Texas Life and Health Insurance Exam 4 (Latest 2023-2024)
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- At what point must a life insurance applicant be informed of
their rights that fall under the Fair Credit Reporting Act?
Answer: Upon completion of the application
- Who elects the governing body of a mutual insurance company?
Answer: policy- holders
- An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Answer: Fair Credit Reporting Act
- What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
Answer: Treaty
- The stated amount or percent of liquid assets that an insurer must
have on hand that will satisfy future obligations to its policyholders is called
Answer: reserves
- Which of the following requires insurers to disclose when an
applicant's consumer or credit history is being investigated
Answer: 1970 - Fair Credit Reporting Act
- What is the consideration given by an insurer in the
Consideration clause of a life policy? 1 / 4
Answer: Promise to pay a death benefit
- When third-party ownership is involved, applicants who also
happen to be the stated primary beneficiary are required to have
Answer: insurable interest in the proposed insured
- Statements made on an insurance application that are believed to
be true to the best of the applicant's knowledge are called
Answer: representations
- The part of a life insurance policy guaranteed to be true is
called a(n)
Answer: -warranty
- Which of these is NOT a type of agent authority?
Express Implied Principal Apparent
Answer: Principal
- The Consideration clause of an insurance contract includes
Answer: the schedule and amount of premium payments
- E and F are business partners. Each takes out a $500,000 life
- However, an insurable interest no longer exists. Where will the
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
proceeds 2 / 4
from E's life insurance policy be directed to?
Answer: In this situation, the proceeds from E's life insurance
policy will go to F.
- Which of the following terms defines the legally enforceable
promise in an insurance contract by the insurer?
Answer: Unilateral
- When must insurable interest exist for a life insurance contract
to be valid?
Answer: Inception of the contract
- Insurance contracts are known as because certain future
conditions or acts must occur before any claims can be paid.
Answer: conditional
- Which of these require an offer, acceptance, and consideration?
Answer: Contract
- Which of these arrangements allows one to bypass insurable
interest laws?
Answer: Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated life insurance (or STOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefit when the insured dies.
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- Which of these is NOT considered to be an element of an
insurance contract?the offer acceptance negotiating consideration
Answer: negotiating
- An agent is an individual that represents whom?
Answer: Insurer
- Insurable interest must exist at what time?
Answer: at the time of application
- Which policy requires an agent to register with the National
Association of Securities Dealers (NASD) before selling?
Answer: Variable Life
- Which of the following actions require a policy owner to
provide proof of insurability in an Adjustable Life policy?
Answer: increase face amount
- When a policy owner exchanges a term policy for a whole life
policy without providing proof of good health, which of these apply?
Answer: Conversion provision
- What type of life insurance are credit policies issued as?
Answer: Term
- How long does the coverage normally remain on a limited-pay
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life policy?