TEXAS LIFE AND HEALTH INSURANCE EXAM | QUESTIONS & ANSWERS (VERIFIED)|LATESTUPDATE| GRADEDA+
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TEXAS LIFE AND HEALTH INSURANCE
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TEXAS LIFE AND HEALTH INSURANCE
TEXAS LIFE AND HEALTH INSURANCE EXAM |
QUESTIONS & ANSWERS (VERIFIED)|LATESTUPDATE|
GRADEDA+ At what point must a life insurance applicant be informed of their rights that fall underthe Fair
Credit Reporting Act?
Correct Answer: Upon completion of the application
Who elects the governing body...
TEXAS LIFE AND HEALTH INSURANCE EXAM |
QUESTIONS & ANSWERS (VERIFIED) | LATEST UPDATE |
GRADEDA+
At what point must a life insurance applicant be informed of their rights that fall underthe Fair
Credit Reporting Act?
Correct Answer: Upon completion of the application
Who elects the governing body of a mutual insurance company?
Correct Answer: policyholders
An insurance applicant MUST be informed of an investigation regarding his/herreputation and
character according to the
Correct Answer: Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk
exposure?
Correct Answer: Treaty
The stated amount or percent of liquid assets that an insurer must have on hand thatwill satisfy
future obligations to its policyholders is called
Correct Answer:
reserves
,Which of the following requires insurers to disclose when an applicant's consumer or credit
history is being investigated
Correct Answer:
1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a lifepolicy?
Correct Answer:
Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the statedprimary
beneficiary are required to have
Correct Answer:
insurable interest in the proposed insured
Statements made on an insurance application that are believed to be true to the best ofthe
applicant's knowledge are called
Correct Answer:
representations
The part of a life insurance policy guaranteed to be true is called a(n)
Correct Answer:
warranty
Which of these is NOT a type of agent authority?
a. Express
,b. Implied
c. Principal
d. Apparent
Correct Answer: Principal
The Consideration clause of an insurance contract includes
Correct Answer: the schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life insurance policy on theother,
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 F. However, an insurable interest no longer exists. Where will the proceeds
from E's life insurance policy be directed to?
Correct Answer: In this situation, the proceeds from E's life insurance policy will go toF.
Which of the following terms defines the legally enforceable promise in an insurancecontract by
the insurer?
Correct Answer: Unilateral
When must insurable interest exist for a life insurance contract to be valid?
Correct Answer: Inception of the contract
Insurance contracts are known as because certain future conditions or acts mustoccur before
any claims can be paid.
, Correct Answer: conditional
Which of these require an offer, acceptance, and consideration?
Correct Answer: Contract
Which of these arrangements allows one to bypass insurable interest laws?
Correct 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 insurancespecifically 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.
Which of these is NOT considered to be an element of an insurance contract?the offer acceptance
negotiating consideration
Correct Answer: negotiating
An agent is an individual that represents whom?
Correct Answer: Insurer
Insurable interest must exist at what time?
Correct Answer: at the time of application
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