Texas Life, Accident and Health Agent Exam: all 287 questions with answers

Each question leads to its own page with the answers and the solution.

• Life: Types of Policies37 questions
• Life: Riders, Provisions, Options and Exclusions36 questions
• Life: Application, Underwriting, Delivery and Contract Law28 questions
• Life: Retirement and Other Insurance Concepts19 questions
• Accident and Health: Types of Policies33 questions
• Accident and Health: Policy Provisions, Clauses and Riders31 questions
• Accident and Health: Social Insurance15 questions
• Accident and Health: Other Insurance Concepts15 questions
• Accident and Health: Field Underwriting Procedures17 questions
• Texas Law: Statutes and Rules Common to Life and Health28 questions
• Texas Law: Life Insurance Only11 questions
• Texas Law: Accident and Health Insurance Only9 questions
• Texas Law: Health Maintenance Organizations8 questions

Life: Types of Policies

• 1001Which feature is characteristic of ordinary (straight) whole life insurance?
• 1002A limited-pay whole life policy differs from ordinary whole life because the
• 1003A single-premium whole life policy is purchased by
• 1004Which statement about universal life insurance is correct?
• 1005In a universal life policy, the cash value is reduced each month by
• 1006Who bears the investment risk in a variable life insurance policy?
• 1007To sell variable life insurance or variable annuities in Texas, an agent needs
• 1008Variable universal life combines
• 1009How does indexed universal life credit interest to the cash value?
• 1010An interest-sensitive whole life policy typically
• 1011Term life insurance is best described as
• 1012Which type of term insurance has a death benefit that declines over the policy period?
• 1013A father wants coverage that will pay off his mortgage balance if he dies, with the amount of protection shrinking as the loan is repaid. Which policy fits best?
• 1014With a return of premium term policy, the insurer
• 1015Annually renewable term insurance provides
• 1016A renewable term policy allows the insured to
• 1017A convertible term policy lets the owner
• 1018Which annuity pays benefits beginning one year or less after a single lump sum purchase?
• 1019An annuity owner is in the accumulation period. This means the
• 1020Which annuity option provides income for as long as the annuitant lives, with nothing paid to a beneficiary after death?
• 1021A life annuity with a 10-year period certain pays the annuitant for life. If the annuitant dies in year 4, the
• 1022Which annuity credits interest at a rate guaranteed by the insurer, with the insurer bearing the investment risk?
• 1023In a deferred annuity, annuity units are used in which kind of contract during the payout phase?
• 1024A joint life (first to die) policy pays the death benefit
• 1025Survivorship life (second to die) is most commonly used to
• 1026Which policy generally has the lowest initial premium for a given amount of coverage for a 30-year-old?
• 1027Which feature distinguishes a participating policy?
• 1028Which of the following is true about a family income policy?
• 1029Family maintenance and family income policies are similar except that
• 1030A juvenile insurance policy often includes a
• 1031A modified endowment contract (MEC) is a policy that
• 1032A life insurance policy that endows at age 100 means
• 1033Which of these is a characteristic of term insurance compared with whole life?
• 1034Which type of policy has a death benefit that is level and a premium that is guaranteed to stay the same for a stated number of years, after which it may increase sharply?
• 1035A policyowner wants permanent protection with the lowest possible premium that is guaranteed never to change. Which policy fits best?
• 1036Which feature of an indexed annuity or indexed life policy limits the amount of index gain that can be credited in a period?
• 1037An annuity in which the owner pays premiums as a series of payments over time before income begins is a

Life: Riders, Provisions, Options and Exclusions

• 2001A waiver of premium rider on a life policy provides that
• 2002A guaranteed insurability rider allows the insured to
• 2003A payor benefit rider is most often attached to a policy on
• 2004An accidental death benefit rider pays the additional amount if
• 2005Accidental death and dismemberment (AD&D) coverage pays the principal sum for
• 2006A cost-of-living rider on a life insurance policy provides
• 2007An 'other insureds' rider is used to
• 2008A long-term care rider on a life policy allows the owner to
• 2009The entire contract provision of a life policy states that the
• 2010The free look provision gives the policyowner
• 2011The grace period in a life policy allows
• 2012The automatic premium loan provision
• 2013Premium payment modes refer to
• 2014Reinstatement of a lapsed life policy usually requires
• 2015A policy loan from a whole life policy
• 2016Which nonforfeiture option provides a paid-up policy of the same type as the original, with a reduced face amount?
• 2017Under the extended term nonforfeiture option, the policy
• 2018Which dividend option uses dividends to buy small amounts of fully paid-up additional insurance?
• 2019A policyowner who chooses to leave dividends with the insurer to earn interest has selected
• 2020Dividends on a participating whole life policy are generally treated for tax purposes as
• 2021The incontestability clause in an individual life policy in Texas generally prevents the insurer from contesting the policy on grounds of misstatement after
• 2022An insured dies in the second month after a life policy is issued. The insurer finds a material misstatement about the insured's health in the application. The insurer
• 2023An absolute assignment of a life policy
• 2024A collateral assignment is commonly used
• 2026If the insured's age was misstated on the application, the life insurer will usually
• 2027Which settlement option pays a fixed sum for a fixed number of years until the proceeds and interest are exhausted?
• 2028In the interest only settlement option, the beneficiary
• 2030Life insurance policies commonly exclude losses from war when
• 2031An aviation exclusion in a life policy generally applies to
• 2032A dangerous occupation exclusion or surcharge might apply to
• 2033A primary beneficiary and a contingent beneficiary differ in that the contingent beneficiary
• 2034An irrevocable beneficiary designation means that the
• 2035A common disaster (simultaneous death) provision is intended to
• 2036Naming a minor child directly as beneficiary can create problems because
• 2037Designating a beneficiary by class (for example, 'my children') means
• 2038Premium payment for a 'flexible' premium policy means that

Life: Application, Underwriting, Delivery and Contract Law

• 3001Who must sign a life insurance application for it to be complete?
• 3002An applicant asks the agent to correct an answer on the application after it is signed. The proper step is to
• 3003An incomplete application will most likely
• 3004A statement in an application that the applicant believes to be true to the best of knowledge is a
• 3005A material misrepresentation on an application is a statement that
• 3006An agent collects the initial premium with the application and issues a conditional receipt. Coverage under the receipt
• 3007Compared to a conditional receipt, a binding receipt
• 3008A life insurance replacement occurs when a new policy is purchased and an existing policy is
• 3009Which of these is a typical disadvantage to the policyowner of replacing a life policy?
• 3010The USA PATRIOT Act requires insurers and agents to take part in programs to
• 3011The Gramm-Leach-Bliley Act (GLBA) requires financial institutions, including insurers, to
• 3012The Fair Credit Reporting Act (FCRA) requires an insurer that takes adverse action based on a consumer report to
• 3013The Medical Information Bureau (MIB) is
• 3014Insurable interest in life insurance must exist
• 3015Which relationship shows an insurable interest without any additional proof?
• 3016Risk classification places a proposed insured in a group with similar risks, which might be
• 3017Stranger-originated life insurance (STOLI) is a practice in which
• 3018Under the doctrine of utmost good faith, an applicant for insurance must
• 3019Which element is NOT required for a valid insurance contract?
• 3020In life insurance, consideration from the applicant consists of
• 3021A life insurance contract is described as a contract of adhesion because
• 3022A life insurance policy is a unilateral contract because
• 3023A life insurance contract is aleatory, which means
• 3024A life insurance policy is called conditional because the insurer's duty to pay depends on
• 3025Coverage under a life insurance policy normally begins
• 3026When delivering a policy, an agent should also
• 3027Warranties differ from representations in that a warranty
• 3028An insurer waives its right to rescind a policy for a known misrepresentation when

Life: Retirement and Other Insurance Concepts

• 4001Third-party ownership of a life insurance policy means that
• 4002A life settlement is a transaction in which
• 4003In a contributory group life plan,
• 4004In a noncontributory group life plan, the employer pays the entire premium, and
• 4006A qualified retirement plan is one that
• 4007Which of these is an example of a nonqualified plan?
• 4008Key person life insurance is purchased by a business to
• 4009A buy-sell agreement funded by life insurance is intended to
• 4010In a cross purchase buy-sell arrangement among three partners,
• 4011The human life value approach to determining life insurance needs is based on
• 4012The needs approach to life insurance planning adds up
• 4013Which Social Security benefit is paid to a surviving spouse caring for a child under age 16?
• 4014The period when a surviving spouse receives no Social Security survivor benefit after the children reach the stated age until the spouse reaches age 60 is called the
• 4015Life insurance death benefits paid to a named beneficiary in a lump sum are generally
• 4016Premiums paid for an individual life insurance policy by the owner are generally
• 4017The premium for group term life insurance provided by an employer is
• 4018Which of these is a Modified Endowment Contract rule for withdrawals and loans?
• 4019Under a non-MEC life policy, a withdrawal up to the owner's basis is
• 4020Investment growth in the cash value of a life insurance policy is generally

Accident and Health: Types of Policies

• 5001An individual disability income policy is designed to
• 5002A business overhead expense (BOE) policy pays
• 5003A business disability buyout policy is used to
• 5004A key employee disability policy is generally owned by
• 5005Group disability income plans commonly
• 5006Accidental death and dismemberment coverage differs from life insurance because AD&D
• 5007Basic hospital, medical and surgical policies provide
• 5008Major medical insurance is characterized by
• 5009A health maintenance organization (HMO) generally
• 5010A preferred provider organization (PPO) allows members to
• 5011A point of service (POS) plan combines features of
• 5012A flexible spending account (FSA) is
• 5013To be eligible to contribute to a health savings account (HSA), an individual must
• 5014Unlike an FSA, a health savings account (HSA)
• 5015A health reimbursement arrangement (HRA) is funded by
• 5016Medicare supplement (Medigap) policies are designed to
• 5017Which of the following is true of group health insurance compared to individual health insurance?
• 5018COBRA continuation coverage generally allows an employee who loses coverage because of a termination to
• 5019The maximum period of COBRA continuation for a spouse after a divorce is
• 5020Long term care insurance typically provides benefits when the insured
• 5021Which level of long-term care includes help with daily activities in a person's home or community, but not skilled care?
• 5022Intermediate care is best described as
• 5023Dental insurance generally emphasizes
• 5024A cancer policy that pays only when a particular disease is diagnosed is an example of a
• 5025A critical illness policy typically pays
• 5026Worksite (voluntary) insurance is generally
• 5027A hospital indemnity policy pays
• 5028Short-term medical insurance
• 5029An accident-only policy generally
• 5030Which disability income policy definition is the most liberal for the insured?
• 5031Coverage that pays a specific dollar amount for an accidental loss of both eyes uses a
• 5032In an HMO, the person who coordinates a member's care and provides referrals to specialists is the
• 5033Which of the following describes an exclusive provider organization (EPO)?

Accident and Health: Policy Provisions, Clauses and Riders

• 6001The entire contract provision in a health policy states that
• 6002The time limit on certain defenses (incontestable) provision in an individual health policy limits the insurer's right to
• 6007The time of payment of claims provision requires the insurer to pay benefits
• 6008Under the payment of claims provision, indemnity for loss of life is payable to
• 6009The physical examination and autopsy provision allows the insurer to
• 6011The change of beneficiary provision allows the insured to change the beneficiary
• 6012The misstatement of age provision in a health policy provides that, if the age of the insured was misstated,
• 6013The change of occupation provision allows the insurer to
• 6014The relation of earnings to insurance provision allows the insurer to
• 6015The illegal occupation provision allows the insurer to
• 6016A probationary period in a health policy is
• 6017The elimination period in a disability income policy is
• 6018A longer elimination period in a disability income policy will generally
• 6019A waiver of premium provision in a health policy generally applies when the insured
• 6020A preexisting condition is generally defined as
• 6021Coinsurance in a major medical policy means that
• 6022Under an 80/20 coinsurance policy with a $500 deductible, the insured has a covered loss of $5,500. How much will the insurer pay?
• 6023A deductible differs from a copayment in that a deductible is
• 6024A pre-authorization (prior approval) requirement means that
• 6025Usual, reasonable and customary (URC) charges refer to
• 6026A policy that pays 80 percent of a lifetime maximum of $1 million per person has
• 6027A noncancelable health policy
• 6028A guaranteed renewable health policy
• 6029A cancelable health policy
• 6030An impairment rider (exclusion rider) on a health policy
• 6031A future increase option rider on a disability income policy allows the insured to
• 6032A disability income policy has a benefit period of two years. This means
• 6033An insured has a $1,000 deductible and a 20 percent coinsurance clause with a $3,000 out-of-pocket (stop-loss) cap on a major medical policy. Which statement is true?
• 6034A health policy that does not pay for care until the insured has paid the first $2,000 of covered expenses in the benefit year has a
• 6035Which provision keeps an insured from collecting twice for the same medical expense under two different policies?
• 6037A consideration clause in a health policy states that the policy is issued

Accident and Health: Social Insurance

• 7001Medicare Part A primarily helps pay for
• 7002Medicare Part B covers
• 7003Medicare Part C (Medicare Advantage) is
• 7004Medicare Part D is
• 7005A person is generally eligible for Medicare at age
• 7006Medicaid is
• 7007Which statement about Medicaid is correct?
• 7008Social Security disability insurance (SSDI) requires that the disability be
• 7009Social Security disability benefits begin after a waiting period of
• 7010To be fully insured for Social Security retirement benefits, a worker generally needs
• 7011Social Security survivor benefits may be paid to
• 7012The Medicare Part A benefit period starts
• 7013The Medicare initial enrollment period lasts
• 7014A person who qualifies for both Medicare and Medicaid is called
• 7015A person who is eligible for Medicare Part A premium free generally must have

Accident and Health: Other Insurance Concepts

• 8001In a disability income policy, total disability that prevents the insured from performing only some duties of the occupation is usually called
• 8002Residual disability benefits are based on
• 8003A recurrent disability provision says that if the insured becomes disabled again from the same cause within a set period,
• 8004Dependent children's benefits in a health policy commonly end
• 8005Coordination of benefits (COB) provisions are used to
• 8006Under the birthday rule, when a child is covered under both parents' plans, the primary plan is the plan of the parent
• 8007Workers compensation covers
• 8008Subrogation in health insurance allows the insurer to
• 8009Managed care generally
• 8010Premiums paid by an employer for employee group health coverage are generally
• 8011Benefits received from an individually owned disability income policy where the insured paid the premiums with after-tax dollars are
• 8012Premiums for an individual's own health insurance are
• 8013A nonoccupational policy covers
• 8014Owner's rights in a health policy include the right to
• 8015Which modes of premium payment typically cost the insured the most over a year?

Accident and Health: Field Underwriting Procedures

• 9001Field underwriting by the agent includes
• 9002An agent should ask the applicant to answer every question on the application
• 9003Before an application for health coverage is signed, the agent should explain
• 9004A HIPAA authorization signed by an applicant
• 9005If an agent collects the initial premium with the application, the agent should
• 9006An agent who deposits a client's premium in a personal account has committed
• 9007When delivering a policy, the agent should explain
• 9008If the policy issued differs from the one applied for (for example, with a rating or exclusion), the agent should
• 9009Replacing an existing health policy with a new policy without regard to the client's interests is
• 9010Twisting is
• 9011Churning is
• 9012An applicant misstates a medical condition and the agent knows the answer is false but submits the application anyway. This could result in
• 9015An agent explains that a disability income policy will pay 'the full salary' while disabled, although the policy pays 60 percent. This is
• 9016For a health application, an agent who learns of a change in the applicant's health after the application but before delivery should
• 9017An agent submits an application without the applicant's signature, signing for the applicant with a note that permission was given. This is
• 9018Before a Texas agent leaves the application with an applicant who must obtain a medical exam, the agent should explain
• 9019An agent gives the applicant a written health application summary stating that no coverage exists until the policy is delivered, unless a receipt says otherwise. This statement helps avoid

Texas Law: Statutes and Rules Common to Life and Health

• 10001In Texas, who is the chief regulator of the business of insurance?
• 10002The Commissioner's authority to look at an insurer's or agent's books, records and papers is called
• 10003Before TDI can suspend or revoke an agent's license for a violation, the agent generally has the right to
• 10004An order from the Commissioner requiring a person to stop an unlawful practice is called a
• 10005An insurance company that wants to transact business in Texas must first obtain
• 10006An insurer organized under the laws of Texas is called a
• 10007An insurer incorporated in Mexico that is licensed to do business in Texas is considered
• 10008A stock insurer differs from a mutual insurer in that a stock insurer
• 10009A fraternal benefit society is
• 10010Under the Texas Insurance Code, 'transacting insurance' includes
• 10011Individual insurance licenses in Texas are typically valid for
• 10012An applicant who passes the Texas insurance exam must submit the license application within
• 10014A temporary agent license in Texas may last up to
• 10015A nonresident agent license in Texas is for a person who
• 10016How many hours of continuing education are required every two years for most Texas agents, including how many in ethics?
• 10019A licensed agent changes the home address. Under Texas law, the agent must notify TDI within
• 10020An agent is convicted of a felony. Under Texas rules, the agent must
• 10021An agent who wants to represent an additional insurer in Texas must
• 10022Under Texas law, rebating is
• 10023Making or circulating a false statement about an insurer's financial condition in order to harm the insurer is
• 10024Misrepresentation under the Texas Insurance Code includes
• 10025Unfair discrimination in life insurance means
• 10026Boycott, coercion, and intimidation in insurance refers to
• 10027Which of the following is insurance fraud?
• 10029The Texas Life and Health Insurance Guaranty Association exists to
• 10030An agent may not use the Guaranty Association coverage
• 10031False advertising is a violation under Texas rules if an ad
• 10032The maximum penalty or action TDI can take against an agent for violations includes

Texas Law: Life Insurance Only

• 11001Under the Texas Insurance Code, an individual life policy must contain an incontestability clause making the policy incontestable after
• 11002In a Texas individual life policy, the entire contract provision states that the policy and the application
• 11003Under Texas law, if a life insurance policy's age of the insured is misstated, the amount payable
• 11004A Texas life insurance policy must provide a grace period for each premium after the first of at least
• 11006A Texas life policy with cash value must provide for policy loans, and it may allow the insurer to defer a loan for a period not to exceed
• 11007The Texas standard nonforfeiture law requires that a life insurer offer
• 11008In Texas, a life insurance replacement occurs when
• 11010A Texas agent who is replacing life insurance must
• 11011Credit life insurance is
• 11012For group life insurance in Texas, a covered employee whose group coverage ends must be given the right to convert to an individual policy, and the application generally must be made within
• 11015After a policyholder dies, a Texas life policy must provide that settlement will be made not later than

Texas Law: Accident and Health Insurance Only

• 12002The Affordable Care Act requires plans that offer dependent coverage to make it available until the child reaches age
• 12008Under the ACA, the essential health benefits include
• 12009Under the ACA, preventive services such as certain screenings are covered
• 12010The health insurance Marketplace (Exchange) is a place where individuals
• 12011Under the ACA, large employers (generally 50 or more full-time equivalent employees) must
• 12013Under the ACA, an individual with a preexisting condition
• 12014A person who loses employer coverage may enroll in the Marketplace outside open enrollment during
• 12015Under the ACA, which group of insurance plans must generally cover pre-existing conditions without waiting periods?
• 12017Under a Medicare supplement open enrollment period, a person who is 65 or older and enrolls in Medicare Part B

Texas Law: Health Maintenance Organizations

• 13001In Texas, a health maintenance organization must obtain
• 13002The evidence of coverage for an HMO is
• 13004A person who receives care from an HMO's network is called
• 13007A health maintenance organization is different from traditional indemnity insurance because the HMO
• 13009Under Texas law, an HMO that provides coverage must
• 13010HMOs in Texas are described in Insurance Code Chapter 843 and in 28 TAC Chapter 11. Which agency is primarily responsible for enforcing these rules?
• 13015A health maintenance organization usually pays its primary care physicians by
• 13016An HMO enrollee who needs a covered specialist service may need