Life & Health License Test Texas Exam FX questions with correct answers<\/p>\n\n\n\n
Life & Health License Test Texas Exam FX questions
with correct answers
What is the main purpose of the Seven-pay Test? CORRECT ANSWER-It
determines if the insurance policy is an MEC.
Which of the following insurance arrangements will be appropriate for a parent
buying a life insurance policy on a child where the parent is the policyowner?
CORRECT ANSWER-Third-party ownership
Which of the following best defines the “owner” as it pertains to life settlement
contracts? CORRECT ANSWER-The policyowner of the life insurance policy
Which of the following is NOT an example of a business use of Life Insurance?
CORRECT ANSWER-Workers Compensation
An insured under a life insurance policy has been diagnosed with a terminal illness
and has 6 months to live. The insured knows that his financial state will worsen
even more with the upcoming medical expenses. What option could the insured
utilize? CORRECT ANSWER-Viatical settlement
Which of the following is INCORRECT concerning a noncontributory group plan?
CORRECT ANSWER-The employer receives a master policy, and employees
receive a certificate of insurance.
A life insurance policy used to fund an agreement that contractually establishes the
intent of someone to purchase a business upon the insured business owner’s death
is a CORRECT ANSWER-Buy-sell agreement.<\/p>\n\n\n\n
Which of the following employees insured under a group life plan would be
allowed to convert to individual insurance of the same coverage once the plan is
terminated? CORRECT ANSWER-Those who have been insured under the plan
for at least 5 years
A partnership buy-sell agreement in which each partner purchases insurance on the
life of each of the other partners is called a CORRECT ANSWER-Cross-purchase
plan.
A producer is helping a married couple determine the financial needs of their
children in the event one or both should die prematurely. This is a personal use of
life insurance known as CORRECT ANSWER-Survivor protection
Which of the following is NOT true regarding policy loans? CORRECT
ANSWER-Money borrowed from the cash value is taxable.
Who is the owner and who is the beneficiary on a Key Person Life Insurance
policy? CORRECT ANSWER-The employer is the owner and beneficiary.
What does “liquidity” refer to in a life insurance policy? CORRECT ANSWERCash values can be borrowed at any time.
Which of the following is an example of liquidity in a life insurance contract?
CORRECT ANSWER-The cash value available to the policyowner
If an immediate annuity is purchased with the face amount at death or with the
cash value at surrender, this would be considered a CORRECT ANSWERSettlement option.<\/p>\n\n\n\n
All of the following are business uses of life insurance EXCEPT CORRECT
ANSWER-Funding against general company financial loss.
Group life insurance is a single policy written to provide coverage to members of a
group. Which of the following statements concerning group life is CORRECT?
CORRECT ANSWER-100% participation of members is required in
noncontributory plans.
Which of the following is true regarding taxation of accelerated benefits under a
life insurance policy? CORRECT ANSWER-They are tax free to terminally ill
insured.
Which of the following describes the tax advantage of a qualified retirement plan?
CORRECT ANSWER-The earnings in the plan accumulate tax deferred.
All of the following are business uses of life insurance EXCEPT CORRECT
ANSWER-Funding against general company financial loss.
All of the following statements concerning the use of life insurance as an
Executive Bonus are correct EXCEPT CORRECT ANSWER-The policy is owned
by the company.
All of the following statements concerning an employer sponsored nonqualified
retirement plan are true EXCEPT CORRECT ANSWER-The employer can receive
a current tax deduction for any contributions made to the plan.
What is the number of credits required for fully insured status for Social Security
disability benefits? CORRECT ANSWER-40<\/p>\n\n\n\n
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
a) Estate liquidation
b) Nonpayment of premium
c) Change of beneficiary
d) Viatical settlement
d<\/p>\n\n\n\n
Which of the following best describes fixed-period settlement option?
a) Only the principal amount will be paid out within a specified period of time.
b) The death benefit must be paid out in a lump sum within a certain time period.
c) Income is guaranteed for the life of the beneficiary.
d) Both the principal and interest will be liquidated over a selected period of time.
d<\/p>\n\n\n\n
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
a) Insurance Index
b) Policy Summary
c) Illustrations
d) Buyer’s Guide
d<\/p>\n\n\n\n
Which of the following is called a “second-to-die” policy?
a) Juvenile life
b) Joint life
c) Survivorship life
d) Family income
c<\/p>\n\n\n\n
Which of the following best describes annually renewable term insurance?
a) Neither the premium nor the death benefit is affected by the insured’s age.
b) It provides an annually increasing death benefit.
c) It is level term insurance.
d) It requires proof of insurability at each renewal.
c<\/p>\n\n\n\n
Which of the following best describes annually renewable term insurance?
a) Neither the premium nor the death benefit is affected by the insured’s age.
b) It provides an annually increasing death benefit.
c) It is level term insurance.
d) It requires proof of insurability at each renewal.
c<\/p>\n\n\n\n
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
a) Conditional
b) A legal (but unethical) contract
c) Unilateral
d) Adhesion
c<\/p>\n\n\n\n
To attain currently insured status under Social Security, an worker must have earned at least how many credits during the last 13 quarters?
a) 4 credits
b) 6 credits
c) 10 credits
d) 40 credits
b<\/p>\n\n\n\n
Insurance is the transfer of
a) Hazard.
b) Peril.
c) Risk.
d) Loss.
c<\/p>\n\n\n\n
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
a) Representation
b) Warranty
c) Concealment
d) Indemnity
b<\/p>\n\n\n\n
Which of the following is NOT true regarding the accumulation period of an annuity?
a) It would not occur in a deferred annuity.
b) It is the period during which the annuity payments earn interest.
c) It is the period over which the annuitant makes payments into an annuity.
d) It is also known as the pay-in period.
a<\/p>\n\n\n\n
An insured committed suicide one year after his life insurance policy was issued. The insurer will
a) Refund the premiums paid.
b) Pay the policy’s cash value.
c) Pay the full death benefit to the beneficiary.
d) Pay nothing.
a<\/p>\n\n\n\n
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
a) Applicant’s present physical condition.
b) Applicant’s present occupation.
c) Applicant’s past income.
d) Applicant’s past medical history.
c<\/p>\n\n\n\n
Which two terms are associated directly with the way an annuity is funded?
a) Renewable or convertible
b) Single payment or periodic payments
c) Increasing or decreasing
d) Immediate or deferred
b<\/p>\n\n\n\n
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
a) Premiums are taxable to the employee.
b) Premiums are not tax deductible as a business expense.
c) Premiums are tax deductible by the key employee.
d) Premiums are tax deductible as a business expense.
b<\/p>\n\n\n\n
Nonforfeiture values guarantee which of the following for the policyowner?
a) That the dividends will be paid annually
b) That the death benefit will be paid in a lump sum
c) That the policy premiums will never increase
d) That the cash value will not be lost
d<\/p>\n\n\n\n
A Straight Life policy has what type of premium?
a) A decreasing annual premium for the life of the insured
b) A variable annual premium for the life of the insured
c) A level annual premium for the life of the insured
d) An increasing annual premium for the life of the insured
c<\/p>\n\n\n\n
Which of the following is INCORRECT concerning a noncontributory group plan?
a) They help to reduce adverse selection against the insurer.
b) They require 100% employee participation.
c) The employer pays 100% of the premiums.
d) The employees receive individual policies.
d<\/p>\n\n\n\n
Which provision of a life insurance policy states the insurer’s duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
a) Beneficiary clause
b) Consideration clause
c) Insuring clause
d) Entire contract clause
c<\/p>\n\n\n\n
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
a) Based on the issue age of the insured.
b) Discounted.
c) Adjusted to the insured’s age at the time of renewal.
d) Determined by the health of the insured.
c<\/p>\n\n\n\n
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
a) Joint and survivor
b) Single life
c) Fixed-amount
d) Life income with period certain
d<\/p>\n\n\n\n
All of the following are personal uses of life insurance EXCEPT
a) Buy-sell agreement.
b) Survivor protection.
c) Estate creation.
d) Cash accumulation.
a<\/p>\n\n\n\n
All of the following benefits are available under Social Security EXCEPT
a) Old-age and retirement benefits.
b) Disability benefits.
c) Death benefits.
d) Welfare benefits.
d<\/p>\n\n\n\n
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
a) She will still be covered under the group plan, but will have to pay an individual policy premium.
b) She can only convert her coverage without proof of insurability if she has the master policy.
c) She must apply for a new policy, which requires her to provide proof of insurability.
d) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
d<\/p>\n\n\n\n
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
a) Cost of living provision.
b) Nonforfeiture option.
c) Guaranteed insurability rider.
d) Paid-up additions option.
c<\/p>\n","protected":false},"excerpt":{"rendered":"
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