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Texas Life Agent > Final Exam Prep > Flashcards

Final Exam Prep Flashcards

1
Q

All of these statements about the Commissioner of Insurance EXCEPT

A

The Commissioner MUST be elected in a general election. The governor appoint the Commissioner to a 2 year term.

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2
Q

Quarterly premium payments increase the annual cost of insurance because:

A

Interest to the insurer is DECEASED while administrative costs are INCREASED. The higher frequency of payments, the higher the premiums.

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3
Q

Variable Life products requires producer to:

A

Hold a Life Insurance license and Securities license.

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4
Q

Which of the following statements is CORRECT about an agent who is taking an insurance application?

A

The agent should have the applicant INITIAL any changes made on the application.

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5
Q

On a life insurance policy, who is qualified to change the beneficiary designation?

A

The POLICY OWNER has the right to change the beneficiary designation.

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6
Q

All of these statements concerning Settlement Options are true, EXCEPT:

A

Only the beneficiary may select. This is inaccurate. Settlement options may be selected by the policy owner.

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7
Q

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?

A

Pay an amount the premiums would have purchased at the insured’s ACTUAL age.

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8
Q

J let her life insurance policy lapse 8 months ago due to non payment. She can re establish coverage under which of the following provisions?

A

The Reinstatement provision allows the policy owner to do so with some limitations.

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9
Q

A term life insurance policy matures:

A

Term life policy can only mature (pay out the fade amount) is death occurs during the term of the policy.

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10
Q

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

A

MARITAL STATUS does not affect the underwriting of a life insurance policy.

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11
Q

(B) recently died and was insured with a life insurance policy for over 5 years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of the application. I’m this situation the insurer will:

A

Pay the amount that premium would have purchased at the CORRECT age.

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12
Q

An example of an unfair claim’s settlement practice is:

A

Turning down a claim without providing the BASIS OF DENIAL.

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13
Q

Credit Life insurance is:

A

Insurance issued on a DEBTOR to cover outstanding loan balances.

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14
Q

All of the statement options involve the systematic liquidation of the death proceeds in the event of the insured’s death, EXCEPT:

A

The INTEREST ONLY option.

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15
Q

A non contributory group term life plan is characterized by:

A

When the entire cost of the plan is paid by the EMPLOYER.

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16
Q

T is the policy owner for a life insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the:

A

Beneficiary. An irrevocable designation may not be changed without the written consent of the beneficiary.

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17
Q

Which of these require an offer, acceptance or consideration?

A

Contract. All are elements of a contract.

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18
Q

Which of the following is NOT included in a life insurance illustration?

A

Company’s MORTALITY table.

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19
Q

A temporary agent’s license issued by the Commissioner of Insurance is valid for up to ____ days.

A

90 days.

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20
Q

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:

A

The agent is guilty of COERCION.

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21
Q

The Accidental Death Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:

A

Is blinded in a accident.

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22
Q

Any changes made on a insurance application requires the initials of whom?

A

Applicant always.

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23
Q

D is the policy owner and insured for a $50,000 life insurance policy. The beneficiary is D’s wife. D and his wife divorce and D re marries, transferring ownership of his policy to his new wife. If D dies without any further changes, to whom will the policy proceeds be paid to?

A

EX WIFE. D’s ex-wife is still the beneficiary of this policy, even though policy ownership has changed to his current spouse.

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24
Q

J is 35 years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

A

20-pay Life policy. The shorter the pay period, the faster the cash growth.

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25
Q

How does a typical Variable Life Policy investment account grow?

A

Through Investment values based instruments such as mutual funds, stocks, and bonds.

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26
Q

The payment on Q’s annuity are no less than $250 quarterly. Which of the following annuities does Q own?

A

Flexible Installment Deferred Annuity

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27
Q

An example of false advertising would be

A

An insurer exaggerating its dividends in a magazine advertisement. An Insurance company may be judged guilty of advertising.

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28
Q

What provision in a life insurance policy states that the application is considered part of the contract?

A

The Entire Contract provision

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29
Q

Which statement is TRUE in regards to a policy loan?

A

Past due interest on a policy loan is added to the total debt. Interest on loan which is not paid when due is added to the debt.

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30
Q

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?

A

Endowment at age 70

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)

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31
Q

C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?

A

“The cost”

In this situation, the cost of insurance is most important when an insurer owner is trying to whether to convert term insurance at the insured’s attained age.

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32
Q

A license may be denied, suspended, or revoked if the licensee?

A

The Commissioner of insurance may suspend, revoke, or refuse to renew the license of an agent who is found guilty of misrepresentation or fraud in obtaining the license.

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33
Q

An individual participant personally received eligible rollover funds from a profit sharing plan. What is the income tax withholding requirements for this transaction?

A

20% is withheld for income taxes

A plan sponsor must withhold 20% of the distribution in federal taxes on a rollover. Once the rollover takes place to a new custodian, the remainder of the distribution is made.

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34
Q

A promotional advertising item is not considered a rebate unless it has value equal to or less than what amount?

A

$25

An item that is a promotional advertising item, educational item, or traditional courtesy commonly extended to consumers and that is valued at $25 or less.

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35
Q

A qualified profit sharing plan is designed to:

A

Allow employees to participate in the profits of the company.

One of the purposes of a qualified profit sharing plan is to distribute a portion of company earnings earnings to employees.

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36
Q

Life and health insurance policies are:

A

Unilateral contracts

One party makes a promise, and the other party can only accept by performance.

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37
Q

All of these statements about the Commissioner of Insurance are true EXCEPT

A

The Commissioner must be elected in a general election.

The Governor appoints the Commissioner to a 2 year term.

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38
Q

Why would the insurance Commissioner examine the records of an insurance company?

A

“To determine the solvency of the company”

The Insurance Commissioner may examine the records of an insurance company in a order to determine the solvency of the company.

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39
Q

A domestic insurance company in Texas is considered a company that?

A

Is a company that is incorporated and formed in Texas.

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40
Q

Which of these provisions is NOT required in the life insurance policies?

A

“Extended Term”

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41
Q

What is required for an agent whose license has been revoked?

A

Wait at least 5 years before applying for a new license.

42
Q

The entity whose sole purpose is sharing medical data among its member companies is called the

A

The purpose of the Medical Information Bureau (MIB) is to share medical data amount it’s member companies.

43
Q

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds directed?

A

The Daughter

A policy owner can be sure that is both the insured and the primary beneficiary die within a short period of time, the death benefits will be paid to the CONTINGENT beneficiary.

44
Q

The advantage of reinstating an original life policy is

A

The premiums are based on a younger age.

45
Q

T cash surrenders a recently issued whole life policy. He also requests that the proceeds be payable to an unrelated third party. T would likely be red flagged for violations of

A

Anti money laundering rules

Insurance companies are required to comply with the anti money laundering provisions of the USA Patriot Act.

46
Q

The phrase “transactions business” includes

A

Collecting premiums

Under Texas insurance law

47
Q

To terminate an agents’s appointment, an insurance company must

A

Send termination notice to the Texas Department of Insurance.

48
Q

Which of the following groups may NOT be insured by a group life insurance policy?

A

Individuals who are related by BLOOD, related by marriage or legal adoption.

49
Q

An example of rebating would be

A

Returning a portion of a premium as inducement to purchase insurance.

50
Q

Which of the these factors does NOT influence an applicant’s need for life insurance?

A

Self maintenance expenses

An individual’s need for a death benefit for survivors is influenced by all of the following factors EXCEPT self maintenance expenses.

51
Q

During a sales presentation for a participating life insurance policy, an agent MUST

A

Make a prospect understand that dividends are NOT guaranteed.

52
Q

A certificate of _____ permits an insurance company to transact business in Texas.

A

A Certificate of Authority

53
Q

K pays on a $20,000 20 year Endowment policy for 10 years and dies from a automobile accident. How much will the insurance company pay the beneficiary?

A

The policy’s face value also known as the death benefit is paid in a lump sum to any beneficiaries.

54
Q

Two partners own equal shares in a business worth a total of $1 Mil. 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?

A

Each partner owns a $500,000 (half) policy on their partner’s life.

55
Q

In a insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

A

Unilateral

56
Q

Which of these would be considered a Limited-Pay life policy.

A

An example of Limited Pay life policy is a Life Paid up at age 70.

57
Q

In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?

A

In Texas, an insurance company must pay death benefits for suicide if the policy has been in force for a minimum of 2 years.

58
Q

The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?

A

This Clause provides the payment of proceeds to the insured’s estate.

59
Q

An employee is covered under a company group life plan with $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program?

A

Group life insurance on an employee’s spouse may not exceed 1/2 of the amount of the insurance.

60
Q

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

A

In favor of the INSURED.

61
Q

What is the monetary penalty for willfully violating a cease and desist order?

A

A fine up to $500 (intentionally)

A fine up to $50 (unintentional)

62
Q

If an insured’s age was misstated on a life insurance contract, the Misstatement of Age Provision requires that any benefit payable would be:

A

An amount that the premiums paid would have purchased at the current age or ages.

63
Q

How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law?

A

6 months

64
Q

How do life insurance companies handle cases where the insured commits suicide within the contract’s states Contestable period?

A

Claim are denied under the Suicide clause of the policy.

65
Q

How often must an insurance agent license normally be renewed?

A

Every 2 years

66
Q

Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?

A

Active insurance companies’ financial reserves.

67
Q

Which of these life products is NOT considered interest sensitive?

A

Modified Whole Life

68
Q

Which of the following is NOT a required provision in group life policies?

A

Right to Loan

69
Q

A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is the called the:

A

Policy Loan Provision

70
Q

What type of annuity has a cash value that is based upon the performance of its underlying investment funds?

A

A Variable annuity’s cash value

71
Q

If it’s employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

A

Contributory

72
Q

In Texas, which of these statements regarding the Suicide Clause is TRUE?

A

An insurer may not use suicide as a defense against payment after the 2nd year.

73
Q

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?

A

Coercion

74
Q

A Return of Premium life insurance policy is:

A

Whole life and increasing term

75
Q

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?

A

20-Pay Life accumulates cash value faster than Straight Life.

76
Q

The reason for backdating a policy is:

A

To obtain a premium rate based on a earlier age.

77
Q

With whom may an agent legally share commissions?

A

Another agent with the same line of insurance.

78
Q

Who is liable when an insured suffers a loss on policy sold by an agent through an insurer not authorized to conduct business in Texas?

A

The agent may be held liable for any claims amounts that the unauthorized insurer does not pay.

79
Q

Which premium schedule results in the lowest cost to the policy holder?

A

The Annual premium schedule

If the policy owner chooses to pay more than once a year, there normally will be an additional charge because the company will have have additional charges in billing and collecting the premium payments.

80
Q

Which of the following does Social Security NOT provide benefits for?

A

Dismemberment

81
Q

K, age 45, and his wife, age 43, have 3 children. They purchase a Family Policy that covers K’s wife to age 65. All of these situations will pay a death benefit EXCEPT

A

K’s wife dies at 66, one year pass the 65 policy.

82
Q

How long does an insurance company appointment remain in force?

A

Until terminated or withdrawn.

83
Q

What is an organization that solicits insurance only to its members?

A

Fraternal benefit society.

84
Q

A Nonforfeiture clause gives the policy owner

A

Guaranteed values even if the policy has lapsed.

85
Q

How does an indexed annuity differ from a fixed annuity?

A

Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index.

86
Q

Which of the following actions is NOT possible with a Universal Life policy?

A

Premiums may be applied as a credit against income tax.

87
Q

In Texas, an individual life insurance policy is REQUIRED to have a grace period of

A

An individual life insurance policy issued in Texas MUST have a grace period for premium payment of 31 DAYS.

88
Q

Which is true concerning a Variable Universal Life policy?

A

Policy owner controls where the investment will go and selects the timing and amount of the premium payments.

89
Q

Which of the following is a requirement for obtaining a Texas insurance agent’s license?

A

Be honest, trustworthy, and reliable.

90
Q

An insured may assign up to ___ of policy ownership under an individual life insurance policy.

A

Maximum of 100% of policy ownership.

91
Q

When an employee is terminated, which statement about group term life conversion is true?

A

An individual must apply for individual coverage WITHIN 31 DAYS after the date of group coverage termination. Individual is covered under the group policy during the conversion period.

92
Q

Which of these is NOT relevant when determining the amount of personal life insurance needed?

A

Local unemployment rates.

93
Q

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:

A

Bilateral

94
Q

Which of these is NOT an example of doing insurance business?

A

Selling shares of stock.

95
Q

P purchases a $50,000 whole life policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers “No”. The policy is then issues with no scuba exclusions. In 2010, P takes up scuba diving and dies from scuba related accident in 2011. What will the insurer pay to P’s beneficiary?

A

$50,000 minus any outstanding policy loans. At the time of death, the policy is beyond the contestable period.

96
Q

T is given a receipt after competing a life insurance applicant and paying the initial premium. Under this situation, T’s coverage is

A

In this situation, the life insurance coverage is conditional, depending on the insurer’s underwriting guidelines.

97
Q

A foreign insurance company conducting insurance business in Texas

A

Is a insurance company that incorporated under the laws of another state.

98
Q

T applies for a life insurance policy and is told be the producer that the insurer is bound to the coverage as of the date of the application or medical examination, which is later. Assuming that T is an acceptable risk, what item is given to T?

A

A conditional receipt

99
Q

All of these are considered sources of underwriting information about an application, EXCEPT:

A

Rating Services

100
Q

In a qualified retirement plan, the yearly contributions to an employee’s account

A

Are restricted to maximum levels set by the IRS.

101
Q

___ of continuing education MUST be competed in the classroom or classroom equivalent.

A

50%

Texas Life Agent (1 decks)

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