hold a Life Insurance license and a Securities license - ANS-Variable Life products require a producer to If both parents were to die, it would provide death benefits to the child - ANS-Which of these is NOT a reason for purchasing life insurance on the life of a minor? If Tom's employment is terminated, 20% of the funds would be forfeited - ANS-Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? Immediate annuity - ANS-The type of annuity that must be purchased with one monetary deposit is called a(n): Income derived from the TSA is received income tax-free- ANS-All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT Indexed annuity owners receive credited interest tied to the fluctuations of the linked index -ANS-How does an indexed annuity differ from a fixed annuity? Individuals who are related by blood - ANS-Which of the following groups may NOT be insured by a group life insurance policy? Inspection report - ANS-Information obtained from a phone conversation to the proposed insured can be found in which of these reports? insurable interest - ANS-A life insurance policy would be considered a wagering contract WITHOUT insurable interest in the proposed insured - ANS-When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have insurance company - ANS-Who makes the legally enforceable promises in a unilateral insurance policy? insurance issued on a debtor to cover outstanding loan balances - ANS-Credit Life Insurance is insured - ANS-If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? Insured's contingent beneficiary - ANS-If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? Interest only - ANS-B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes? Investor-Originated Life Insurance - ANS-A life insurance arrangement which circumvents insurable interest states is called: irrevocable - ANS-A policyowner's rights are limited under which beneficiary designation? is found guilty of misrepresentation in obtaining the license - ANS-A license may be denied, suspended, or revoked if the licensee? is incorporated and formed in Texas - ANS-A domestic insurance company in Texas is considered a company that? issued in an amount not to exceed the amount of the loan - ANS-Credit Life Insurance is: It highlights the critical parts of the policy issued - ANS-What is the purpose of a Policy Summary? January 26 - ANS-On January 8, an applicant filled out an application for a life Insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? K has no ownership rights - ANS-K is an insured under a life insurance policy owned by a third party. Which of these statements is true? K will forfeit the right to use the automatic loan provision upon reinstatement - ANS-K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT key person insurance - ANS-An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager? Legal Purpose (Insurable Interest) - ANS-Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? Life Annuity with Period Certain - ANS-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 settlement contact - ANS-A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than it's cash value? Limited Pay Life - ANS-Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: Long term care - ANS-An insured's inability to perform two or more activities of daily living may trigger which type of life policy rider? make a prospect understand that dividends are NOT guaranteed - ANS-During a sales presentation for a participating life insurance policy, an agent MUST Medical Information Bureau (MIB) - ANS-The entity whose sole purpose is sharing medical data among its member companies is called the Misrepresentation - ANS-Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? Mode of Premium - ANS-A policyowner is allowed to pay premiums more than once a year under which provision? Modified Endowment Contract - ANS-Which type of policy is considered to be overfunded, as stated by IRS guidelines? Modified Endowment Contract (MEC) - ANS-When a life insurance policy exceeds certain IRS table values, the result would create which of the following? Modified Whole Life - ANS-All of the insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for: Modify a provision in the insurance contract - ANS-Which of these is NOT considered to be a right given to a policyowner? More than 60% of plan assets are in the key employee accounts - ANS-Which of the following is TRUE about a qualified retirement that is "top heavy"? negotiating - ANS-Which of these is NOT considered to be an element of an insurance contract? No sooner than 6 days - ANS-When will a hearing be held after a notice of hearing, alleging participation in an unfair or deceptive act, is served to a licensee or insurer by the Commissioner? none - ANS-When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? Only the beneficiary may select - ANS-All of these statements concerning Settlement Options are true, EXCСЕРТ: Owner's Rights - ANS-In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy Paid-Up Additional Insurance - ANS-K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she choose? partial withdrawal features beyond a surrender charge period - ANS-Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT Past due premiums are waived - ANS-All of the following statements are true regarding a policy's Grace period, EXCEPT: Past-due interest on a policy loan is added to the total debt - ANS-Which statements is TRUE in regards to a policy loan? Pay an amount the premiums would have purchased at the insured's actual age - ANS-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? Payor Benefit rider (A payor benefit rider provides for waiver of premium if the adult-payor of the policy dies or becomes totally disabled.) - ANS-Which life insurance rider typically appears on a Juvenile life insurance policy? Payor Provision - ANS-A father who does within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? policy proceeds - ANS-M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the: Policy proceeds will be paid if the employee dies during the conversion period - ANS-When an employee is terminated, which statement about a group term life conversion is true? Policyowner - ANS-The is authorized to assign a Life Insurance policy as collateral for a Ioan. Policyowner - ANS-Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?