welcome to the law of averages
investments llcs texas life insurance
pre-licensing practice exam audible
guide 2022
written and transcribed by david l price
written and copyrighted by david l price
in april 2021
this copyrighted audio of the texas life
insurance pre-licensing practice exam
guide 2021 may not be retransmitted
reproduced rebroadcast or otherwise
distributed or used in any form without
the express written consent of david l
price all rights are reserved
chapter 1 basic principles
chapter 2 legal concepts
chapter 3 premiums proceeds and
beneficiaries
chapter 4 additional legal concepts
let's proceed to chapter 1 basic
principles
each chapter contains study questions
and answers
question 1
who elects the governing body of a
mutual insurance company
answer
a mutual insurance company is an
insurance company owned entirely by its
policyholders
the policyholders is the correct answer
question two
what year was the mccarran ferguson act
enacted
answer
the mccarran ferguson act was passed by
congress in 1945.
subject to certain conditions
the mccarran act essentially returned
insurance regulation to the states
the act was designed to ensure the
preeminence of state regulation not to
free insurers from federal anti-trust
laws
the year 1945 is the correct answer
chapter 2 legal concept
question 1
a contract where one party either
accepts or rejects the term of a
contract written by another party is
called a contract of
answer
a contract where one party either
accepts or rejects the term of a
contract written by another party is
called a contract of adhesion
a contract of adhesion is the correct
answer
question two
at what point does an informal agreement
become a binding contract
answer
when consideration is provided by one of
the parties to the contract
consideration must be given in order to
make a contract legally binding
when consideration is provided by one of
the parties to the contract
is the correct answer
question
three
which of the following best describes a
warranty
answer
a warranty is a statement guaranteed to
be true
a statement guaranteed to be true best
describes a warranty is the correct
answer
question four
a life insurance arrangement which
circumvents insurable interest statutes
is called
answer
investor originated life insurance i o l
i pronounced eo
is used to circumvent state insurable
interest statutes
this is done when an investor or
stranger persuades an individual to take
out life insurance
a life insurance arrangement which
circumvents insurable interest statutes
is called eoli
investor originated life insurance is
the correct answer
question five
q purchases of five hundred thousand
dollars life insurance policy
and pays 900 in premiums over the first
six months
q dies suddenly and the beneficiary is
paid 500 000
this exchange of unequal values reflects
which of the following insurance
contract features
answer
aleatory an exchange of unequal values
is the correct answer
question 6.
which of these is not considered to be
an element of an insurance contract
answer
negotiating
negotiating is not considered to be an
element of an insurance contract is the
correct answer
question 7.
what is the consideration given by an
insurer in the consideration clause of a
policy
answer
promise to pay a death benefit to a
named beneficiary
consideration is given by the insurer by
promising to pay a death benefit to a
named beneficiary is the correct answer
question 8
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
in third party ownership an applicant
who is also the stated primary
beneficiary must have insurable interest
in the proposed insured
must have insurable interest in the
proposed insured is the correct answer
question 9
a policy of adhesion can only be
modified by whom
answer
a policy of adhesion is best described
as a policy which only the insurance
company can modify
a policy of adhesion can only be
modified by the insurance company is the
correct answer
question 10
a life insurance policy would be
considered a wagering contract without
answer
without insurable interest a life
insurance policy would be considered a
wagering contract is the correct answer
question 11.
which of the following consists of an
offer acceptance and consideration
answer
offer acceptance and consideration are
all elements of a contract
all elements of a contract is the
correct answer
question 12.
which of these is not considered to be
an element of an insurance contract
answer
the elements of an insurance contract do
not include negotiating
elements of a contract does not include
negotiating is the correct answer
question 13.
if a contract of adhesion contains
complicated language to whom would the
interpretation be in favor of
answer
in a contract of adhesion any confusing
language would be interpreted in the
favor of the insured
interpreted in the favor of the insured
is the correct answer
question 14.
a policy of adhesion can only be
modified by whom
answer
a policy of adhesion is best described
as a policy which only the insurance
company can modify
a policy which only the insurance
company can modify is the correct answer
question 15.
a part of a life insurance policy
guaranteed to be true is called a
answer
warranties are statements that are
considered literally true
a warranty that is not literally true in
every detail even if made in error is
sufficient to render a policy void
a part of a life insurance policy
guaranteed to be true is called a
warranty is the correct answer
question 16.
when third-party ownership is involved
applicants who also happen to be the
stated primary beneficiary are required
to have
answer
an applicant who is also the designated
primary beneficiary must have an
insurable interest in the proposed
insured
insurable interest in the proposed
insured is the correct answer
question 17
insurance policies are considered
eleatory contracts because
answer
insurance contracts are illeatory
this means there is an element of chance
and potential for unequal exchange of
value or consideration for both parties
an alieatory contract is conditioned
upon the occurrence of an event
it is conditioned upon the occurrence of
an event is the correct answer
question 18
which statement is correct regarding the
premium payment schedule for whole life
policies
answer
with whole life insurance premiums are
payable throughout the insured's
lifetime and coverage continues until
the insured's death
premiums are payable throughout the
insured's lifetime and coverage
continues until the insured's death is
the correct answer
question 19.
term insurance has which of the
following characteristics
answer
with term insurance the policy expires
at the end of the policy period
the policy expires at the end of the
policy period is the correct answer
question 20.
which of the following types of policies
pays a benefit if the insured goes blind
answer
an accidental death and dismemberment
policy commonly referred to as an adnd
policy can provide financial benefits if
an insured is killed lose a limb suffer
blindness or is paralyzed in a covered
accident
accidental death and dismemberment is
the correct answer
question 21
david purchased a family income policy
at age 40.
the policy has a 20-year writer period
if david were to die at age 50 how long
would david's family receive an income
answer
in this situation the family would
receive an income from the policy for 10
years family income policies pay an
income beginning at the insured's death
and continues for a period specified
from the date of the policy issue
the family would receive an income from
the policy for 10 years is the correct
answer
question 22
david buys a policy where the premium
stays fixed for the first five years
the premium then increases in year six
and stays level thereafter all the while
the death benefit remains the same
what kind of policy is this
answer
the type of policy in this situation is
a modified whole life
premium stays fixed for the first five
years
the premium then increases in year six
and stays level thereafter all the while
the death benefit remains the same is
the correct answer
question 23
a universal life policy is sometimes
referred to as an unbundled life policy
because the owner can see the interest
earned the cost of insurance and
answer
the universal life policy is called an
unbundled life policy because the
policyholder can see the expense charges
the interest earned and the cost of
insurance
policyholder can see the expense charges
is the correct answer
question 24.
stranger owned life insurance referred
to as stoli is when a person purchases
life insurance only to sell to a
answer
stranger owned life insurance referred
to as stoli is when a person purchases
life insurance only to sell to a third
party with no insurable interest who
would therefore be unable to legally
purchase the original policy
stoli is a way to circumvent the
insurable interest requirement when
purchasing a life insurance policy
to legally purchase life insurance on
someone else the purchaser must have an
insurable interest in that person's life
stole is prohibited in most states
to sell to a third party with no
insurable interest is the correct answer
question 25
david is covered by a whole life policy
which insurance product can cover his
children
answer
the means of providing life insurance on
the children of a person who is covered
by a life insurance policy is by a child
term rider a child term rider is the
correct
answer question 26
what type of reinsurance contract
involves two companies automatically
sharing their risk exposure
answer
reinsurance contracts involving two
companies automatically sharing their
risk exposure is called a treaty a
treaty is the correct answer
question
27 what is the name of the law that
requires insurers to disclose
information gathering practices and
where the information was obtained
answer
the law that requires insurers to
disclose information gathering practices
and where the information was obtained
is the fair credit reporting act the
fair credit reporting act is the correct
answer
question 28
a term life policy normally used when
covering an insured's mortgage balance
answer
a decreasing term life policy is
normally used when covering an insured's
mortgage balance a decreasing term life
policy is the correct answer
question 29
which of these characteristics
is consistent with a straight life
policy
answer
premiums are payable for as long as
there is insurance coverage in force
straight whole life provides permanent
level protection with level premiums
from the time the policy is issued until
the insured's death
or age 100
premiums are payable for as long as
there is insurance coverage in force is
the correct answer
question 30.
which of these life products is not
considered interest sensitive
variable universal life
interest sensitive whole life variable
life
modified whole life
answer
all of these have an interest-sensitive
investment aspect except modified whole
life
modified whole life is not considered
interest sensitive is the correct answer
question 31
additional coverage can be added to a
whole life policy by adding a
answer
a decreasing term rider can add
additional coverage to a whole life
policy
a decreasing term rider is the correct
answer
question 32
what kind of insurance policy supplies
an income stream over a set period of
time that starts when the insured dies
answer
a policy that provides an income for a
specific period starting at the death of
the insured is a family maintenance
policy
a family maintenance policy is the
correct answer
question 33
a blank blank life policy combines
investments choices with a form of term
coverage
answer
a variable universal life combines
investment choices with a form of term
coverage
variable universal is the correct answer
question 34
when is the face amount of a whole life
policy paid
answer
the face amount of a whole life policy
will be paid when the insured dies or on
the maturity of the policy whichever
occurs first
will be paid when the insured dies or on
the maturity of the policy whichever
occurs first is the correct answer
question 35
which is true concerning a variable
universal life policy
answer
the policy owner controls where the
investment will go and selects the
amount of the premium payment
with variable universal life the policy
owner controls the investment of cash
values and chooses the timing and amount
of premium payments
the policy owner controls where the
investment will go and selects the
amount of the premium payment is the
correct answer
question 36
term life policies that have the ability
to be converted to permanent coverage
may do so during a specific time period
answer
the conversion period varies according
to the contract
the conversion period varies according
to the contract is the correct answer
question 37
what kind of premium does a whole life
policy have
answer
a whole life insurance policy has a
level premium
a level premium is the correct answer
question 38
a limited pay life policy has
answer
in a limited pay life policy premium
payments are limited to a specific
number of years
premium payments are limited to a
specific number of years is the correct
answer
question 39.
the investment gains from a universal
life policy usually go toward
answer
in a universal life policy income is
usually directed toward the cash value
the cash value is the correct answer
question 40
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 correct
answer
in this situation the statement 20 pay
life accumulates cash value faster than
straight life
20 pay life accumulates cash value
faster than straight life is the correct
answer
question 41
life insurance immediately creates an
estate upon the death of an insured
which of the following policies is
characterized by a guaranteed minimum
death benefit
answer
the variable nature of variable whole
life insurance is its death benefit
however if investment performance is
poor the death benefit will not go lower
than the policy's guaranteed minimum
variable whole life insurance is
characterized by a guaranteed minimum
death benefit is the correct answer
question 42
which provision allows the policy owner
to change a term life policy to a
permanent one without providing proof of
good health
answer
the conversion provision allows the
policy owner to change the policy to a
permanent life policy without providing
evidence of insurability
the conversion provision is the correct
answer
question 43
a universal life policy is sometimes
referred to as an unbundled life policy
because the owner can see the interest
earned cost of insurance and the
answer
the universal life policy is called an
unbundled life policy because the
policyholder can see the expense charges
the interest earned and the cost of
insurance
the policyholder can see the expense
charges is the correct answer
question 44
a company that owns a life insurance
policy on one of its key employees may
do all the following except
answer
the company may do all of these things
with a key person insurance policy
except change the policy's interest rate
except change the policy's interest rate
is the correct answer
question 45
which of the following actions is not
possible with the universal life policy
answer
all of these actions are possible with
the universal life policy except
premiums may be applied as a credit
against income tax
except premiums may be applied as a
credit against income tax is the correct
answer
question 46
peter 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
answer
an endowment policy is characterized by
cash values that grow at a rapid pace so
that the policy matures or endows at a
specified date before age 100
an endowment policy is the correct
answer
question 47
credit life insurance is typically
issued with which of the following types
of coverage
answer
the type of insurance used for credit
life is typically a decreasing term with
the term matched to the length of the
loan period
a decreasing term is the correct answer
question 48
a life insurance policy that provides a
policy owner with cash value along with
a level face amount is called
answer
whole life provides the insured with a
cash value as well as a level face
amount
a whole life policy is the correct
answer
question 49
which statement is true regarding a
variable hole policy
answer
a variable whole life policy provides a
minimum guaranteed death benefit
a minimum guarantee death benefit is
provided is the correct answer
question 50.
which of the following information is
not required to be included in a whole
life policy
answer
all of this information must be included
in a whole life policy except for
policies guaranteed dividend table
except 4 policies guaranteed dividend
table is the correct answer
question 51
which of the following types of term
life policies most likely contains a
renewability feature
answer
a 10-year convertible term life policy
contains a renewability provision
a 10-year convertible term life policy
is the correct answer
question 52
a policy that becomes a modified
endowment contract mec
answer
when a policy becomes a modified
endowment contract mec many of the tax
advantages are lost
mec many of the tax advantages are lost
is the correct answer
question 53
which of these types of life insurance
allows the policy owner to have level
premiums and to also choose from a
selection of investment options
answer
a life insurance policy that has a level
premium but allows the policy owner to
choose from a selection of investment
options is known as variable life
variable life is the correct answer
question
54 additional coverage can be added to a
whole life policy by adding a
answer
a decreasing term rider can add
additional coverage to a whole life
policy
a decreasing term rider is the correct
answer
question 55
what a life insurance policy exceeds
certain irs table values the result
would create which of the following
answer
when a life insurance policy exceeds
certain irs table values the result
would create a modified endowment
contract
modified endowment contract is the
correct answer
question
56 jack 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 jack purchase
answer
limited pay whole life policies have
premiums that are limited to a certain
period
limited pay whole life policy is the
correct answer
question 57
when is the face amount of a whole life
policy paid
answer
the face of a whole life policy will be
paid when the insured dies or on the
maturity of the policy whichever occurs
first
when the insured dies or at the policy's
maturity date whichever happens first is
the correct answer
question 58
which of these types of policies may not
have the automatic premium loan
provision attached to it
answer
the automatic premium loan provision can
be incorporated into all of these
policies except decreasing term
decreasing term is the correct answer
question 59
in order to sell a blank life policy a
producer is required to register with
the financial industry regulatory
authority finra
answer
in order to sell a variable life policy
the producer must register with the
financial industry regulatory authority
finra
a variable life policy is the correct
answer
question 60
what kind of life insurance product
covers children under their parents
policy
answer
family plan policies usually cover the
family head with coverage on the spouse
and children is term insurance in the
form of a writer
a term rider is the correct answer
question 61
kevin is issued a life insurance policy
with a death benefit of 100 000
he pays 600 per year in premium for the
first five years
the premium then increases to 900 per
year in the sixth year and remains level
thereafter
the policy's death benefit also remains
at one hundred thousand dollars
which type of life insurance policy is
this
answer
modified whole life policies are
distinguished by premiums that are lower
than typical whole life premiums during
the first years usually five and then
higher typically thereafter
modified whole life is the correct
answer
question 62
morel needs life insurance that provides
coverage for only a limited amount of
time with a death benefit that changes
regularly according to a schedule
what kind of policy is needed
answer
a life insurance policy written for a
specified period of time with a death
benefit that changes regularly according
to a schedule is a decreasing term
policy
a decreasing term policy is the correct
answer
question 63
how long does the coverage normally
remain on a limited pay life policy
answer
even though the premium payments are
limited to a certain period the
insurance protection extends until the
insured's death or to age 100
the insurance protection extends until
the insured's death or to age 100 is the
correct answer
question
64.
what kind of insurance policy supplies
an income stream over a set period of
time that starts when the insurer dies
answer
a policy that provides an income for a
specific period starting at the death of
the insured is a family maintenance
policy
a family maintenance policy is the
correct answer
question 65
a life policy that contains a monthly
mortality charge as well as
self-directed investment choices is
called a
answer
variable universal life is comprised of
monthly mortality charges and
self-directed investment choices
variable universal life is the correct
answer
question 66
which of the following types of term
life policies most likely contains a
renewability feature
answer
a 10-year convertible term life policy
contains a renewability provision
a 10-year convertible term life policy
is the correct answer
question 67
which of these are not an example of a
non-forfeiture option
answer
all of these are examples of
non-forfeiture options except life
income
except life income is the correct
answer question 68
the blank has the right to change a life
insurance policy's beneficiary
answer
the policy owner has the right to change
a life insurance policy's beneficiary
the policy owner is the correct answer
question
69 roy is the policy owner and insured
for a 50 000 life insurance policy
the beneficiary is roy's wife
roy and his wife divorced and roy
remarried transferring ownership of his
policy to his new wife
if roy dies without making any further
changes to whom will the policy proceeds
be paid to
answer
roy's ex-wife is still the beneficiary
of this policy even though policy
ownership has changed to his current
spouse
roy's ex-wife is still the beneficiary
is the correct answer
question 70
daryl is the insured on a participating
life policy
which statement is true if daryl's
premiums are waived due to a
disability answer
even though premiums are waived because
of the disability the insured will
continue to receive dividends just as if
the insured were still making the
payments themselves
the insured will continue to receive
dividends just as if the insured were
still making the payments themselves is
the correct answer
chapter 3
premiums proceeds and beneficiaries
question one
which statement regarding the change of
beneficiary provision is true
answer
a policy owner may change a beneficiary
at any time
consent may be needed by the current
beneficiary if the policy is designated
as irrevocable
a policy owner may change a beneficiary
at any time if the policy is designated
as irrevocable consent may be needed by
the current beneficiary is the correct
answer
question two
david purchased an accidental death and
dismemberment policy and named his son
as beneficiary
david has the right to change the
beneficiary designation at any time
what type of beneficiary is his son
answer
with a revocable beneficiary designation
the policy owner may change the
beneficiary at any time without
notifying or getting permission from the
beneficiary
a revocable beneficiary is the correct
answer
question 3
a policy owner is able to choose the
frequency of premium payments through
what policy feature
answer
premium mode is the feature that allows
the policy owner to select the timing of
premium payment such as monthly
quarterly annually etc
premium mode is the correct answer
question
4. what percent of personal life
insurance premiums is usually deductible
for federal income tax purposes
answer
in general personal life insurance
premiums are not deductible for federal
income tax purposes
zero percent is the correct answer
question five
what is the underlying concept regarding
level premiums
answer
the concept of level premiums charges
more than needed in the early years
the early years are charged more than
what is needed is the correct answer
question 6.
which type of life insurance beneficiary
requires his or her consent when a
change of beneficiary is attempted by
the policy owner
answer
an irrevocable designation may not be
changed without the written consent of
the beneficiary
an irrevocable designation is the
correct answer
question 7.
a level premium indicates
answer
a level premium means that the premium
remains fixed through the life of a
policy
the premium remains fixed through the
life of a policy is the correct answer
question eight
dominique and paul are married and have
three children
dominique is the primary beneficiary on
paul's accidental death and
dismemberment policy and paul's sister
is the contingent beneficiary
paul dominique and paul's sister are
involved in a car accident paul and
dominique are killed instantly
the accidental death benefits will be
paid to who
answer
in this situation benefits will be paid
to paul's sister because paul's sister
survived the accident and is now the
primary beneficiary
paul's sister is the correct answer
question 9.
a policy owner would like to change the
beneficiary on a life insurance policy
and make the change permanent
which type of designation would fulfill
this need
answer
an irrevocable designation may not be
changed without the written consent of
the beneficiary
an irrevocable designation is the
correct answer
question 10
when can a policy owner change a
revocable beneficiary
answer
with a revocable beneficiary designation
the policy owner may change the
beneficiary at any time without
notifying or getting permission from the
beneficiary
anytime without notifying or getting
permission from the beneficiary is the
correct answer
question 11
a blank beneficiary may be changed by
the policy owner without the consent of
the beneficiary
answer
a revocable beneficiary may be changed
by the policy owner without the consent
of the beneficiary
a revocable beneficiary is the correct
answer
question 12.
which statement is true regarding a
minor beneficiary
answer
in most cases insurers require that a
guardian be appointed in the beneficiary
clause of the policy or that a guardian
be designated in the will
a guardian is appointed in the
beneficiary clause of the policy or that
a guardian is designated in the will is
the correct answer
question 13.
stacey and flip are named co-primary
beneficiaries on a 500 000 accidental
death and dismemberment policy insuring
their father
their mother was named contingent
beneficiary
five years later flip dies of natural
causes and the father is killed in a
scuba accident shortly afterward
how much of the death benefit will the
mother receive
answer
the mother receives zero dollars because
stacy is still alive and is the sole
primary beneficiary while the mother is
still the contingent
the mother receives zero dollars is the
correct answer
question 14.
if the insured and the 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
answer
under the uniform simultaneous death act
if both insured and primary
beneficiaries are killed in the same
accident and there is insufficient
evidence to show who died first policy
proceeds will be paid as if the insured
died last
in other words the proceeds will be paid
to the secondary or contingent
beneficiary
the proceeds will be paid to the
secondary or contingent beneficiary is
the correct answer
question 15.
carmen has a life insurance policy where
her husband is the beneficiary and her
daughter is the contingent beneficiary
under the common disaster clause if
carmen and her husband are both killed
in an automobile accident where would
the death proceeds be directed
answer
with a common disaster provision a
policy owner can be sure that if both
the insured and the primary beneficiary
die within a short period of time the
death benefits will be paid to the
contingent beneficiary which is the
daughter
the death benefits will be paid to the
contingent beneficiary which is the
daughter is the correct answer
question 16.
which of these characteristics is
consistent with a straight life policy
answer
straight whole life provides permanent
level protection with level premiums
from the time the policy is issued until
the insured's death or age 100.
premiums are payable for as long as
there is insurance coverage and force is
the correct answer
question 17
additional coverage can be added to a
whole life policy by adding a
answer
a decreasing term rider can add
additional coverage to a whole life
policy
a decreasing term rider is the correct
answer
question 18.
what kind of insurance policy supplies
an income stream over a set period of
time that starts when the insured dies
answer
a policy that provides an income for a
specific period starting at the death of
the insured is a family maintenance
policy
a family maintenance policy is the
correct answer
question 19.
when is the face amount of a whole life
policy paid
answer
the face amount of a whole life policy
will be paid when the insured dies or on
the maturity of the policy whichever
occurs first
when the insured dies or on the maturity
of the policy whichever occurs first is
the correct answer
chapter 4
additional legal concepts
question 1.
why is an applicant's signature required
on a life insurance application
answer
an applicant's signature represents that
the statements on the application are
true to the best of the applicant's
knowledge
represents that the statements on the
application are true to the best of the
applicant's knowledge is the correct
answer
question two
the 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
the insurance agent may be found guilty
of
answer
in this situation the agent is guilty of
coercion
coercion is the correct answer
question three
which type of life policy contains a
monthly mortality charge as well as
self-directed investment choices
answer
variable universal life is comprised of
a monthly mortality charge as well as
self-directed investment choices
variable universal life is the correct
answer
question four
insurance policies are offered on a take
it or leave it basis which makes them
answer
because insurance policies are offered
on a take it or leave it basis they are
referred to as contracts of adhesion
contracts of adhesion is the correct
answer
question 5
which requirement must be met for an
association to be eligible for a group
life plan
answer
group life insurance can be formed just
as long as they are formed for the
reason other than to acquire insurance
just as long as they are formed for the
reason other than to acquire insurance
is the correct answer
question 6.
which of these retirement plans can be
started by an employee even if another
plan is in existence
answer
an individual retirement account and ira
may be established by an employee
regardless of any other retirement plan
an individual retirement account is the
correct answer
question 7.
what is the purpose of a policy summary
answer
a policy summary highlights the critical
parts of the policy issued and describes
the coverage riders and exclusions
it highlights the critical parts of the
policy issued is the correct answer
question 8
what is old age survivor's health
insurance oasdhi also known as
answer
social security also known as old age
survivors and disability health
insurance was signed into law in 1935 by
president roosevelt as part of the
social security act
social security is the correct answer
question nine
an agent takes an application an initial
premium from an applicant and sends the
application and premium check to the
insurance company
the insurance company returns the check
back to the agent because the check is
made out to the agent instead of the
insurance company
what action should the agent take
answer
return the check to the customer collect
a new check made out to the insurance
company and send the new check back to
the insurance company
return the check to the customer collect
a new check made out to the insurance
company and send the new check back to
the insurance company is the correct
answer
question 10
in a key employee life insurance policy
the third party owner can be all of the
following except
answer
in a key employee life insurance policy
the third party owner can be all of the
following except the insured
except the insured is the correct answer
question 11.
which of these would be considered a
limited pay life policy
answer
life paid up at age 70 would be
considered a limited pay life policy
life paid up at age 70 is the correct
answer
question 12.
tina let her life policy lapse eight
months ago due to non-payment
she can re-establish coverage under
which of the following provisions
answer
in cases where a policy owner wishes to
reinstate a lapsed policy the
reinstatement provision allows the
policy owner to do so with some
limitations
the reinstatement provision is the
correct answer
question 13.
the automatic premium loan provision is
designed too
answer
the purpose of the automatic premium
loan is to keep the policy from lapsing
to keep the policy from lapsing is the
correct answer
question 14.
a temporary agent's license issued by
the commissioner of insurance is valid
for up to how many days
answer
the commissioner may issue a temporary
insurance agent license for 90 days to
an applicant for a license who is being
considered for appointment as an agent
issue a temporary insurance agent
license for 90 days is the correct
answer
question 15.
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
answer
the company will most likely pay the
policy proceeds in the amount of the
premiums that would have been purchased
at the insured's actual age
pay the policy proceeds in the amount of
the premiums that would have been
purchased at the insured's actual age is
the correct answer
question 16.
which of these require an offer
acceptance and consideration
answer an offer acceptance and
consideration are all elements of a
contract
an offer acceptance and consideration
are all elements of a contract is the
correct answer
question 17
on april 6 joanne submitted an
application for a 50 000 life insurance
policy and did not pay the initial
premium
on april 18 joanne went to her doctor
complaining of chest pains and some
tests were given by the doctor
the life policy was delivered by the
producer on april 20th and joanne
explains what had recently taken place
with a doctor
what action should the producer then
take
answer
in this situation the producer should
deliver the policy and obtain a premium
payment along with a signed health
statement
the producer should deliver the policy
and obtain a premium payment along with
a signed health statement is the correct
answer
question 18.
all of the following statements about
traditional individual retirement
accounts are false except for
answer
all of the following statements about
traditional individual retirement
accounts are false except for 10 penalty
is applied to withdrawals before age 59
and a half
10 penalty is applied to withdrawals
before age 59 and a half is the correct
answer
question 19.
all of these are considered sources of
underwriting information about an
applicant except
answer
rating services for example a m best
standards and poors has nothing to do
with the applicant
rating services is the correct answer
question 20.
the insurance commissioner must give how
many days notice prior to holding a
hearing regarding an agent's unfair or
deceptive practice
answer
the insurance commissioner must give a
30 days notice regarding an agent's
unfair or deceptive practice
must give a 30 days notice is the
correct answer
question 21
the free look provision begins when
answer
when delivering the policy the agent
needs to explain that the free look
begins upon receipt of the policy by the
policy owner
upon receipt of the policy by the policy
owner is the correct answer
question 22
what type of group insurance plan
involves sharing the cost
answer
employee sharing the cost of group
insurance with an employer is called a
contributory plan
a contributory plan is the correct
answer
question 23
the agreement in a life insurance
contract that states a specific sum of
money will be paid to a designated
person upon an insured's death is called
a
answer
the agreement in a life insurance
contract that states a specific sum of
money will be paid to a designated
person upon an insured's death is called
an insuring agreement
a ensuring agreement is the correct
answer
question 24
which of these actions is taken when a
policy owner uses a life insurance
policy as collateral for a bank loan
answer
collateral assignment is taken when a
policy owner uses a life insurance
policy as collateral for a bank loan
collateral assignment is the correct
answer
question 25
what is required for an agent whose
license has been revoked
answer
the agent must wait at least five years
before applying for a new license
the agent must wait at least five years
before applying for a new license is the
correct answer
question 26
what type of policy covers two people
and pays upon the death of the last
insured
answer
a survivorship life policy insures two
individuals and is designed to pay a
benefit upon the second death
a survivorship life policy is the
correct answer
question 27
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
answer
to keep the architecture firm from
losing a lot of money in the event of
the death of its project manager the
firm should purchase a key person
insurance policy
a key person insurance is the correct
answer
question 28
in texas an individual life policy is
required to have a grace period of
answer
an individual life insurance policy
issued in texas must have a grace period
for premium payments of 31 days
a grace period for premium payments of
31 days is the correct answer
question 29
an example of an unfair claim settlement
practice is
answer
denying an insured's claim without
indicating the basis of denial under the
policy is considered an unfair claim
settlement practice
denying an insured's claim without
indicating the basis of denial under the
policy is the correct answer
question 30
life insurance companies are required to
establish and maintain an anti-money
laundering compliance program according
to which federal regulation
answer
the usa patriot act includes provisions
intended to prevent the financial
service industry including the insurance
sector from being used for money
laundering and terrorist financing by
criminals and terrorists
the usa patriot act is the correct
answer
question 31
a qualified profit sharing plan is
designed to
answer
one of the purposes of a qualified
profit-sharing plan is to distribute a
portion of company earnings to employees
to distribute a portion of company
earnings to employees is the correct
answer
question 32
who is normally considered to be the
owner of a 403 b tax sheltered annuity
answer
the participating employee normally
applies for and owns a 403 v tax
sheltered annuity
the participating employee is normally
considered to be the owner of a 403 b
tax sheltered annuity is the correct
answer
question 33
during a sales presentation for a
participating life insurance policy an
agent must
answer
during a sales presentation for a
participating life insurance policy an
agent must include a statement that
dividends are not guaranteed
must include a statement that dividends
are not guaranteed is the correct answer
question 34
a medical information report referred to
as mib report may disclose which of the
following
answer
a medical information report mib report
may disclose lifestyle habits such as
drugs drinking overeating and smoking
the mib report may disclose lifestyle
habits such as drugs drinking overeating
and smoking is the correct answer
question 35
a foreign insurance company conducting
insurance business in texas is
answer
a foreign insurance company is one that
is incorporated under the laws of
another state
one that is incorporated under the laws
of another state is the correct answer
question 36
which of the following is a requirement
for obtaining a texas insurance agent's
license
answer an applicant for an agent's
license must be honest trustworthy and
reliable
must be honest trustworthy and reliable
is the correct answer
question 37
a certificate of blank permits an
insurance company to transact business
in texas
answer
a certificate of authority permits an
insurance company to transact business
in texas
a certificate of authority is the
correct answer
question 38
quarterly premium payments increase the
annual cost of insurance because
answer
interest to the insurer is decreased
while the administrative costs are
increased the higher the frequency of
payments the higher the premiums
interest to the insurer is decreased
while the administrative costs are
increased is the correct answer
question 39
upon delivery of a rated life insurance
policy the producer must obtain each of
the following except
answer
the producer must obtain each of the
following except a signed hipaa
disclosure
the hipaa disclosure should be taken at
the time of sale with the application
a signed hipaa disclosure is the correct
answer
question 40
a sole proprietor may use this plan only
if the employees of this business are
included
answer
a keo plan may be used by a sole
proprietor only if the employees of the
business are included
akio plan is the correct answer
question 41
tom has a qualified retirement plan with
his employer that is currently
considered to be 80 vested
how can this be interpreted
answer
in this situation 80 percent vested
means that 20 of the funds could be
forfeited if tom's employment is
terminated
means that 20 of the funds could be
forfeited if tom's employment is
terminated is the correct answer
question 42
all are true statements regarding the
underwriting process except
answer
aids and hiv testing must be conducted
in a uniform fashion and cannot be
discriminatory
aids and hiv testing must be conducted
in a uniform fashion and cannot be
discriminatory is the correct answer
here's a little about the author david
price
i am a retired law enforcement officer
of 23 years in houston texas
i created this study guide for those
that are seriously looking to increase
their income by educating our peers
about how money works how it relates to
our financial stability and how we would
like our style of living to be now and
in the years to come
to educate others on their finances
insurance
investing and more you have to be
licensed in that particular state in
which you are doing business
the licensing study material can be very
confusing and monotonous especially if
you cannot dedicate quality study time
to the process
in august 2021 i decided to add an
additional income stream to my company
educating those closest to me from my
former career
to be eligible to educate my peers about
their finances living benefits life
insurance and tax-free retirement
strategies i had to obtain my fiduciary
license from the texas department of
insurance
i was on a mission to have this done
before i left on vacation
so i had seven days to study and have my
licensing exam completed
i completely disengaged from any outside
distractions and studied tirelessly
during this process
i was introduced to a company that had
one of the best pre-licensing
authorities and the simplest learning
platform for me to learn from and i
joined their team
in order for you to be eligible to take
the state exam you have to have
completed an insurance licensing
pre-exam study course from one of the
authorized approved agencies
in an effort to help retain all the
information being forced on me
i created this study guide
according to the 2020 national
association of insurance commissioners
they reported only 60 of the first
attempts for life agents had passed on
their first attempt with a passing score
of 70 percent
so
creating this study guide placed me in
the top 60
of the first attempt exam takers to pass
on the first go it also placed me in the
above average of first attempts to pass
with a passing grade of 80
now for my disclaimer due to the
difference in study habits i am in no
way claiming that you will either pass
your first attempt nor am i stating that
you will pass with an 80 passing grade
for every individual using this study
guide results will vary but if you do
happen to have found the study guide
beneficial to you successfully passing
your life agent exam on your first
attempt
please come back to where you purchased
your guide and please give a positive
review on it so that it could be
beneficial to someone else that would
like to have a career changing people's
lives financially
you